The Electric Vehicle Revolution

Across the country, we hear more about electric vehicles (EVs) today than we ever have before, and there’s good reason for it. U.S. and foreign car manufacturers have been betting big and are committing massive amounts of capital to developing and marketing this form of petroleum-free transportation. Investment in electric vehicles announced by the beginning of this year include at least $19 billion by automakers in the U.S., $21 billion in China and over $52 billion in Germany.

While sales of EVs today comprise just 2% of all automobile sales, automakers are betting heavily that those numbers will change. A recent study by Bloomberg estimates that EV sales will exceed 60% of all new car sales in the U.S. by 2040 and over half of new car sales worldwide. That seems like the distant future, but it’s hard to believe that is only 20 years from now.

Regulatory issues and consumer sentiments about climate change are fueling this ramp-up of EV investment, but what’s at the heart of it is the huge strides that have been made in battery technology. Th e average cost of a lithium-ion battery pack has dropped 85% from $1,160 in 2010 to $176 in 2018 and continues to decrease. Further development in batteries will drive the cost even lower, but will also help ease the two biggest roadblocks for potential EV consumers – range anxiety and charging wait times.

The average range of an electric vehicle today is 190 miles compared to 475 miles for a gasoline-powered car, but that is changing with Tesla’s new Roadster, boasting a range of up to 620 miles between charges. The time it takes to top off your vehicle is coming down as well. Rapid chargers now provide an additional 60 to 200 miles of range in as little as 20 minutes of charge time.

Most EV charging is done at home or at work while the vehicle is idle, which is 95% of the time. While on the road, the network of public fast charging stations across the country is growing rapidly. As of January, Tesla’s supercharger network of fast charging stations consisted of over 12,000 charging stalls with plans to grow that number to over 15,000. As of May, there were more than 68,800 nonresidential charging units throughout the United States.

One of the biggest selling points of EVs is that despite the higher purchase price, the cost of ownership can be much less. With 25% fewer parts and significantly fewer moving parts, maintenance costs are dramatically less. Oil changes are essentially a thing of the past with electric vehicles. Operating costs can also be dramatically reduced. Fuel costs will range between 3 to 4 cents per mile with an electric vehicle compared to around 10 cents per mile for a standard vehicle, depending on gas prices and your vehicle’s gas mileage.

Despite the hype and all the technological advances, North Dakotans have been slow to adopt this new form of transportation. Cold temperatures reduce the operating efficiency and range of batteries. Our rural nature means we have to drive farther than most Americans do, and as I sit at my desk writing and watching vehicles go by my window, I’m reminded that we gravitate toward SUVs, pickup trucks and the like. Over time, technology will overcome cold temperatures and long distance, but automakers will ultimately decide what choices we have for model options. To that end, I recently watched a YouTube video of the new all-electric Ford F-150 prototype pulling a freight train weighing over a million pounds. I guess at least Ford is betting rural America will eventually embrace electric vehicles.

In August, we co-sponsored an event at Minnkota’s Grand Forks campus to showcase electric cars and North Dakota’s first all-electric school bus. Th e event was well-attended by folks interested in learning about growing EV adoption over the next few years. Electric vehicles will certainly play a central role in new car purchase options in the years ahead – how long it will take until they become mainstream in North Dakota is yet to be seen. Automakers are betting big this will be sooner rather than later.

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Co-ops And Environmental Stewardship

The recent decline of the monarch butterfly has been “flying under the radar” so to speak, so I thought I’d bring you up to date. In the last two decades, the population of monarch butterflies that winter in Mexico has declined by 90% from its high in 1997. The decline is attributed to things such as unseasonably warm fall weather and severe hurricanes during the monarch migration, but most notably it is the loss of their spring and summer breeding habitat in the U.S. that is being blamed for the decline.

Monarch caterpillars only eat milkweed. In fact, the monarch is also known as the “milkweed butterfly.” Without the milkweed, there would be no monarch butterfly. The milkweed plant provides all the nourishment the monarch needs to transform the caterpillar into an adult butterfly.

