Energy policy in North Dakota

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Energy policy in North Dakota
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Quick facts
Major industry: Fossil fuels
Energy department: Department of Energy
State population: 723,393[1]
Per capita income: $51,893
Energy consumption
Total energy consumption: 526 trillion BTU[2][3]
Per capita energy consumption: 768 million BTU
Energy spending
Total state energy spending: $6,409 million
Per capita energy spending: $9,360
Residential natural gas price: $8.34 per thousand cubic foot
Residential electricity price: 9.72 cents per kWh
See also
Energy on the ballot
Statewide fracking on the ballot
Local fracking on the ballot
Policypedia
Policypedia Energy logo.jpg
Energy Policy Project
Energy policy in the United States
Energy use in the United States
Glossary of energy terms
Energy policy in North Dakota
Fracking in North Dakota

Energy policy in North Dakota depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in North Dakota attempts to simultaneous develop both fossil fuels and renewable energy. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: "Energy policy in the United States" for more information on energy policy.
See also: Fracking in North Dakota

Energy overview

State facts

Below are quick facts about North Dakota’s energy climate.

North Dakota

  • is a net electricity exporter.
  • has traditional energy resources in the form of petroleum, natural gas and coal.
  • has renewable energy in the form of biofuels, hydroelectric energy and wind energy.
  • ranks 10th in the nation for ethanol production.
  • ranks in the top 10 states for both wind energy potential and percentage of electricity generated by wind energy.
  • uses no nuclear power generation.
  • has a voluntary goal that 10 percent of all electricity come from renewable sources by 2015.[4]

In North Dakota

  • households consume the fourth most electricity in the U.S. and pay the least for electricity.
  • 82 percent of the electricity consumed comes from coal.
  • natural gas heats 40 percent of homes.
  • renewable energy resources made up 18 percent of the state's net electricity generation in 2013.
  • industry is the largest energy-consuming sector in the state[4]

Available energy resources

North Dakota has plentiful traditional energy resources such as oil, coal and natural gas; production from these sources has been growing rapidly. Petroleum is produced in the shale deposits of the Williston Basin. Liquid petroleum comes through the state through the Keystone Pipeline from Canada to other parts of the nation. Natural gas is found in the Bakken Shale Formations of Western North Dakota along with crude oil. That area also contains the largest deposit of lignite (coal) in the world.[4]

North Dakota has renewable energy resources that contributed 18 percent of net electricity generation in 2010 according to the U.S. Energy Information Administration (EIA). The flat, windy landscape makes North Dakota a prime spot for wind energy, which could potentially provide for all of the state’s needs. The state is also very fertile with a strong agricultural economy, providing corn as fuel for ethanol production. North Dakota has one hydroelectric power source, the Garrison Dam, which produced 6 percent of the state’s energy in 2010. There is potential for geothermal production as well.[4]

Consumption and prices

Energy consumption in North Dakota
ND energy consumption chart.png

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As shown on the pie chart in 2011, over half of North Dakota’s energy use was in the industrial sector, and just less than one quarter for transportation; the rest was used mostly in residential and commercial buildings--for heating, cooling, lighting and other functions. Most of the energy used in the state comes from coal (used primarily for industrial electricity), followed by fuel oil and natural gas.[4]

Gasoline, used in transportation, accounts for 50 percent of the petroleum consumed in the state. The industrial sector accounts for a third of petroleum consumption. Slightly over one-sixth of households use petroleum products for home heating. Generally the price of gasoline in the state tracks closely to the national average.[6][7]

According to the EIA's February 2014 report, the federal excise tax is 18.40 cents per gallon of gasoline and 24.40 cents per gallon of diesel fuel. In addition to that, North Dakota collects a total tax of 23 cents on every gallon of gasoline and gasohol diesel fuel, which ranks it at the 31st highest in the United States.[8][9]

Comparisons tables

The table below compares North Dakota’s consumption and spending for energy, as well as prices for gas and electricity, and carbon emissions to those of Alaska, which has similar population, resources and consumption needs because of climate. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • North Dakota’s rank of 36th in carbon emissions means that carbon emissions are higher in North Dakota than in Alaska, which has a ranking of 39th.
  • Likewise, per capita income in North Dakota is higher than the national average, and somewhat higher than in Alaska, which at 11th ranks four places behind Alaska’s ranking of seventh in per capita income.
  • Alaska and North Dakota are similarly ranked near the bottom in population, total energy consumption and energy expenditures. However, both states rank near the top for both per capita consumption and expenditures with Alaska spending (1st) and consuming (3rd) more than North Dakota (4th in both categories). The extreme climate in these states contributes to high per capita consumption.

