The "landscape is our unwitting autobiography, reflecting our tastes, or aspirations, and even our f

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• The "landscape is our unwitting autobiography,
  reflecting our tastes, or aspirations, and even
  our fears, in tangible, visible form.... All our
  cultural warts and blemishes are there, and our
  glories too but above all, our ordinary
  day-to-day qualities are exhibited for anybody
  who wants to find them and knows how to look for
  them. (Lewis 1979)

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Legal Controls on Behavior
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U.S. Energy Use
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• Electricity has transformed society and
  landscapes in the United States
• Its impact is far more pervasive than the impact
  of the automobile
• Produced in a variety of ways
• Transported considerable distances
• Consumed in increasing amounts
• Cannot be stored
• Flows wherever directed

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Electricity generation as a proportion of energy
flow

• Electricity
• Coal 19.6
• Nuclear 7.2
• Renewable Sources 6.9
• Natural Gas 22.2 (23.8 used to generate
  electricity)
• Petroleum 34.6

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Energy Policy Act of 2005 Public Law 109-58
August 8, 2005 1,700 pages long. Tax breaks by
subject area

• 4.3 Billion for nuclear power
• 2.8 billion for fossil fuel production
• 2.7 billion to extend the renewable electricity
  production credit
• ?.? Billion for the Freedom Car initiative (1.7
  billion 2003 CATO estimate)
• 1.6 billion in tax incentives for investments in
  clean coal facilities
• 1.3 billion for conservation and energy
  efficiency
• 1.3 billion for alternative motor vehicles and
  fuels (ethanol, methane, liquefied natural gas,
  propane)
• ?.? Billion for hydrogen research
• The Congressional Budget Office estimated the Act
  will increase direct spending by 1.6 billion,
  and reduce revenue by 12.3 billion between 2006
  and 2015

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Major items

• Provides a tax credit of up to 3,400 for owners
  of Hybrid vehicles
• Authorizes loan guarantees for "innovative
  technologies" that avoid greenhouse gases, which
  might include advanced nuclear reactor designs as
  well as clean coal and renewable energy
• Increases the amount of biofuel (usually ethanol)
  that must be mixed with gasoline sold in the
  United States to triple the current requirement
  (7.5 billion gallons by 2012)
• Seeks to increase coal as an energy source while
  also reducing air pollution, through
• authorizing 200 million annually for clean coal
  initiatives
• repealing the current 160-acre cap on coal leases
  
• allowing the advanced payment of royalties from
  coal mines
• requiring an assessment of coal resources on
  federal lands that are not national parks
• Authorizes subsidies for wind energy, and other
  alternative energy producers

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Major items

• Adds ocean energy sources including Wave power
  and Tidal power for the first time as separately
  identified renewable technologies
• Authorizes 50 million annually over the life of
  the bill for a biomass grant program
• Contains several provisions aimed at making
  geothermal energy more competitive with fossil
  fuels in generating electricity
• Requires the DOE to study and report on existing
  natural energy resources including wind, solar,
  waves and tides
• Provides tax breaks for those making energy
  conservation improvements to their homes
• Provides subsidies for oil companies
• Extends Daylight Saving Time by approximately
  four weeks
• Requires that no drilling for gas or oil may be
  done in or underneath the Great Lakes
• Sets federal reliability standards regulating the
  electrical grid (done in response to the Blackout
  of 2003

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Provisions in the original bill that were not in
the Act

• Limited liability for producers of MTBE
• Drilling for oil in the Arctic National Wildlife
  Refuge (ANWR)
• Increasing vehicle efficiency standards (CAFE)
• Requiring increased reliance on non-greenhouse
  gas-emitting energy sources similar to the Kyoto
  Protocol

