Senate finance committee hears testimony on HB 1279 to extend state coal conversion tax relief for lignite plants

At a hearing before the Senate Finance and Taxation Committee, lawmakers heard testimony on House Bill 1279, which would extend a 10‑year state-level exemption from the coal conversion tax for lignite‑fired power plants.

Representative Anna Novak of District 33 introduced the bill, telling the committee the proposal is "about protecting affordable energy for every North Dakotan and ensuring a reliable power grid that sustains our way of life." Novak said the measure targets the coal conversion tax — the tax that power plants pay for converting lignite into electricity — and does not change coal severance taxes or local portions of the conversion tax. She said the 10‑year length is intended to provide investment certainty amid shifting federal rules.

Supporters from the lignite industry and related local governments and utilities told the committee the extension is necessary to maintain base‑load generation, protect jobs and keep electricity prices stable. Jonathan Fortner of the Lignite Energy Council said coal plants face rising costs from litigation, insurance and limited access to capital and that without relief "the ability to provide affordable, reliable electricity for North Dakotans is at risk." Fortner told the committee the industry has spent roughly $5,000,000 in the past two years defending against federal regulations and that federal tax and subsidy policies favor intermittent generation.

Jean Schaffer, senior legislative representative for Basin Electric, said existing tax relief saved Basin Electric more than $60,000,000 over the prior five years and estimated a 10‑year extension would save the cooperative about $120,000,000. Schaffer described Basin Electric as a regional, customer‑owned generation and transmission cooperative with about 8,000 megawatts of generating capacity that supplies wholesale power to co‑ops across nine states.

Rainbow Energy Center — owner and operator of Coal Creek Station — and other operators said the tax relief helps cover routine and capital costs such as preventative maintenance and projects that convert coal waste to beneficial use. Jessica Bell, vice president of external affairs at Rainbow, said Coal Creek sells fly ash to the concrete market (about 500,000 tons annually) and is preparing a project to process bottom ash for additional concrete use, a change she said would reduce CO2 emissions.

Minnkota Power Cooperative's Carly McLeod said her cooperative has invested more than $400,000,000 in environmental upgrades and that tax relief lowers operating costs, which helps plants compete in minute‑by‑minute wholesale markets. McLeod said Minnkota expects to receive about $3,500,000 of the fiscal‑note relief cited by committee staff.

Witnesses and industry groups also presented fiscal and economic context. Committee staff cited a fiscal note showing roughly $21,350,000 in reduced state revenue for the current biennium and $42,700,000 for the following biennium if the exemption continues as structured; witnesses explained the larger second biennium figure reflects the expiration of an existing five‑year exemption in the middle of the next biennium. Industry witnesses said the state coal sector produces roughly $100,000,000 in annual tax revenue and supports about 12,000 jobs concentrated in Oliver, Mercer and McLean counties; they also noted North Dakota has a large lignite deposit and said lignite‑based electricity contributes to comparatively low residential rates in the state.

Committee members questioned the length and cost of the proposed 10‑year exemption. Senator Rummel asked for clarification of the fiscal figures; Fortner and other witnesses explained the existing five‑year exemption expires and fiscal notes typically extend only one biennium. Some senators questioned whether a 10‑year commitment was necessary given the new federal administration; supporters answered that long‑term planning for transmission and generation often requires a horizon longer than a single presidential term.

Senators also discussed per‑kilowatt‑hour effects. One committee member estimated the fiscal impact equated to roughly 0.02 cents per kilowatt‑hour, and witnesses said while the effect on an individual ratepayer's bill may be small, the relief helps plants remain economically viable, operate at higher capacity factors and thus support grid reliability.

No members of the public testified in opposition; several regional utilities, coal industry representatives, and local government representatives testified in favor. The committee did not take formal action at the hearing and the chairman said members would "digest this a little bit" and likely revisit the bill at a later meeting.

Ending

The hearing closed with the committee adjourning and no vote taken on HB 1279. Committee members said they would continue to review testimony and the fiscal materials provided by industry and staff before any future action.