It looks like just a small thing — an accounting change that led to a boost of $15.1 million in depreciation and amortization expense for Great River Energy last year.
Yet there was nothing trivial about it. Depreciation is up mostly because Great River decided changes in carbon emissions rules may make its biggest coal-fired power plants in North Dakota worth nothing by 2028. The biggest one had been expected to last until 2042.
"We are the first utility in the nation to do that," said David Saggau, Great River's CEO. "I am not aware of any others."
The evolution of carbon rules over the next 15 years is, really, anybody's guess. But responding now certainly seems like good thinking.
It also illustrates just how long-term the thinking has to be for power companies, and why the past few years have been challenging for them. Shortening a depreciation schedule to 2028 may not look like much of a decision in industries with almost daily technological change. On the other hand, most folks don't have to make decisions today on an asset that's meant to be used 45 years after they retire.
About 1.7 million people in our region depend on Great River making good choices for their electric power, too. Based in Maple Grove, Great River is one of those unusual companies that's both really big — about $1 billion in annual revenue — and low profile. It has no retail customers, generating and distributing electricity for 28 member electric cooperatives from northeastern Minnesota to the Iowa border.
Saggau said any conversation in December 2009 "would have filled the newspaper" with the challenges companies like his faced.
The Great Recession derailed the plans of nearly everyone, of course, but for power companies it takes years to plan and build a big power line or generating plant. It's almost impossible to start too early on a project if new capacity may be needed.