North Dakota has significantly lower electricity prices, 8.85 cents per kWh (50th), than Alaska, 18.33 cents per kWh (3rd). While Alaska has to rely on petroleum for much of its electricity generation, North Dakota relies on a variety of resources, which helps keep prices low. Eighty percent of electricity in the state comes from coal, which is still less expensive than many other forms of generation, despite growing federal regulations.[10]

Consumption and Expenditures Comparisons Summary
Type North DakotaAlaskaU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population723,39349735,13248313.9 million
Per Capita Income Average$51,8937$46,77811$42,693
Total Consumption526 trillion BTU41638 trillion BTU3897,301 quadrillion BTU
Per Capita Energy Consumption768 million BTU4881million BTU3312 million BTU
Total Spending on Energy$6,409 million43$7,739 million39$1,394,088 million
Per Capita Spending on Energy$9,3604$10,6921$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$8.34488.7941$12.48
Price of Electricity, cents per kWh9.724718.33312.31
Total Carbon Dioxide Emissions, million metric tons (2010)52.53638.7395,631
*Rank is from highest to lowest.

The most common home heating source in North Dakota is natural gas. Electricity is a close second, heating 38 percent of homes. LPG is the next most common source, followed by fuel oil and other sources.

See also: State Energy Rankings to compare all 50 states
Consumption of energy for heating homes in North Dakota
Source North Dakota 2011 U.S. average 2011
Natural gas 41.2% 49.5%
Fuel oil 4.2% 6.5%
Electricity 38% 35.4%
Liquid Petroleum Gases (LPG) 13.5% 5%
Other/none 3% 3.6%

Production and transmission

North Dakota produced 1,518.4 trillion BTU of energy in 2011. Of that 58 percent came from crude oil and just over 24 percent came from coal. The remaining 18 percent came from what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels."[11]

Energy production by type in North Dakota, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Crude oil 887.3 58.44% 7.42%
Natural gas 130.5 8.59% 0.49%
Coal 367.6 24.21% 1.67%
Biofuels 53.5 3.52% 2.79%
Other 79.4 5.23% 1.11%

Electricity produced and consumed in North Dakota is primarily from coal, which produces 82 percent of the total. In 2012, North Dakota produced over 27 million short tons of coal. Almost all of the coal used in electricity generation comes from in-state deposits with small amounts coming from Montana and Wyoming. North Dakota has four steam power plants fired by coal.[12]

North Dakota produced 179 billion cubic feet of natural gas in 2012. About two-fifths of that production was burned for home heating. Natural gas production has surged since 2006 because of the Bakken Shale development and fracking. North Dakota has infrastructure for liquid natural gas including several interstate pipelines that keep natural gas prices low.

In 2010, renewable energy resources made up 18 percent of net electricity generation with 12 percent of that produced by wind energy. North Dakota has several ethanol plants and produces over 400 million gallons per year from corn and wheat straw. The Garrison Dam on the Mississippi River was the 5th largest power plant in the state as of March 2014, and generated 6 percent of the state’s electricity in 2010.[4]

Where electricity comes from in North Dakota[13]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 2,000 0.07% 0.01%
Coal-fired 2,297,000 78.64% 0.13%
Hydroelectric 117,000 4.01% 0.04%
Other renewables 496,000 16.98% 0.25%
Total net electricity generation 2,921,000 100% 0.07%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In North Dakota there are currently three major investor-owned electric and natural gas utilities: Montana-Dakota Utilities Co., Northern States Power Company and the Otter Tail Corporation. The North Dakota Association of Rural Electric Cooperatives (NDAREC) provides electricity to many of the state’s rural areas. The Midwest Independent Transmission System Operator (MISO) operates most of the transmission. These are regulated through the North Dakota Public Service Commission and North Dakota Transmission Authority.[14]

Energy policy

Policy Issues
Energy legislation in North Dakota has focused on the production of coal. More recently oil and natural gas have become important topics, especially since 2007, when the Bakken Shale started producing large amounts of oil and natural gas due to the use of horizontal drilling and hydraulic fracturing. Instead of trading off traditional resources for renewables, North Dakota has attempted to facilitate the production of both. Much of the energy regulation in North Dakota is federal.[15]
See also: "Fracking in North Dakota"

