Better Together: Basin Electric members on the value of cooperative

Managers representing Basin Electric member cooperatives discussed the benefits of being a part of something bigger in a panel discussion titled, “Better Together: Basin Electric Members on the Value of Cooperative.”

people on a stageChris Baumgartner, Basin Electric senior vice president, Member Services and Administration, moderated the panel, which featured the following cooperative leaders:

  • Tom Boyko, CEO/general manager, East River Electric Power Cooperative, Madison, South Dakota. East River is a Class A member of Basin Electric. It is a generation and transmission cooperative serving 24 distribution cooperatives and one municipal system in eastern South Dakota and western Minnesota.
  • Doug Hardy, general manager, Central Montana Electric Power Cooperative, Great Falls, Montana. Central Montana is a Class A member of Basin Electric. It is a generation and transmission cooperative serving eight distribution cooperatives in north central and south central Montana.
  • Lyle Korver, CEO, North West Rural Electric Cooperative, Orange City, Iowa. North West REC is a Class C member of Basin Electric. It is a distribution cooperative serving members in four counties in northwest Iowa.
  • Travis Kupper, CEO and co-manager, Innovative Energy Alliance (IEA), Mandan, North Dakota. IEA is a management service cooperative owned by four distribution cooperatives in southwest and south central North Dakota: KEM Electric Cooperative, Mor-Gran-Sou Electric Cooperative, Roughrider Electric Cooperative, and Slope Electric Cooperative.

The managers represent a cross section of the Basin Electric membership, ranging from generation and transmission cooperatives to distribution cooperatives, from high-growth areas to extremely rural territory. Each brought a unique perspective on the value of being a part of a three-tiered cooperative system. Highlights of the discussion follow.

Baumgartner: How do you each serve your membership, and how does Basin Electric help you do that?

Boyko: We are about a 720-megawatt peak load and provide transmission system over 3,000 miles, about 270 substations. … We also have a load management program. We load manage about 75,000 pieces of equipment, so we have a little over 80% load factor, so it works very, very well. Right now we have load growth across our system. Large loads make up about 27% of our system, a lot of dairies, sugar beet plants, a lot of ethanol plants, and pipelines. Then we have residential growth across the system. … A lot of companies want to come to South Dakota, and we’re able to do that because we can rely on Basin. We know Basin is there with the power and the transmission, and then we appreciate that. We can focus on the other things that we need to do to provide power to our members.

Hardy: Central Montana is a little different than some of the others. … If you look at our system, if I drive from the headquarters of each of our eight member cooperatives … it’s 1,000-mile loop from my office to go to each member’s headquarters and back. If you take the four (member cooperatives) across the highline, those members serve a geographic area that is larger than the combined geographic area of Connecticut, Rhode Island, Delaware, New Jersey, and Massachusetts, yet they serve only 8,000 members.  It brings a whole different set of challenges in the distances between. … As we look at the power lines that our distribution (cooperatives) have, if you put all their power lines together, they would be long enough to reach three-quarters of the way around the world at the equator, yet very little load to deal with. So those are the challenges. If we didn’t have an entity like Basin, I don’t know how we would keep things affordable.

Korver: We’re a growing system. … We’re very fortunate to have a lot of diversity. We have a high usage per residential meter, about 2,400 kilowatt-hours per month. Our density is not real high, we’re only at 2.7 (members per mile of line). … We saw pretty dramatic growth in the decade of 2000-2010. We grew about 150% and one of the great things was, we didn’t have to worry about having adequate power to meet our members’ needs. We knew that Basin would be there for us and they’ve been able to provide that for us. When we don’t have to worry about the lights staying on because of not having generation, we can concentrate on the things that we do to serve our members. So we really appreciate having that peace of mind that Basin is going to have the generation that we need.

Kupper: Just speaking on line density, two of (our member) cooperatives are in the bottom 10 for line density of all cooperatives in the U.S. at about 1.22-1.25 (members per mile of line). … It definitely gives us some challenges. … We have a little over 800 miles of transmission line collectively throughout our system. … We have to make sure that maintenance is done and have utilized Basin for some assistance with their engineering staff, or just giving us the different contractors that we can talk to. … One of our members is serving a large pump site and that pump site is looking to expand and we are going to be needing to provide additional power. … I’ve been working with Basin over the last six to eight months now on how we’re going to be able to accomplish that in the most economical manner possible, not only for our member, but also for our existing cooperative members and also make it fair with Basin as well. So (Basin is a) very valued partner.