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Annual Energy Outlook 2004 indicates that over
the next two decades....
U.S. energy demand will grow at an average annual
rate of 1.5 percent
The energy efficiency of the economy will
increase at an average annual rate of 1.5 percent
Future growth in U.S. natural gas supplies will
depend on unconventional domestic production,
natural gas from Alaska, and liquefied natural
gas imports.
U.S. oil import reliance will grow from 54
percent to 70 percent
Carbon dioxide emissions will grow at an average
annual rate of 1.5 percent
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Net imports
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Petroleum Supply, Consumption, and Imports,
1970-2025
(million barrels per day)
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History
Projections
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20
70
Consumption
Net imports
15
54
10
Domestic supply
5
0
1970
1980
1990
2000
2010
2025
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Net imports
15
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Includes total associated-dissolved,
non-associated conventional, lower-48
offshore, supplemental natural gas production,
Canadian, and Mexican imports.
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Nuclear Energy in Minnesota

• Federal Promotion and Licensing
• State Regulation
• Excel Energy production
• Waste
• Prairie Island Nuclear Waste Storage (Minnesota
  Legislative Reference Library)
• Renewable Energy

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Renewable Energy

• Minnesota statutory law requires that utilities
  offer green power to their customers
• Minnesota Utilities Green Power Programs
• A Renewable Electricity Standard would require
  Minnesota utilities to gradually increase the
  amount of new renewable energy sources they use
  to 20 percent
• Minnesota Renewable Energy

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Resources

• Energy Information Administration ltMinnesotagt
• Minnesota Incentives for Renewable Energy
  (Database of Incentives for Renewable Energy)
• Minnesota North Star ltEnergygt
• Utility Information (Minnesota Department of
  Commerce)
• Minnesota Public Utility Commission
• Power Plant Siting
• Environmental Quality Board
• Amendment of power plant siting rules (Chapter
  4400)
• Board of Electricity

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Every flip of a light switch

• Requires
• electricity be generated
• sent over a highway - a transmission line
• distributed to the person who flipped the switch
• Some companies provide all three services, some
  only provide one

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• A century ago electricity was provided by a
  hodgepodge of unconnected utility systems
  competing against one another

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• Today, electricity is provided by a hodgepodge
  of connected utility systems each a monopoly
  operating in a regulated competitive business
  climate in which cooperation is essential
• Buy and sell electricity amongst themselves
• Lease facilities from each other
• Co-own facilities with each other

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Structure of Electrical Industry

• Electricity generation and transmission were
  natural monopolies
• Large centralized power plants were the most
  efficient and inexpensive means for producing
  electric power and delivering it to customers
• Large generating plants, integrated with
  transmission and distribution systems, achieved
  economies of scale and consequently lower
  operating costs than relatively smaller plants
  could realize
• Such monopoly demanded government controlled
  operating procedures, prices, and entry to the
  industry to protect consumers

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• This monopoly is being challenged under
  deregulation
• Technological advances have altered the economics
  of producing electricity
• 1975 -- 1985, electricity prices increased
• The effects of the Public Utilities Regulatory
  Policies Act of 1978, demonstrated that
  traditional vertically integrated electric
  utilities were not the only source of reliable
  electrical service
• The electric industry now has many new companies
  that produce and market wholesale and retail
  electric power

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Deregulating Electric Industry

• The Deregulation of the Electricity Industry A
  Primer (Cato Institute)
• Causes and Lessons of the California Electricity
  Crisis (CBO)

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North American Industry Classification
SystemStandard Industrial Classification System

• Electric Utilities companies engaged in
  generating, transmitting, and distributing
  electricity
• Generating
• Hydroelectric
• Fossil Fuel
• Nuclear Fuel
• Other solar, tidal, wind (solid waste
  incinerators not included)
• Transmitting
• Distributing

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Structure of the Electricity Industry

• Utilities generating, transmitting, /or
  distributing electricity
• Investor-owned Utilities
• 2. Public Utilities
• Federal Government
• Municipal Governments
• 3. Cooperatives

