Wild Rice says "cap and trade" will cost it $40 million annually
Wild Rice Electrical Cooperative CEO Steve Haaven told attendees at a Detroit Lakes Regional Chamber of Commerce Agricultural Issues forum that a proposed federal climate bill, if passed into law, will lead to higher electricity rates.
During the forum held in Callaway on Thursday, Haaven said that the measure would raise rates because Wild Rice's electricity producer, Minnkota Power Cooperative, would have to either limit the coal emissions from its power plants or pay for emission credits.
"There will be allowances given to each utility based on what they've been doing with emissions," Haaven said.
Under proposed cap and trade legislation, large carbon emitters, such as Minnkota, would be limited on how much carbon they could emit. If they can't get under that limit, they could purchase credits from companies that are under the limit.
The climate bill is in flux after barely passing the House of Representatives. The Senate hasn't taken it up yet.
The ultimate goal is to reduce carbon emissions by 17 percent by 2020 and 83 percent by 2050, Haaven said.
"The long and short of is that somewhere you are going to spend a lot of money," Haaven said.
Electricity utility companies in the Midwest are disproportionately affected because the region relies on coal-burning power on a greater basis than power plants on both coasts, Haaven said.
"The amount of carbon credits that we would have would be 61 percent of our needs," Haaven said if the credits are based on what the electrical sales are now.
Making up the difference could cost Wild Rice over $40 million annually, he said.
"Obviously, we are working hard with legislators, senators and everybody else to make sure that doesn't happen," Haaven said.
Wild Rice's members need to make their feelings know to Sens. Franken and Klobuchar, he said.
The state government figures into the climate change mix as well. Haaven said that with the state budget mess continuing several years out with the latest projections, there have been rumblings of a carbon impact fee.
"It turns out to be a moneymaker," Haaven said.
That money turns into a tax no matter what entity is charged, a cost that is ultimately passed on to consumers, Haaven said.
The other issue facing Wild Rice's customers is higher electrical rates related to renewable energy.
Haaven said that Wild Rice had to assess a surcharge starting with this month's bills as Minnkota bought a certain amount of wind power from NextEra Energy Resource's wind farms in North Dakota.
Utilities are under a mandate to buy more and more power from renewable resources, he said.
Haaven said a state law requires utilities to generate 25 percent of their power from renewable sources by 2025.
'That's pretty significant," he said.
He also said that the trend of higher electricity rates would continue.
"That's not going to quit in the foreseeable future," he said. "I hate to be the bearer of bad news."
He did say that Wild Rice is becoming more efficient, though.
All meter reading can be done remotely now.
While it's not technically part of what's called a smart grid, a way of managing electrical consumption in a more efficient way, it's a start. A smart grid allows a customer to control electrical use remotely, such as turning on a furnace or air conditioner from a computer or phone.
Wild Rice still needs to pay off its remote metering system, Haaven said, instead of investing in a smart grid.
"We are probably not going to make that quick step because now until we have paid for this system," Haaven said.
However, he said that Wild Rice work on a rebate program and energy audits to maximize energy efficiency.