Brian Zinchuk: SaskPower just signed a massive carbon leakage interchange agreement with the States, and Estevan will suffer the consequences

There was an announcement by SaskPower on Aug. 10 that is very significant, especially for Estevan.

SaskPower is going to beef up its power transmission interconnect with the U.S. Southwest Power Pool (SPP), from the existing 150 megawatts to 650 megawatts. It’s a connection to 106 utilities across 14 states from North Dakota right down to include the Texas panhandle.

The idea is when they need power, and we have power to offer, we sell power into the SPP. And when we need power, we can buy it from the SPP. And for that privilege, we will pay a tariff of $52 million per year. More on that later.

This sort of interconnected grid is really important when it comes to intermittent power sources like wind and solar. Especially wind and solar. When I was typing up the initial story this morning, I checked on how Alberta’s power grid is doing. And at that moment, at 10:46 a.m., Alberta’s power grid was producing 188 megawatts out of a theoretical 2,389 megawatts of wind power connected to their grid, a measly 7.9 per cent. And this has happened numerous times this summer. I’m losing track, really.

So what Alberta does, as indicated on the Alberta Electric System Operator website, is draw from its neighbours. Their minute-by-minute report shows their interchange, with negative showing the Alberta grid drawing from its neighbours. In eight months of observing, very, very rarely do I see Alberta supplying power to its neighbours. It is almost always drawing power, from British Columbia, Montana, and to a much lesser extent, Saskatchewan, even as it has shut down all but one of its coal plants.

 

That interchange, which at this very moment near midnight, can be as low as 553 megawatts. I’ve even seen it in the 400s. But more frequently, Alberta is drawing 700 or 800 megawatts from its neighbours.

Let me be clear on this – Alberta is one of the most energy-rich jurisdictions on the entire planet. It’s got more oil, natural gas and coal then almost every energy producer on the third rock from the sun, never mind wind and solar. And it is routinely, almost every single day, drawing on power production from its neighbours to keep its lights on.

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And this is what I anticipate will happen in Saskatchewan. Sure, we could send power to North Dakota. But it’s more likely that we will be drawing power from the SPP, nearly all the time.

A few numbers stood out. That 650 megawatts is very, very close to the amount of power Boundary Dam Power Station produces, or at least used to produce. Now, Boundary Dam is supposed to only be producing power from Units 3, 5 and 6, as Unit 4 was supposed to be shut down. But within weeks of its supposed retirement, it was fired up again. Why? Because SaskPower needed it. I thought that was going to be short term, but on Aug. 4, a former coal miner asked Premier Scott Moe about it at a town hall in Arcola, and Moe confirmed it. So despite federal rules requiring us to shut down our coal for the love of God and the planet, we have not, because most likely we cannot. If we could have, we would have, and we have not.

We have been building a lot of wind farms in Saskatchewan, recently adding 375 megawatts of power generation at Assiniboia and Herbert. SaskPower doesn’t publicly release data like Alberta’s grid does (I asked. It would be disadvantageous, businesswise, I was told.) So I don’t know for certain if we get days like Alberta where wind generation drops to 1 per cent of supposed nameplate capacity. But I’m guess that will happen. So this interconnect will allow us to backfill with power from North Dakota and beyond. And since the Americans were so kind to build a massive wind farm just south of Estevan, maybe the wind will blow there when its not blowing in Assiniboia. Hopefully.

However, I may have found a new favorite website, as SPP.org posts some of its data publicly. And at midnight, Saskatchewan time, this is what it looked like – 46 per cent was coal, 15 per cent natural gas, 30 per cent wind, 2 per cent hydro. And for the nuclear buffs, that’s producing 5 per cent. Since it’s midnight, solar went beddy-bye.

 

So great! We could buy some wind power from the Yankees! But wait! Nearly half of that power is coming from coal. And I don’t think they have implemented carbon capture on their plants, now, have they?

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Indeed, the social media comments from my initial story woke me up on this point.

“So we signed an agreement to by U.S. coal produced electricity. Oh no, I mean an interchange agreement,” said one.