These plants, however, are rapidly diminishing due to the loss of habitat stemming from land development, as well as the widespread use of weed killers and pesticides. The milkweed necessary for the monarch to complete its life cycle used to spring up between the rows of corn, soybeans and other commercial crops. Today, we do a better job of removing the unwanted plants from our fields, but in the meantime it also reduces the available habitat for the orange and black-winged pollinators.

As a result of this decline, in 2014 the U.S. Fish and Wildlife Service was petitioned to protect the monarch butterfly under the Endangered Species Act. Based on the information in the petition, it was determined that federally protecting the monarch may be necessary, so the U.S. Fish and Wildlife Service announced it would conduct a thorough assessment. A final decision on whether to protect the butterfly was due at the end of June but has been delayed 18 months until Dec. 15, 2020.

Listing the monarch for protection as an endangered species could have wide-ranging impacts for cooperatives across the Midwest. Activities such as vegetation management and infrastructure construction and maintenance could become highly regulated and expensive to complete.

In an effort to weigh in to the listing determination, co-ops across the country are implementing voluntary conservation measures. Some are even developing pollinator habitat gardens with milkweed and nectar plants around headquarters and solar farms and in rights-of-way.

America’s electric cooperatives take pride in being good environmental stewards of the land. For decades, co-ops have implemented voluntary projects to benefit “at risk” species and their habitats. In fact, collective voluntary efforts are what has resulted in some of the greatest conservation success stories, such as the delisting of the bald eagle as an endangered species.

I don’t think you’ll see your cooperative planting weed gardens anytime soon, but we will be following the progress of this decision very closely. When we evaluate our vegetation management practices, we will certainly look at the options for maintaining monarch habitat without adversely affecting our neighbors. In the meantime, if you hear about cooperatives across the country planting weeds, rest assured there is a good reason for it.

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N.D. Legislature Concludes Session

You may have recently read or heard reports that the 66th session of the North Dakota legislature concluded its business and has adjourned. For some of us, it’s welcome news that comes with a sigh of relief. One of our responsibilities as the stewards of your cooperative is legislative advocacy. Laws and regulations can have a profound effect on the operation and success of our cooperative, so it’s vital that we closely monitor state and federal attempts to change the rules under which we operate.

By working with our industry partners and trade associations, we engage with political leaders in Bismarck and Washington on your behalf. When speaking on behalf of the cooperative we represent, we bring credibility. Policymakers know that we represent constituents who have skin in the game and will be affected by the issues we bring to them. Because of that, we as a cooperative family speak collectively with a loud voice when addressing our politicians. I would say that voice was heard clearly this year in Bismarck.

Our industry was successful in helping to defeat bills that would be detrimental to our operation and supported the passage of those we believed would be helpful. In North Dakota, there were bills on net metering, easements and energy project siting that were successfully killed, each of which would have had a detrimental effect on your cooperative. There were also changes to railroad crossing permits and carbon dioxide sequestration enacted that will ultimately have positive impacts for us. On the national front, there are always issues with regulation, taxes and infrastructure that we are working on.

Just as we depend on our members to support our issues and speak up when called upon, we depend on our industry partners and trade associations to be our eyes and ears and take the lead on our political advocacy efforts. Quite frequently, NRECA, the North Dakota Association of Rural Electric Cooperatives and Minnkota Power Cooperative, our wholesale power supplier, do much of the heavy lifting for us and we depend on them mightily. Rest assured, we are right there supporting the efforts of the group to guard against any detrimental political or regulatory action and to support positive change.

When it comes to political parties, we are completely blind. Whether Democrat, Republican, right, left or middle, the issues that affect your cooperative are all that matter to us. We support the political leaders who support the legislation that is in our cooperative’s best interest.

One of the ways we show this support is through the political action committees to which cooperative members donate – ACRE and REPAC. ACRE, or the Action Committee for Rural Electrification, is the federal political action committee, or pac, and REPAC, or Rural Electric Political Action Committee, is the North Dakota pac. These two groups make contributions to candidates for state and federal offices who will speak for and protect the interests of electric cooperatives and their member-owners. These dollars go to our political champions regardless of which political affiliation they belong to and are funded by individual contributions from co-op directors, employees and our member-owners. If you would like to help support the candidates that support our cooperative, consider contributing to one or both of these political action committees.

