President and General Manager Message
Challenges and difficult situations are not new for Basin Electric. Our history is full of ups and downs, milestones, pivotal decisions, and triumph over challenges. Woven throughout are themes of perseverance and loyalty by the cooperative’s members, employees, leaders, and friends.
Together, through it all, we, as a cooperative family, have remained strong and united – undivided by challenges. In 2016, there were more than a few.
We faced challenges like the Clean Power Plan, which as written in the final rule, is a dramatic shift from the proposed rule. We put a lot of effort into fighting the rule legally, legislatively, and in the states we serve because of its potential to impact our end consumers.
On the positive side, the rule provided focus for our work toward advancing clean coal technologies, and as such Basin Electric finalized a lease and operating agreement with the Wyoming Integrated Test Center at Dry Fork Station; and pursued opportunities with technology like the Allam Cycle, which potentially would gasify lignite coal to produce synthetic natural gas.
We showed our resiliency through the mild weather, which created a compounding financial deficiency with the drastic and sudden drop in commodity prices resulting in margin shortfalls.
The cooperative also experienced an influx of wind into the region. Wind offered at extremely low prices in the Southwest Power Pool market overwhelmed coal-based generation resulting in a need to back down coal plants, and for a short time, forced the cooperative to respond with an economic shutdown of Leland Olds Station Unit 1.
All together these events spurred a difficult decision by the board of directors to implement a 7-mill rate increase across the membership. The directors scrutinized all possible scenarios and financial models to ensure they could reach the most astute conclusion. In the end, the rate increase was approved under the condition the cooperative continue its austerity program.
And it has continued. Employees exceeded expectations watching every dollar and considering more efficient ways of doing their work and managing assets. We recognize it hasn’t been easy, but the employees are committed and diligent because they know they work for our members. All the efforts combined ensured Basin Electric was able to close the year in a financially stable position.
For the last three years, the board and staff have been engaged in strategic planning. From this comes an annual cooperative plan. It’s our compass ensuring employees and members know where we are, where we’re headed, and why we’re doing what we’re doing.
Our focus centers on four key areas: operational excellence, member support and growth, commitment to cooperative, and commitment to workforce. In all of these areas, we must take into account the external forces that shape our direction: a carbon-constrained future, commodity risk, and emerging technologies. All of our efforts incorporate continuous improvement with an emphasis on safety through the Our Power, My Safety process.
Our nine-state service area is a broad footprint, and one that requires due diligence to ensure we can continue to reliably serve a growing membership. This has required substantial investments, but the Bakken region has stabilized with needed transmission infrastructure and gas-peaking capacity.
Throughout the year, we continued conversations with Minnkota Power Cooperative about potential Class A membership, and we welcomed Montana distribution co-ops Fergus Electric and Tongue River as Class C members through Members 1st Electric Cooperative, a new Class A generation and transmission cooperative formed by PRECorp; and Mid-Yellowstone as a Class C member through Upper Missouri. At Dakota Gasification Company’s Great Plains Synfuels Plant, construction also continued on the development of the new urea processing facility. The facility is 65 percent complete, though it’s been an uphill project. From Mother Nature’s demolition of the storage building in July to other challenges causing unexpected delays, the overall cost of the project and anticipated completion date have shifted.
Even with those setbacks, the Synfuels Plant will still be in a good position to help keep the cooperative strong with its ever-growing portfolio of diverse products.
We’re also working to ensure we maintain a stable, engaged workforce. Staff pursued a number of efforts during the year to further connect employees with the cooperative business model and the cooperative’s membership. Those efforts include the People. Power. Purpose. series, Building Co-op Connections, and a new program called EmPOWER, focused on youth in our communities.
With all we faced in 2016, the year could have left us feeling defeated. But, having a greater purpose and driven to consistently fight for what’s best for our members, we are hopeful that the co-op way will transcend the challenges that threaten to divide us. We are not defeated. We are hopeful. We are empowered. We are united.
We are all in this together, and we couldn’t be more honored to serve you.
Wayne Peltier, President
Paul Sukut, CEO and general manager