Baumgartner: The world is going to be more dependent on electricity, not less. What does that mean to your members in terms of stability and reliability? How have your members’ expectations changed over the years?

Boyko: When you talk reliability, when you look at the ethanol plants and if they don’t have reliable power, they lose a batch of ethanol, it can cost them millions of dollars. If you’re trying to provide power to computer-oriented businesses, they can’t have any of the glitches or it’s going to cost them major dollars. Then when you look at what happened through that (February 2021) weather event, we appreciate what Basin did through that. It was a tremendous accomplishment what we came through, and we made it through without affecting our rates, so a huge, huge accomplishment throughout that whole event. Again, we can do our local business and provide our services to our members because we know Basin is doing what they need to do to provide that reliable, stable power supply, so we do appreciate that.

Hardy: When we cancelled contracts with Northwestern Energy, we wanted to come to Basin because we had the relationship, we were already members of Basin. Others wanted to see everything out in the world that we could, to where we had a good due diligence, what are our options, and Enron was one of those. In 1995 or so, they were coming in and they were getting power so cheap and we kept saying, “How can they do that?” They don’t have any generation particularly. … That was the appeal of going to Basin, where if it shuts down over here, something else is happening over here. That ability to move over such a geographic footprint is protection and stability from my perspective and it’s incredibly important.

Baumgartner: The Basin Electric family has grown substantially, particularly in the past 20 years. All of that was made possible by the investment and commitment by the local co-ops. Can you talk a little about that expansion?

Korver: I think that brings us to one of the special things about our cooperative model, and particularly in the Basin system, is our three-tiered power supply network that we have. Basin takes care of the generation, some transmission, NIPCO handles the transmission and they own our substations also, and we’re at the distribution level. We all play a key piece and we all have to make that investment. If Basin has wonderful generation resources, but our system is falling down, or NIPCO isn’t rebuilding their system, we still aren’t going to have the reliable power that we want. … So it takes all of us making those investments and having that commitment to do that. … We can’t do it on our own, Basin can’t do it on their own, NIPCO can’t, we have to work together, plan together, and I think it has really worked well.

Kupper: If you get into the northern portion of Roughrider, that’s the very southern tip of the Bakken. … We did see substantial growth in that area and that did take a lot of investment on our part, working with some of those new members on an aid to construction policy, how can we best serve them and still continue to not only protect the cooperative, but to protect the members that had been there for a good number of years, and have they already spent the money and invested in the system. …We did have to build some additional 115 (kilovolt) transmission line as well. Part of that was done in working with Basin, not to place the line, but they shared with us their line design and their pole structure requirements so that we could build a system that we knew met the needs of the area.

Baumgartner: We’ve talked about serving our members, we talked about a lot of the infrastructure that’s required, and I’m so proud of how the co-ops work together to do that. What are member expectations when it comes to incorporating distributed generation like renewables?

Boyko: We’re seeing more and more requests for some distributed generation and especially the large loads. … We’re seeing a lot more requests to put in renewables at the site. You have data processors and they want solar farms right on their site, so that people can see that they’re green, but they do want to offset their carbon footprint too. … I think it’s something we have to take serious and we have to try to adjust our rates and our interconnection requirements and make sure we can let that happen without, causing cost shifts within the membership of East River or the co-op or across Basin. That whole issue is not going to go away. 

Hardy: All of my members offer RECs (renewable energy credits) as an option, but some people that want the on-site (renewable generation). … When people have renewables on site, in general, they’re putting that metering on, their usage goes up because they think, “Well, I’ve got to use all that product now.” When the renewable is not on and it’s drawing all off the grid, it actually can increase. … We peak when it’s dark and morning, and afternoon summer peak when it’s way past the prime of solar. It’s not changing. It’s not contributing to peak. … How do we work together and get the strategies to where people understand how much of the grid’s purpose is for when their renewable isn’t there, and how do we have generation sources to meet that.