“Let us hope that the Moe government did not just make an excuse to rebuild and put carbon capture units and nuclear units in favour of dirty U.S. coal generation,” said a second.

But what really got me thinking were these comments: “Over 50% of North Dakota’s power is coal fired. Carbon tax free,” said one. And that’s true. According to the U.S. Energy Information Administration, “In 2021, coal-fired power plants provided 57 per cent of North Dakota’s electricity generation, and wind energy accounted for 34 per cent, which was the sixth-highest share from wind power for any state.”

And this comment hit home, as most of my neighbours are either coal miners or work for SaskPower.

“And no jobs here in coal. Goodbye Estevan, you’re ruined.”

Key numbers

So let’s get back to those standout numbers. While SaskPower pointed out to me today that this is not a power purchase agreement, but one for an increased interconnect, you can bet you sweet bippy we’re going to be buying a lot of power through it. And we will do so through minimal infractructure construction.

That’s because we already have the transmission lines capable of handling 650 megawatts in place, originating at Boundary Dam Power Station. Boundary Dam originally had a nameplate capacity of 813 megawatts, when all six units were running. So all they have to do is build a bigger power line from the U.S. border to Boundary Dam – a distance so short, you could walk it in an afternoon.

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The new interconnect will be in place by 2027, in time for the retirement of the remaining units of Boundary Dam – Units 5 and 6.

This begs the question – what about the $1.6 billion investment made into the carbon capture plant for Unit 3? Does anyone think SaskPower is going to keep that massive facility open, and the mine feeding it, for just one relatively small unit? Then you have to wonder about Shand Power Station. Will the mine stay open for one singular unit there, if Boundary Dam is gone?

We pay next to nothing for the coal

And that $52 million annual fee – which I must compliment the Leader Post on finding that out. I missed that. That’s a lot of bucks. Indeed, it’s much more than what SaskPower pays the provincial government in coal royalties via its coal purchases.

Wait, what?

You got that right. We pay next to nothing for coal – at least the coal on crown land, which is most of it.

A few years ago I got curious why the provincial budget never listed coal royalties. It listed oil, and potash, and even natural gas, until it became a rounding error. But it never listed coal. So I did some digging. And digging. And I found out. You can read it here.

In 2018, SaskPower paid $32.7 million in coal royalties to the province, and 72.3 per cent of its coal was Crown, with the remaining 24.7 per cent freehold minerals.

We are in the unique position of the Crown owning the utility, and the Crown owning most of the coal mineral rights. So we, the people who own the Crown minerals, charge us, the people who own the Crown power utility, next to nothing.

Oh, we do pay to mine it. No question. That year, coal costs (i.e. mining it) cost $296 million. But for the coal itself – it was a rounding error. The Crown royalties we paid ourself for coal in 2018 was just 63 per cent of the tariff we just signed onto for the privilege of buying more carbon tax-free coal power from North Dakota and the rest of the SPP.

Carbon leakage

This enlarged interchange, 650 megawatts, is “carbon leakage” writ large. The power is still going to be produced, just in jurisdictions that don’t really care too much about greenhouse gas emissions or carbon taxes.

We can’t burn coal here because coal emissions are bad, so the federal government is forcing us to shut it down. That same federal government will increasingly tax the hell out of coal until we do shut it down. But we’ll be able to buy plenty of power – a Boundary Dam Power Station worth of power – without paying a cent of carbon tax on that.

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Apparently American coal-fired power won’t end the planet – but Saskatchewan’s will.

In the meantime, my neighbour behind my fence is a coal miner. My neighbour two doors to the left is a coal miner. The one across the street keeps the power plants running. And the one four doors to the right recently retired from SaskPower. How many of those houses will have for sale signs on them, while power hums along the transmission lines from the States?

We have hundreds of years of coal reserves in Saskatchewan. We have the technology to capture the carbon, and sulphur dioxide, if we implement it. We have dramatically reduced other forms of pollution from burning coal. And we can do all these things continually, reliably, and cheaply, wind or no wind, day and night, 24/7/365.

What are we doing here?

 

Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelineonline.ca.

 

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