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. In 2007, North Dakota enacted a voluntary Renewable Portfolio Standard (RPS) establishing an objective that 10 percent of all electricity sold in the state come from renewable and recycled sources by 2015. Utilities receive no penalty for not meeting the objective. Solar thermal, photovoltaic, landfill gas, biomass, hydroelectric, geothermal, hydrogen, waste heat and anaerobic digestion generation all constitute renewable or recycled energy as part of the portfolio. The cost for that production is paid by the utility companies, who are free to determine which renewable source is most economically efficient. In order to comply, utilities provide reports on energy sales annually. These reports include renewable and recycled energy certificates and information on that utility’s progress as well as challenges to meeting the objective.[16][17][18][19]

The American Council for an Energy Efficient Economy (ACEEE) is a nonprofit and nonpartisan organization dedicated to improving energy efficiency policy in the United States. Each year, they rank each state by their energy efficiency policies. North Dakota scored 51st on the ACEEE's 2013 State Energy Efficiency Scorecard (the ranking includes Washington DC). Neither the North Dakota State Government or state energy utilities created any energy efficiency programs. Building codes are decided at the "jurisdictional level" and there are no standards for appliances. Out of 50 possible points on the energy efficiency scorecard, North Dakota scored 3.5 points.[20] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gains in energy efficiency will be eroded as consumers consume additional goods and services."[21][22]

Major legislation

  • H.B. 1506 (2007), established North Dakota’s RPS. Meeting the target goal of 10 percent generation from renewable sources is voluntary for producers. From June 30, 2009 onward, all utilities must report their annual sales to the North Dakota Public Service Commission (PSC). This report includes information on renewable sources used by producers and on the measures taken by producers to comply with the voluntary standard. All renewable energy sources must be certified by the PSC before they can count towards the renewable objective.[23]
  • House Bill 1333 (2013) and House Bill 1147 (2013) attempt to make pipeline planning and construction easier. Combined, these two bills increase transparency and efficiency in siting and locating new pipelines and give flexibility to landowners and pipeline planners in resolving disputes and making minor adjustments. HB 1147 enacted a new permitting process that allowed for planners and landowners to work together while HB 1333 helped expand mediation to create a better relationship between planners and land owners. It is expected that these bills will help save valuable time in building natural gas infrastructure.[24][25]
  • Title 17, Article 2 of the North Dakota Century Code, updated in 2013, contains "Ethanol Production Incentives." Any ethanol plant in operation before July 1, 1995 that increases its production by ten million gallons or by 50 percent during any year is eligible to receive ethanol production incentive payments. This incentive program will help North Dakota meet the Federal Renewable Fuel Standard. The funds for this incentive program come from the state.[26]
Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.

State environmental policy


See also
Local fracking on the ballot

Statewide fracking on the ballot

Ballot measures

Below is a list of energy related ballot measures across North Dakota. These ballot measures cover issues from fracking bans, to utilities and related tax questions.

Government agencies and committees

  • The North Dakota Public Service Commission is a constitutionally commissioned agency begun in 1940. The commission ensures reliable service and fair rates for consumers, reclaim mined coal lands and ensure fairness and safety in weighing and measuring practices. They have authority to regulate electric and gas utilities, energy plants and transmissions, pipelines, mined coal land reclamation and more. Lately, the commission has lost some regulatory power due to new technology and changing regulatory environments. These changes have lead to greater dependence on competitive market forces to regulate what were traditionally monopoly rates.[28]
  • The North Dakota Transmission Authority (NDTA) was created in 2005 by the state legislature to build transmission capacity if needed and not provided by other developers. They facilitate, finance and develop transmission infrastructure in order to help bring new investment. The NDTA has been working to meet the goal of 5,000 megawatts of wind generation by 2020 set by the EmPower North Dakota Commission.[29]
  • The North Dakota Industrial Commission conducts and manages utilities, industries, enterprises and business projects created by state law. The Oil and Gas Division has jurisdiction over state oil and natural gas production, including the drilling and plugging of wells. The commission also includes the Pipeline Authority, which facilitates the development of pipelines for production.[30]
  • The North Dakota Department of Health has been tasked with protecting and enhancing the health and safety of the state's citizens and the environment. The department oversees issues such as community health, disaster relief and environmental health.[31]