• Non Utilities
• Qualifying Facilities
• Power Marketers

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A Little History

• By the end of the 1880s, small central stations
  dotted many U.S. cities each was limited to a
  few blocks area because of transmission
  inefficiencies
• The hydroelectric development of Niagara Falls by
  George Westinghouse in 1896 inaugurated the
  practice of placing generating stations far from
  consumption centers
• Electric utilities spread rapidly in the 1890s
• Municipally owned utilities supplying street
  lighting and trolley services reached their peak
  share of total generation, ca 8, at end of the
  century
• From 1901 through 1932, growing economies of
  scale hastened growth and consolidation in the
  electric utility industry
• By 1921, privately owned utilities were providing
  94 percent of total generation, and publicly
  owned utilities contributed only 6 percent
• Also marked the beginning of state and federal
  regulation

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Federal Involvement in Electricity industry

• The electric power industry became recognized as
  a natural monopoly in interstate commerce
  (producing a product most efficiently provided by
  one supplier)
• Federal government owned most of the Nation's
  hydroelectric resources
• Federal economic development programs
  accelerated, including electricity generation
• During Depression, Congress took two actions that
  affected the electric power industry
• Federal power production
• Rural Electrification Administration (REA)

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Federal Electricity Sources

• Bureau of Reclamation
• Bonneville Power Administration
• Western Area Power Administration
• Southeastern Power Administration
• Tennessee Valley Authority
• 1933 Tennessee Valley Authority
• 1936 Hoover Dam
• 1937 Bonneville Dam
• 1941 Grand Coulee Dam

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Rural Electrification Administration

• REA created in 1935 as an independent bureau
• Rural Electrification Act of 1936
• Established a program for electrifying American
  farms by 1941 35 electrified
• Reorganized in 1939 as a division of U.S.D.A.
• Abolished in 1994, replaced by the Rural
  Utilities Service to oversee USDAs
  Electrification, Telecommunications, and Water
  and Waste Disposal Programs
• Now run by USDA Rural Development
• USDA Rural Development's Electric Programs

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• Goal of REA to provide rural areas and towns -
  populations under 2,500 - with inexpensive
  electric lighting and power
• Provided long-term loans
• state and local governments
• farmers' cooperatives
• nonprofit organizations
• REA-backed cooperatives enjoyed federal power
  preference and exemptions from taxes and from
  some regulations

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Cooperatives
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Minnesota Cooperatives

• Governed by a board of directors elected by the
  customers
• Traditionally, cooperative boards set their own
  rates
• 6 generation transmission cooperatives
• 45 distribution cooperatives
• Involves 15 of electricity sold in state
• In Minnesota cooperatives serve approximately
• 560,000 residential customers
• 37,000 commercial customers
• 770 industrial customers

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Minnesota Rural Electric Association
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Minnesota Rural Electric Association

• Touchstone Energy Cooperatives a nationwide
  alliance of electric cooperatives
• Comprising more than 600 electric co-ops in 44
  states it is the largest utility in the country,
  delivering energy and energy solutions gt 17
  million customers
• The Minnesota Rural Electric Association is the
  regional partner in Minnesota
• Forty cooperatives in Minnesota are part of this
  alliance
• Great River Energy ----------------- generation
  and transmission coop
• Minnekota Power Cooperative ---generation and
  transmission cop
• Dakota Electric Association ---- distribution
  coop

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Generation Transmission Cooperatives

• Basin Electric Power Association. Bismark, SD.
• Provides power to 23 cooperatives, serving 1.7
  million in 9 states
• 4 coal-fired generating stations
• Laramie Station part of Missouri Power Project
• Great Plains Synfuels Plant (1984)
• Dairyland Power Cooperative. La Crosse, WI
• Provides power to cooperatives and 13 municipal
• 5 generating plants 3 base load

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Generation Transmission Cooperatives

• East River Cooperative. Madison, SD
• Provides power to 21 cooperatives and 1 municipal
  (9 counties in west MN)
• 3 generating plants
• Great River Energy. Elk River, MN - provides
  electricity to 29 coops
• 3 generating stations, 1 in MN
• Minnkota Power Cooperative Inc. Grand Forks, ND -
  provides power to 11 coops and 12 municipals in
  MN and ND
• 1 generating station
• L O Power Cooperative. Rock Rapids, IA