In just a few weeks, Harrison Stockeland, a high school sophomore from Grand Forks Central High School, will represent Nodak at the Electric Cooperative Youth Tour in Washington, D.C. He will join other cooperative member students from across North Dakota and the rest of the country for a week in Washington, D.C., learning more about cooperatives and how our government works. For decades, this program has been churning out future political and cooperative leaders who better understand how the cooperative business model works. We would like to congratulate Harrison and wish him the best as he travels to and from Washington, D.C.

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Message To Our Members

When we look back on Nodak’s history, 2018 will be remembered as the year we were awarded the utility privatization contract for the Grand Forks Air Force Base and the Cavalier Air Force Station. After six years in development, we were awarded contracts for the maintenance, repair and replacement of the electric distribution systems at the two military facilities. Over the next 50 years, the government will benefit from safer, more reliable distribution systems, and our members will enjoy additional revenue and margins that will help keep our rates affordable. The military has been a valued partner of ours for many years – this new agreement solidifies that relationship for decades into the future.

Affordable power is the reason Nodak was established 79 years ago and today it remains a primary focus. We are fortunate to have a committed Board of Directors and a team of dedicated employees to help accomplish this goal. Spurred by a year without a wholesale rate adjustment, in 2018 we were able to hold retail rates

steady for the second straight year. Our Deferred Revenue Program also played a small part in helping us stabilize our rates. In 2014, we established a Deferred Revenue Program by setting aside excess revenue that can be recognized in years when we don’t quite hit our budgeted margins. Your Board also created a Financial Goals Policy that establishes metrics of financial ratios we strive to meet each year. These two initiatives help ensure we are able to retire capital credits, maintain stable rates and enjoy a healthy, robust financial position. This commitment to financial security is a critical piece to the health of your cooperative and our ability to provide safe, reliable and affordable electric service to our members for years to come.

Over the last several years, your cooperative has enjoyed steady growth in both total number of metered services and in kilowatt-hour sales. In 2018, we topped the milestone of 20,000 metered services for the first time as well as an increase of nearly 3.8 percent in kilowatt-hour sales. Continued growth serves to stabilize rates by providing a larger number of members and an increased number of kilowatt-hours to spread fixed costs over. One of our largest growth areas is the Grand Forks region. We were pleased to begin a new 20-year franchise agreement at the beginning of the year with the city of Grand Forks and to continue the valued partnership we’ve enjoyed with the city and residents of the region.

Having a growing, financially healthy cooperative is obviously something we strive for. Beyond the comfort of a strong balance sheet, this financial security puts us in a position where we can return our members’ investment in the cooperative back to the members. Once again, your Board of Directors chose to return your patronage investment and retire $1.4 million in capital credits in 2018. This capital credit retirement is part of the Board’s continued commitment to be good stewards of your capital and give it back to you in a timely fashion.

In addition to providing low-cost power to our members, commitment to community is one of our core guiding principles. As a means to fulfill that commitment, our Operation Roundup Trust continues to make lasting impacts on the lives of our neighbors in need. By amassing pennies from bills rounded up to the nearest dollar from the almost 8,500 members who participate in the program, our Operation Roundup board was able to donate more than $56,000 last year to worthy causes. Since its inception, our Roundup board has put more than $88 million of your pennies to work helping individuals and organizations throughout the Nodak Electric service area. What a shining example of how each of us doing a little bit can make a huge impact. One of the cooperative movement’s greatest assets is we have the strength in numbers to accomplish our objectives.

The utility industry continues to change slowly in some areas and more rapidly in others. As we look ahead, we see opportunities as electric vehicles and smart homes gain popularity and technologies become more prevalent. We also see challenges in the ever-increasing complexity of our industry. Your Board of Directors and employees see a bright future ahead as we commit to innovate and adapt to these changes. Our mission is to serve the needs of our membership, and we are as committed as ever to fulfilling that pledge. Thank you for your support and patronage over the past year and thank you for the opportunity to serve you and be part of this wonderful organization. We look forward to visiting with you at the annual meeting on April 11 at the Alerus Center in Grand Forks.

