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Nelson: Federal regulations hurt communications, coal-fired power plants in S.D.

Posted: Thursday, Sep 27th, 2012

Chris Nelson

HURON — Federal regulations are hurting the coal industry and costing consumers, while causing rural telephone companies to scale back expansion and creating uncertainty, a candidate for the Public Utilities Commission said.

Chris Nelson, most recently the South Dakota secretary of state, is running for the remaining four years of a six-year term. He was appointed to the PUC in January 2011 to fill a vacancy.

In an address at a Beadle County Republican Party campaign lunch in Huron this week, he said one of the commission’s biggest challenges is dealing with the Environmental Protection Agency’s “regulatory war against coal-fired power plants.” The United States gets 70 percent of its power from those facilities across the country.

The EPA has issued a series of regulations requiring additional and expensive emission controls, and power plant officials are deciding whether to comply and spend the money or shut down, Nelson said.

Black Hills Power is mothballing a plant in Rapid City, while Big Stone is spending $500 million to upgrade its environmental controls.

“All of those costs end up coming back to you and I,” he said.

New regulations are being challenged in court, and in August a federal appeals court in Washington, D.C., threw out one of them, saying the EPA had gone too far.

It meant Otter Tail Power filed a request to the PUC to withdraw a proposed rate increase because it would no longer have to comply with that regulation.

“That’s how the rubber really meets the road with these EPA regulations,” Nelson said.

President Obama has said his administration does not want to shut down the coal industry, but prefers an “all of the above” solution to America’s energy needs. It wants more clean coal technology, new domestic oil and gas drilling domestically and more investments in renewable energy sources.

Shifting more to natural gas to generate electric power would raise the cost at a time when consumers are enjoying low rates to heat their homes, Nelson said. Natural gas is also used to dry grain and produce anhydrous ammonia, and increased demand would certainly boost prices.

“The concern that I have is that if we completely abandon coal – a domestic resource, an abundant domestic resource, we abandon that and move dramatically toward natural gas, what’s going to happen to the price of natural gas?” he said. “It’s going to push right back up,”

And last week, he said a major coal producer in West Virginia and Pennsylvania announced it was laying off 1,200 coal miners.

“We’re turning our backs on this domestic resource and I think that’s a mistake,” Nelson said.

Despite opposition from the PUC and others, the Federal Communications Commission issued a massive order about a year ago that puts into question how 50 percent of the revenue stream for rural telephone companies in South Dakota works, Nelson said.

“Our rural telephone companies in South Dakota offer extremely good service, in some cases really world-class service,” he said.

The federal order is already causing some companies, which had been aggressively pushing out broadband to rural South Dakota, to pull back their plans.

“They are telling us ‘we are going to finish our plans for 2012, but make no additional expansions in 2013 or beyond because we don’t know under this new regulation what our revenues are going to be,’” Nelson said.

Even more concerning are those companies that borrowed money to make dramatic expansions and improvements in their systems in the last few years and are now wondering if they’ll have the money to repay them, he said.

“One of the biggest problems coming out of Washington in the last four years is uncertainty,” he said.

“We’ve got places in South Dakota, rural places, farms, that have world-class Internet access via fiber optics,” Nelson said. “We’ve got places in South Dakota literally across the road from those spots that have no Internet access whatsoever. It’s called the rural-rural divide.”

The PUC’s plea to the FCC to back away from its plan in favor of an alternative that would be less harmful has so far been ignored, but Nelson said the commission continues to work with rural telephone companies on the issue.

Meanwhile, he said the PUC has a strong plan it will submit in the next legislative session that would give the commission the tools it needs by law to prevent future problems like the Anderson Seed bankruptcy in Redfield, in which farmers who delivered sunflowers lost $2.6 million.

Nelson said he is not taking a position at this point on the proposal by his opponent, Democrat Nick Nemec, that would establish an indemnity fund through a temporary check off.

Nemec agrees that some producers don’t like check offs, but said it would be a way farmers could come to the aid of their neighbors in times of crisis, just like they do when there’s an illness. He also says farmers should be first in line, not last, among those affected by a bankruptcy and sale.

Nelson is suggesting that farmers take their case directly to the Legislature for debate.

If an indemnity fund is established by law, it’s likely it will be the responsibility of the PUC to administer it, Nelson said.

For the complete article see the 09-26-2012 issue.

Click here to purchase an electronic version of the 09-26-2012 paper.

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