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Great River Energy
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Minnkota Power Cooperative

• Milton R. Young Station is the primary mine-mouth
  generating facility for Minnkota
• Located near the town of Center, N.D., the Young
  Station consists of two units that are supplied
  with lignite coal from the adjacent mines of BNI
  Coal, Ltd 
• Young 1, owned and operated by Minnkota began
  commercial operation on Nov. 20, 1970 
• Young 2 began operations on May 11, 1977
• owned by Square Butte Electric Cooperative and
  operated by Minnkota
• Minnkota purchases 29 and Minnesota Power
  purchases 71 of the power

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Missouri Basin Power Project

• 6 regional cooperatives that constructed
  coal-fired Laramie River Station Wheatland WY
• Basin Electric Power Cooperative, Bismarck, ND -
  construction manager and operator of Laramie
  River Station, generation and transmission to
  distribution cooperatives in nine states of the
  Missouri Basin
• Tri-State Generation Transmission Association,
  Inc., Denver, CO, supplier to 34 rural electric
  cooperatives in western Nebraska, northeastern
  Colorado and Wyoming
• The Western Minnesota Municipal Power Agency,
  Ortonville, MN, a group of municipally owned
  electric systems in Minnesota - represented in
  the Project by the Missouri River Energy
  Services, Sioux Falls, SD
• Lincoln Electric System, Lincoln, NE, the largest
  municipally owned electric system in the Missouri
  Basin
• Heartland Consumers Power District, Madison, SD,
  a public power district serving South Dakota
  agencies and municipal electric systems in South
  Dakota, Iowa and western Minnesota.
• Wyoming Municipal Power Agency Lusk WY.

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Distribution Cooperative

• Dakota Electric Association. Farmington, MN

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Distribution Cooperative

• Wright-Hennepin Cooperative Electric Association
  Rockford MN

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Municipal Utilities
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Municipals in Minnesota

• Non-profit corporations regulated by the city
  council or appointed utility commission
• Capital is raised through operating revenues or
  sale of tax-exempt bonds
• In Minnesota serve
• 265,000 residential customers
• 41,000 commercial customers
• 2,600 industrial customers 
• Population of cities in which municipals operate
  is approximately 645,000
• Largest municipal Rochester serving 85,000 The
  next largest - Moorhead, serves 32,200

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Municipals

• About 85 of Minnesota's municipals have fewer
  than 5,000 customers
• About 45 have fewer than 1,000 customers
• About 20 have fewer than 500 customers
• Minnesota Municipal Utilities Association
• Member web sites

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Southern Minnesota Municipal Power Agency

• In 1977 18 Minnesota cities form Southern
  Minnesota Municipal Power Agency, Rochester MN,
  to own and operate the generation and
  transmission functions
• Owns 41 of the Sherco 3 generating unit located
  near Becker, MN operated by Xcel Energy

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Investor-owned
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Investor-owned Utilities

• Monopolies regulated most closely
• Governed by a board of directors elected by
  stockholders.
• Exist to make a profit for stockholders
• Capital is raised through stock sales, taxable
  bonds, and operating revenues
• Operate generating facilities that convert
  energy, such as water power, fossil fuels, and
  nuclear power into electrical energy
• Operate transmission systems that transport
  electricity from the generating facility to the
  distribution system through power lines,
  transformers and sub stations
• Operate a distribution system - controlling the
  distribution of electricity to the consumers
  through power lines, poles, meters, and wiring

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Investor-Owned Utilities in Minnesota

• Xcel Energy
• Alliant Energy
• Allete (electric utility - Minnesota Power)
• Northwestern Wisconsin Electric
• Otter Tail Power

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Service Areas Ottertail Power, Minnesota Power
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Xcel Energy