Korver: We did a solar demonstration project at our headquarters facility seven years ago to try to learn more about solar, and we’ve used that to try to educate our members. Like Doug said, it’s not generating on our peak seven months out of the year. … But we’re also seeing (distributed generation) interest in some of our larger loads too … We had pork processing facility … that really wanted to do something in the area of renewables. They first were looking at maybe they would invest in some renewables physically, and then we started talking about the PrairieWinds Program, and they ended up deciding to just do that. They subscribed to 100% of their energy … for only $20,000. They could go out and promote that they were buying 100% of their energy renewable, a very low investment for them. They didn’t have to invest in a multimillion dollar renewable project, and they’re happy.

Kupper: One of the biggest challenges that we do run into is the education of the member. … They talk to people who want to sell them a system. … At the end of the day, we spend time and have to educate that member on what the realistic expectations are, what the service life of that particular unit is, whether it be a solar or even in some cases small wind generators, and how much maintenance you’re going to have to put into that. They’re not going to last forever. … It goes back to reliability. They don’t want to have to be solely dependent upon it.

Baumgartner: We have a tremendous network in the Basin family, with over 1,000 directors with all their perspectives and experiences. We see the same thing with the managers: 131 senior executives in the membership bring perspectives and challenges. It’s a wonderful thing to see, the give and take, listening and sharing. What’s your perspective on that?

Hardy: When you can work as a team, your solutions are so much better than what I, as an individual, or a given distribution manger, can do. One of the most valuable things in our manager’s meetings is the round table between the mangers. They’re learning from each other, we’re all learning from each other. … We can be mighty powerful when we’re working together. 

Kupper: You have members that have different desires and different wants, and they want to approach things differently, like renewables. Some want all renewables, some don’t want anything to do with it. But when you work together, you come out with a compromise, and I think where Basin is at has been great. With our Western (Area Power Administration hydro) allocation and Basin’s renewables, we’re at 40% renewables. That’s a huge accomplishment. You didn’t swing either way. You came down with something that worked for everybody. 

Baumgartner: To wrap things up, what are some of the challenges of this cooperative family? And what are some of the opportunities?

Boyko: I want to thank Basin for what you accomplished through that (February) storm. I talked about it before, but when you look at what some of the people went through, $10,000 monthly bills, some entities went bankrupt, some are going to have to spend billions of dollars to harden their systems so it doesn’t happen again. We had a couple hiccups, but we came through it. We didn’t have any rate increases and our system is basically set up to handle it going forward. That’s a huge accomplishment. You can’t undersell that. That’s just tremendous. 

Hardy: The greatest opportunity we have is to educate not just our members, but the public, and find ways to do it to where they understand the consequences of what they push for. If they push for things that are just impossible for us to do, that harm them in the future, it’d be great if we can make sure they know that before public policy gets put in place that does very harmful things to us. So our opportunity: we have one of the biggest networks. You show me any other entity that has as many people in as many voting districts in this nation as electric co-ops, and wait, you can’t; there isn’t. … It’s as important now that we leverage our combined strengths as it ever was, maybe even more so. 

Korver: Balancing and making sure we get our rates right so that the ones that want to use us just as the battery are paying their fair share and the other ones aren’t having to subsidize, I think that’s a challenge. The EV (electric vehicle) build out, it’s going to be awhile, but we need to prepare for that, and I think there’s some opportunities with that. … Time-of-use rates, and that type of thing, that might benefit Basin and all of us. We need to think through some of that and be well prepared for when that comes.

Kupper: I’m going to have to tie it back into what Lyle just stated there in regard to some of the technologies that we have in front of us and how we are going to incorporate those into our system: making it fair for our members, keeping it safe for our employees, keeping it safe for our members, and at the end of the day, incorporating that in to give them the best possible rate, continuing to provide them the base service that they have grown accustomed to, and keep that reliability up. I think that in itself is going to be a heck of a challenge as we go into the future, but it’s another opportunity for us to work together as a group, to stay together as a group, and continue to provide service to those members like we’ve already done for so many years. 

Baumgartner: Taking our 60th anniversary to reflect on things: the challenges that we have, the opportunities are going to be new, but if you look at this cooperative family, having challenges, having opportunities is not new. We have all worked through them over the years and we’ve come up with wonderful solutions to help serve our membership better together, so thank you.