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MINUTES

Governor Rounds' Energy Task Force

Second Meeting                                               LRC Rm. 412
December 1, 2004                                            State Capitol Building
11-4 p.m.                                                         Pierre, South Dakota

The second meeting of the Governor's Energy Task Force was called to order by Department of Tourism and State Development Secretary Jim Hagen, Chair, at 11:20 a.m. on Wednesday, December 1, 2004 in the in LRC Room 412 of the State Capitol Building in Pierre, South Dakota.

The following members were present: Department of Tourism and State Development Secretary Jim Hagen (Chair), Dick Sweetman (Vice-Chair), Public Utilities Commission Chairman Bob Sahr, Public Utilities Commission Vice Chairman Gary Hanson, Public Utilities Commissioner Jim Burg, Senator Paul Symens, Representative Joel Dykstra, Senior Advisor to the Governor Dusty Johnson, Vic Simmons, Rod Bordeaux, Jeff Nelson, David Emery, Jim Wilcox, and Rick Rylance. Ray Wahle, Senator Tom Dempster and Kathryn Johnson were unable to attend.

Staff members present included Pam Bonrud (PUC), Steve Wegman (PUC) and Keith Senger (PUC).

Members of the public present included Tom Marvin (SD Municipal League) and Kevin Nelson (member of the public).

Chairman Hagen welcomed the members and thanked them for their time and commitment.  He stated there are a number of issues to work through today including developing a Mission Statement and outlining the Subcommittees and the issues that each committee will cover.  He thanked PUC staff for providing the reading materials to the members.  Chairman Hagen mentioned that he has spoken with the Governor about creating an Energy Office to deal with the issues brought forth by the Energy Task Force.  Chairman Hagen is in the process of staffing this office.

There was also discussion about the Production Tax Credit Petition for more wind power development.  Jeff Nelson brought up several issues regarding the PTC.  Commissioner Burg mentioned that NARUC had passed a resolution supporting the issues that Jeff Nelson brought up.  Commissioner Burg said that he would get the resolution to the Task Force members.  Chairman Hagen then requested that PUC staff draft a letter to include Jeff Nelson's issues and get input for signature.

Chairman Hagen presented the Task Force members with a draft of the mission statement that had been laid out from the 2004 Legislative session.  There was discussion and suggested changes.  Chairman Hagen will make suggested changes and redistribute to the members for comments.

Task members broke for lunch at 12:15 p.m. with the meeting to resume at 1:15 p.m.

Chairman Hagen called the meeting back to order at 1:15 p.m.  He wanted to discuss two topics before the break out into subcommittees: Regional Tax structure for power plants, wind farms etc; and what sort of incentives can or should be offered to get the coal power plant in SD?

Chairman Hagen then suggested that the subcommittees meet for an hour and discuss the suggested topics.  After the hour the Task Force as a whole would reconvene to discuss committee assignments and future meeting dates.

Below are the subcommittees and proposed topics:

Advanced Technologies Subcommittee (Chair- Hanson, Vice Chair- Dykstra, Hagen, Nelson, Sweetman, K. Johnson):

  1. Examine future energy development / Advanced Technologies – ethanol, bio-mass, hydrogen, etc. 
    1. State and viability of ethanol – Understand the current state of the ethanol industry and projections for the market.  Should SD continue our incentives for construction of new plants or consider that policy to be a success and transfer those resources to a new area?  Do we have enough ethanol plants in South Dakota or would it be wise to support additional projects.  What will happen when the technology allows production of ethanol from feedstock other than corn?
    2. State and viability of bio-diesel – Is bio-diesel the next ethanol?  What impact would state subsidies have on the economics of soy-diesel production?
    3. What would be the impact of state mandates for ethanol and/or bio-diesel?  Should we copy Minnesota's policy?
    4. What is the potential of bio-mass or anaerobic digester technology to produce power in South Dakota?  What are the impediments to development of these projects?  Should we adopt incentive policies similar to those in Minnesota?  Can we get the power companies to remove stand-by charges for digester applications to make them more feasible?
  2. Further explore nuclear power.   Is America ready for nuclear plants?  Is South Dakota a logical state to site a plant?  Safety issues?  Dept. of Energy view of nuclear power in the future…what is it?
  3. Carbon sequestration – What is happening in the field?  Is this realistic?  Dr. Patrick Zimmerman form the School of Mines can give a presentation. 

Transmission and Markets Subcommittee (Chair- D. Johnson, Vice Chair- Symens, Emery, Wahle, Simmons):

  1. Examine new and existing electricity markets.  Who has need for power in the coming years?
  2. Further examine current transmission challenges and new transmission infrastructure.  Analyze current system for opportunities and challenges.  Review proposals to build lines.  What are other states doing – Rocky Mountain States and Wyoming?  Discuss public ownership.
  3. Examine Interstate/ Regional cooperation – Have Agencies/Utilities contact their counterparts to determine level of interest.  Are their collaborative efforts being undertaken now?  If so, what are they?
  4. How can we put together the Upper Midwest for generation and transmission of energy from all sources?  We will need all states in the Region – including Manitoba – working together to create and export energy out of the area if we are to even consider developing our potential. 

Wind Power Subcommittee (Chair- Sahr, Vice Chair- Dempster, Wilcox, Bordeaux, Burg, Rylance):

  1. Identify potential markets for wind power.
  2. Work closely with Transmission subcommittee on transmission and market issues and Task Force as a whole on tax comparisons
  3. Survey wind developers and utilities- What is their view of doing business in South Dakota?  Discuss with utilities the pros and cons of integrating more wind energy into their systems.
  4. Review South Dakota wind power initiatives.  Look for additional opportunities for programs that provide tangible benefits like WRAN and landowner-targeted programs, materials and meetings.
  5. Encourage existing programs targeted towards landowner issues and brainstorm on new ways to assist landowners and their professional advisors.  Consider Regional Wind Lease Comparison.
  6. Foster relationships with WAPA to facilitate transmission access and to encourage distribution of wind power to WAPA customers.  Monitor and, if appropriate, participate in WAPA Dakota Wind Study.
  7. Evaluate the possibility of Community-Based initiatives.

Chairman Hagen thanked the Task Force members again for their willingness to serve.  He added that the sub-committees would be meeting in the coming weeks and months and the Chairs of those sub-committees would establish the meeting dates.   

Meeting ended at 4 p.m.