• Operates more than 70 generating stations using a
  variety coal, natural gas, nuclear fuel, water,
  oil, refuse, wind, and sun
• Generates approximately three-quarters of the
  electricity it needs buying the remainder from
  other electricity suppliers
• Also
• purchases electricity from other producers for
  resale
• operates its own transmission lines
• leases the right to use other companies lines
• operates its own distribution system

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Xcel Energy

• Serves 3.1 million electric customers in 12
  Western and Midwestern states
• 16 Coal 55.9
• 6 Oil 2.9
• 16 Natural Gas 25.6
• 3 Refuse Driven 0.7
• 2 Nuclear 10.5
• 1 Wind 2 Solar 0.1
• 28 Hydro 4.1

• High Bridge, St Paul 1923
• Black Dog, Burnsville 1952
• Red Wing 1959
• Riverside, Minneapolis 1964
• Allen S. King, Oak Park Heights 1968
• Monticello 1971
• Prairie Island 1973
• Sherburne County, Becker 1976

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Alliant Energy (Madison, WI)

• Subsidiaries
• IES Utilities Inc
• Interstate Power Co
• Wisconsin Power and Light Co
• Generates, transmits, distributes electricity
• 31 power plants in upper Midwest
• Fox Lake, Montgomery, Hills MN
• 9,700 miles of lines
• Serves 1.2 million IA, IL, MN, WI

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The North American Electricity Reliability Council

• Understanding the grid
• Established 1968
• Comprises ten Regional Reliability Councils aimed
  at ensuing that the bulk electric system in North
  America is reliable, adequate, and secure

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MAPP

• Association of electric utilities and other
  electric industry participants
• 107 investor-owned utilities, cooperatives,
  municipals, public power districts, a power
  marketing agency, power marketers, regulatory
  agencies, and independent power producers
• Organized in 1972 to pool generating and
  transmitting electricity
• A reliability council, responsible for the safety
  and reliability of electric production and
  transmission
• Protects the electric power network in Minnesota,
  Nebraska, North Dakota Manitoba, Saskatchewan,
  and parts of Wisconsin, Montana, Iowa and South
  Dakota
• A regional transmission group, responsible for
  facilitating access to the transmission system
• A power and energy market facilitating members
  and non-members buying and selling electricity

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Transmission

• Investor-owned utilities own 73
• Federally owned utilities own 13
• Public utilities and cooperative utilities own
  14
• Not all utilities own transmission lines
• No independent power producers or power marketers
  own transmission lines
• Transmission lines grouped into three major
  networks (power grids)
• These grids include smaller groupings or power
  pools
• Minnesota Electric Transmission Planning

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Transmission

• TRANSLink - a for-profit, Delaware limited
  liability company
• Independent transmission-only company owning or
  controls the participant utilities' transmission
  systems
• Six utilities
• Alliant Energy
• Corn Belt Power Cooperative
• MidAmerican Energy
• Nebraska Public Power District
• Omaha Public Power District
• Xcel Energy

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Midwest Independent Transmission System
Operator, Inc.

• Nation's first Regional Transmission Organization
  (RTO) approved by the Federal Energy Regulatory
  Commission (FERC).
• Based in Carmel, Indiana, responsible to monitor
  and direct the flow of wholesale bulk electric
  power lines thus ensuring the smooth regional
  flow of electricity in a competitive wholesale
  marketplace
• that delivers power from generating plants to
  wholesale power transmitters
• that deliver power to distribution companies
• that deliver power to residential and commercial
  customers
• Role to ensure equal access to the transmission
  system and to maintain or improve electric system
  reliability in the Midwest.
• Established Feb. 12, 1996, configured to comply
  with FERC's concept of an independent
  organization
• Utilities with more than 100,000 miles of
  transmission lines covering 1.1 million square
  miles from Manitoba, Canada, to Kentucky have
  committed to participate in the Midwest ISO.

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Some Basic References

• US Department of Energy
• Energy Information Administration
• US Nuclear Regulatory Commission
• Federal Energy Regulatory Commission
• Minnesota Public Utilities Commission
• Minnesota Environmental Quality Board
• Fresh Energy