Exactly how a super generation and transmission (G&T) cooperative should be organized was a topic of discussion in the late 1950s and early '60s. The idea of the regional power supplier interested many distribution cooperatives and led to the formation of what we know today as Basin Electric Power Cooperative.
One idea was for this super G&T to become the wholesale supplier and everyone who needed power would become customers. Under this model, cooperatives purchasing power would have no voice in management of the plant, establishing rates, conditions of service, etc. They would simply be a customer.
Instead, Basin Electric was formed on the premise it would provide power for intermediate G&Ts. This power would be low-cost because of economies of scale. Basin Electric would be managed by a board of directors elected from the membership and run in a matter consistent with cooperative principles.
On April 4, 1961, 67 distribution cooperatives from eight states met to officially form Basin Electric Power Cooperative. In Minneapolis they seated eight directors from the membership. (Henry Swenson was seated in 1962).
Basin Electric was incorporated on May 5, 1961 in Bismarck, ND.
Lignite Electric and Basin Electric
Basin Electric was not the only G&T in the region hoping to build a power plant; Lignite Electric (now Minnkota Power Cooperative, Grand Forks, ND) was also seeking REA money to build a lignite power plant in North Dakota. Area cooperatives were divided as to which power supplier to partner with: Basin Electric or Minnkota.
It was through many meetings between the officers and members of Basin Electric and Lignite (Minnkota) Electric that it became clear that Basin Electric's proposed plant would best meet the needs of the Missouri River basin preference customers in 1965, when supplemental power from the Bureau of Reclamation would terminate. Officers from Lignite Electric agreed to step aside by requesting REA to give prior consideration to Basin Electric's loan request.
The fact that Basin Electric was given preference for the REA loan was due to its commitment to serve large parts of the Missouri River basin. Lignite Electric planned to serve a smaller region: parts of North Dakota and Minnesota.
1963 Annual Meeting
Basin Electric applied for an REA loan to finance its first power plant. The loan was granted, but REA had one stipulation: Basin Electric had to offer a special sign-up period to allow other co-ops who wanted regional power to become members. It was during this time that Central Power, Rushmore Electric and others became Basin Electric members. In the case of Central Power and Verendrye Electric, they were involved at the very beginning when Basin Electric was formed, but they had their own power plant at the time, so that is why there was a little delay until they officially became Basin Electric members.
In search of a plant site
After securing the financing for a power plant, the focus became finding an adequate site to build a power plant. Adequate water supply was needed, using existing federal power lines instead of building a lot of new transmission, and securing low-cost fuel were important factors in determining the plant's site. North Dakota received immediate consideration because of its abundant lignite coal and the mine-mouth-to meter capability. "Minemouth-to-meter" means that all elements for producing baseload electricity are in one place: the water, the coal and Western Area Power Administration's transmission system. Only 12 miles of transmission had to be built to connect Leland Olds Station to the Federal power grid. Another factor was that state laws that were favorable to cooperatives.
Leland Olds Station
Basin Electric's first power plant was named after Leland Olds, who promoted the concept of regional electric power supply. Leland Olds Station Unit 1 came on-line in 1966 (210 MW) and the next one came on-line in 1975 (440 MW). Leland Olds Station is located near Stanton, ND.
One key to Basin Electric providing low-cost power for its members was its agreement with the Western Area Power Administration [then the Bureau of Reclamation]. U.S. Army Corp of Engineers built the dams and the Bureau marketed the power.
Basin Electric signed a pooling agreement with Western to deliver power across the federal transmission system. Basin Electric paid for the transmission based on the amount of megawatts generated. Western provided backup power if Leland Olds Station Unit 1 went off line. Basin Electric provided backup power for Western if its generation went off line. Basin Electric also agreed to charge Western a reasonable agreed upon price for selling power.
When Leland Olds Station Unit 2 came online (1975), an REA loan stipulation forced Basin Electric to join MAPP (Mid-Continent Area Power Pool) because it needed backup generation if Leland Olds Station Unit 2 went off line. Western did not have adequate backup generation to support Basin Electric, so Basin Electric joined the regional power pool.
William J. Neal Station
In 1973, Basin Electric purchased the William J. Neal Station from Central Power in Minot, ND. When Central Power joined Basin Electric (1964), a condition of membership was to sell its generating assets to Basin Electric. Basin Electric was the generator, intermediate G&Ts managed the delivery of that generation, and distribution co-ops delivered the power to end-use consumers.
In April 1952 when the station was built, it was the largest, state-of-the-art lignite powered station in the United States. Coal for the mine was supplied by TRUAX, then the largest coal operation in the United States.
Peak power usage
Basin Electric's member systems' demand for electricity in the 1970s was increasing at an alarming rate. It became evident Basin Electric's existing generation would not be enough to meet its all-requirements contractual obligations to its members in the near future. Since power plants take eight to 10 years to construct, planning for new power projects began during the early 1970s.
Spirit Mound Station
In 1978, Spirit Mound Station, a peaking power plant, came on-line in Vermillion, SD. The purpose of this fuel oil-fired plant was to generate electricity when demand in the Basin Electric system was maxed out. Spirit Mound Station burns 100 gallons of fuel oil per minute when operational. No additional transmission construction was required, and an oil pipeline for delivering fuel was nearby.
In the late 1970s Basin Electric was in the throes of a massive construction phase - a new power plant was being constructed in Wyoming and another one in North Dakota to provide power to Basin Electric member cooperatives. Predicting (or projecting) power needs 10-12 years in advance for a large region of the United States is not an exact science. Compared to the 1976-1978 anticipated load growth of 20 percent, the Basin Electric 1979 Power Requirements Study showed a 6 percent load growth. This meant that the power plants that were currently under construction would have capacity to create more power and expenses than consumer demand would require.
At the same time, interest rates were skyrocketing. During the late 1970-1980s, rates went up 146 percent. Interest expense on the money borrowed to finance construction of the new plants, was costly and had to be paid through rate increases to Basin Electric's membership.
Laramie River Station
One of the power plants under construction, Laramie River Station (Units 1, 2, and 3) in Wheatland, WY, is a joint project owned by the Missouri Basin Power Project (MBPP). The units came on-line 1980-1982. Basin Electric constructed and is operating agent for Laramie River Station and the majority owner of the plant. The owners include: Basin Electric Power Cooperative, Tri-State G&T, Western Minnesota Municipal Power Agency, Lincoln Electric System (NE), Heartland Consumers Power District (SD, IA, MN), and Wyoming Municipal Power Agency. The partnership again demonstrates Leland Olds' vision of public-owned utilities providing regional power.
Antelope Valley Station
Originally scheduled to be on-line in 1981, Antelope Valley Station project near Beulah, ND, was delayed until 1984 due to slower than projected load growth in the Basin Electric system. The first unit was declared operational in 1984.
Basin Electric average member rates
The average mill rate for Basin Electric consumers during the early to mid- 1980s increased significantly. This was a very challenging period for Basin Electric and its members.
Managing the surplus
In an era of surplus power and increasing costs, it was essential for Basin Electric to increase efficiencies and electricity sales while reducing costs. This was done in several ways: promoting special electric rates, appliances - like water heaters, and deferring expenses.