Basin Electric directors approve revenue deferral
Basin Electric directors passed a resolution at their January meeting to authorize the deferral of up to $170 million.
Steve Johnson, Basin Electric CFO and senior vice president, said this action was taken to help plan for the future.
“The $170 million deferral is larger than what we have originally been talking to the membership about, but that is a result of a very good year for Basin Electric financially on a consolidated basis. The board felt that it was in the best interest of the membership to defer the excess revenue to provide for rate stability and greater operational flexibility,” Johnson said. “The deferral will potentially be used in the event of two different things. One portion could be used for margin stabilization if we would have a weather event, like we had in 2015, for example. Or, it could be used if we’d have another downturn in commodity prices. The other portion could be used in the event that we need to do an impairment or write-down some of Dakota Gas' assets.”
Basin Electric currently has $23 million in deferred revenue. The deferral of up to $170 million could bring the total amount in deferred revenue to $193 million.
“Currently our bylaws allow for deferral of up to $200 million. So, over the course of this next year, we’ll be spending some additional time with the membership talking about changing or modifying the bylaws to either eliminate or modify that cap,” Johnson said.