Cap-and-trade bill a major concern

July 2009

A recent survey was done to see how many of the public had any idea as to what the recent proposed Cap and Trade Bill is about. The surveyor made it easy by asking a multiple choice question with only four choices. Less than one in four (24%) knew that it had something to do with an environmental issue, 29% guessed it was related to Wall Street, 17% thought it was about healthcare reform, and 30% admitted they had no idea. The point here is that the public needs to pay more attention to this Bill. It is sometimes referred to as the Waxman/Markey Bill after its primary sponsors, Representative Henry Waxman from California and Representative Ed Markey from Massachusetts. If passed in its present form, it will result in a huge tax on coal-based electricity. This bill is challenging in that it is extremely complex, and it is proposed to solve a very complicated concern – that of global climate change. You may want to learn more about this Bill, and if you have concerns, you may want to express them to our congressional delegates.

On a more positive note, it appears Nodak’s net margins through the first half of 2009 will be substantially higher than budget. Our margins through the end of June will be approximately $750,000 greater than budgeted, which is about three percent of the gross sales through that period. We are going to say that the extra margins come from higher-than-expected sales, as well as brilliant management. You will probably make the observation that they may have come from us overshooting the rate increase last January. The truth is, it has a lot to do with above normal sales, somewhat to do with overshooting our rate increase, and very little to do with management. In any event, if our good fortune continues, you can expect a larger-than-normal capital credit check next spring. A word of caution is that a return to $4.50 diesel fuel, a minor ice storm, and reduced sales during the second half of the year can eat up excess margins in a hurry. Hope for the best during the last half of the year.

North Dakota was declared a national disaster area this spring due to the extensive flooding problems. With this declaration, FEMA funding is available to cover much of the cost of restoration due to flooding, as well as mitigation measures to prevent reoccurring flood damages. Nodak, as a not-for-profit entity, is eligible to apply for FEMA assistance. We often have poles taken out when the Red River of the North expands and ice begins to flow far outside its normal banks. We are in the process of applying for assistance to cover the cost of mitigating damage potential for future years.

We are very thankful to our members who have worked with Minnkota Power Cooperative to provide easements allowing for transmission line extensions to serve three new pumping stations for the Keystone Pipeline. We trust that Minnkota has been fair and upfront with all of the landowners when securing these easements. I know there was some misinformation that the cost of easement is simply passed on to the pipeline company. In reality, procurement of easements is a cost to do business for Minnkota, and is ultimately included in the rates we pay. The bottom line is that every one of us buys electricity that comes from transmission lines going through someone else’s property. While landowners need to be treated fairly, we all want the cost of our electricity to be as low as possible.

With the late spring, it took longer than normal for the frost to leave the ground, and it also took a long time to dry up so we could begin our construction season. Like the farmers, we are getting an extremely late start on what will be a busy construction season. We already have some of our crews working overtime, and we have hired an outside contractor to try to catch up. For those of you who have requested new services or modifications to your existing services, we ask for your patience while we try to cram a lot of work into the next few months.