Major organizations

  • Utility Shareholders of North Dakota (USND) is a group of people and organizations who hold stock in any utility in North Dakota. Their mission is "to establish and maintain a positive, credible and independent voice regarding matters affecting investors in utility companies operating in North Dakota." They mean to help utilities deal with the continuing deregulation of North Dakota utilities and the challenges that come with it. They also mean to stand up for the rights of consumers who might be taken advantage of because of deregulation.[32]
  • The Midwest Reliability Organization (MRO) is a non-profit organization whose mission is to "ensure the reliability and security of the bulk power system in the north central region of North America." They accomplish this by ensuring producers meet reliability standards and that the grid has the capacity for all consumers. They operate under the North American Energy Reliability Corporation (NERC).[33]
  • The North Dakota Alliance for Renewable Energy (NDARE) is an association whose mission is to continue the work of the North Dakota Renewable Energy Partnership, which was dissolved in 2007. They foster "the development and use of home-grown renewable energy and energy efficiency through education, outreach and public policy advocacy." They hope to gain more state investment in renewable energy projects.[34]

In the news

This section displays the most recent stories in a Google news search for the term "North+Dakota+Energy+Policy"

All stories may not be relevant to this page due to the nature of the search engine.

North Dakota Energy News Feed

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See also

External links

References

  1. U.S. Census Bureau, "North Dakota Quickfacts," accessed March 14, 2014
  2. These figures come from the U.S. Energy Information Administration "State Profiles and Energy Estimates, North Dakota Overview." Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  3. U.S. Energy Information Administration, "North Dakota Overview," accessed February 14, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 U.S. Energy Information Administration, "North Dakota Profile Analysis," December 18, 2013, accessed February 20, 2014
  5. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  6. Gas Buddy, "Historical Gas Charts," accessed February 14, 2014
  7. To compare current gasoline prices in North Dakota to the U.S averages, go to GasBuddy.com
  8. U.S. Energy Information Administration, "Petroleum Marketing Monthly," February 2014, accessed February 14, 2014
  9. The Tax Foundation, "State Gasoline Tax Rates, 2009-2013," March 21, 2013
  10. Institute for Energy Research, "North Dakota Energy Facts," accessed February 18, 2014
  11. U.S. Energy Information Administration, "State Energy Data System, Production," accessed February 18, 2014
  12. U.S Energy Information Administration, "Coal production and number of mines by state and coal rank", accessed February 25, 2012
  13. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, "North Dakota Overview," accessed February 5, 2014
  14. North Dakota Public Utilities Commission, "Jurisdiction: Electric and Gas," accessed February 25, 2014
  15. Utility Shareholders of North Dakota, "Trends in North Dakota Energy Policy and Legislation," accessed February 25, 2014
  16. U.S. Department of Energy, "North Dakota," accessed February 25, 2014
  17. According to a report called "The Status of Renewable Electricity Mandates in the States," by the free-market Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states without a RPS.
  18. Institute for Energy Research, "The Status of Renewable Electricity Mandates in the States," accessed March 24, 2014
  19. Manhattan Institute, "The High Cost of Renewable-Energy Mandates," February 2012
  20. American Council for an Energy Efficient Economy, "51, North Dakota," accessed February 25, 2014
  21. International Risk Governance Council, "The Rebound Effect: Implications of Consumer Behavior for Robust Energy Policies," accessed March 3, 2014
  22. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013, accessed March 3, 2014
  23. U.S. Department of Energy Database of State Incentives for Renewables and Efficiency, "North Dakota," accessed February 25, 2014
  24. Bakken Magazine, "New Rules On Pipeline Infrastructure," January 20, 2014
  25. North Dakota Legislature, "House Bill 1333," accessed February 25, 2014
  26. North Dakota Legislative Branch, "Ethanol Production Incentives," accessed February 25, 2014
  27. North Dakota State Gov, "Energy Development and Transmission Committee," accessed February 27, 2014
  28. North Dakota Public Service Commission, "About the Commission," accessed February 27, 2014
  29. North Dakota Transmission Authority, "Annual Report: July 1, 2008 - June 30, 2009," accessed February 25, 2014
  30. North Dakota.gov, "About the Commission," accessed February 27, 2014
  31. Health Section North Dakota Department of Health, "Department Overview", accessed May 20, 2014
  32. Utility Shareholders of North Dakota, "About Us," accessed February 27, 2014
  33. Midwest Reliability Organization, "Home," accessed February 27, 2014
  34. "North Dakota Alliance for Renewable Energy", "Mission," accessed February 27, 2014