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Honoring Our Veterans

As I write this article, Veterans Day is just around the corner; however, by the time you receive it the holiday season will be in full swing. Still, I want to pause and express my gratitude by saying thank you to all our current and former service men and women. Your sacrifice and commitment to making the world a better place has not gone unnoticed and as such, we honor our fallen veterans and say thank you to the brave men and women who have served. On this 100th anniversary of the armistice ending World War I, it is especially important that we express our thanks to those who sacrificed so much to ensure freedom for us and our allies.

As an electric cooperative, we hold our veterans in high esteem and aim to do our part to not only honor them but help support them. One way we would like to do this is through the “No Barriers Program.” One of our financial services partners, CoBank, has teamed up with No Barriers USA to allow electric cooperatives to nominate veterans with disabilities to participate in a five-day expedition at no cost. The program provides an opportunity for rural veterans to challenge their own limitations, both real and perceived, physical and mental. Through successful completion of demanding activities like rafting, rock climbing and hiking, they become better equipped to overcome obstacles they face in their daily lives. By sharing experiences with other veterans with disabilities, they also build a network of support that can last a lifetime. If you or someone you know could benefit from this program, go to http://www.cobank.com/citizenship/no-barriers for more information.

The holiday season can be a magical time for many of us. Festive gatherings with family and friends, time away from school, ringing in the new year and celebrating the promise of new opportunities can be especially exciting. However, the holiday season can also be an extremely difficult time. The added financial pressures that come from this time of year can be especially difficult for those who have those day-to-day struggles. For those without family or friends to share the holidays with, it can also be a very difficult and lonely time.

As we move through the holiday season we hold those having struggles close in our thoughts and encourage everyone to extend a helping hand whenever possible. To all our members and neighbors, we at Nodak Electric Cooperative want to wish you the happiest of happy holidays.

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Maintaining Geographic Diversity

I’m sure you are aware that Nodak’s service territory is divided into three separate districts, with three of our nine board members residing in each district. This is done for several reasons, but most importantly it ensures a certain degree of geographic diversity among our board members.

This geographic diversity spreads our board members throughout our service area. That increases the chance there will be a board member you know, live near, or interact with occasionally. It also increases the likelihood that the board will more closely match the diversity of our membership. The life experiences and perspectives that come from raising livestock in the western part of our service area may be somewhat different from that gained by raising sugar beets in the northern Red River Valley, dealing with the rising water near Devils Lake, or the congestion of a larger city in the east. Member districts guard against one area dominating the board and falling to special interests or just losing touch with our membership.

With the goal of maintaining that geographical diversity, from time to time our board reviews the makeup of the three districts and makes adjustments to their boundaries. Our bylaws require that “the cooperative service territory shall be divided into three substantially similar districts based on member population.” While we do experience growth throughout our service area, the growth around the population centers has a tendency to skew the numbers toward the more populated areas. In an effort to reestablish parity between the districts, your board has adjusted the district boundaries ahead of our next board election.

To accomplish this, each of the three districts were modified slightly to bring the member population substantially equal again. The map on this page shows the new districts that will be used for our next board of director election in April. If you live close to the new district boundaries and are unsure which district you live in, feel free to call the cooperative headquarters and we will be happy to assist you in determining which district you are part of.

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50-year Contract With Air Base Good News For Member Owners

Each time we publish an edition of The Nodak Neighbor, I take that opportunity to utilize some of the space to share information with our member-owners. Those topics vary from some sort of safety-related topic like “Call Before You Dig,” or what to do if your vehicle hits a power pole, to subjects like regulation, voting or getting involved. With this edition, I’m happy to say I get to share some long-awaited good news. On July 1, 2018, Nodak was awarded a 50-year contract to take over the maintenance, repair and replacement of the electric infrastructure at Grand Forks Air Force Base and Cavalier Air Force Station.

The takeover, or privatization, of the Air Base distribution systems should be fairly transparent to the government and to the families that live on the installations. Nodak has been serving the electric needs of both facilities on a bulk basis for quite a long time, and the government or their contractors have been responsible for their systems from the substations to the end users. With this new arrangement, Nodak will be responsible to maintain an adequate distribution system so we can deliver the power all the way to the end user.

We began this process approximately six years ago when we received notice that Grand Forks Air Force Base and Cavalier Air Force Station would be accepting bids for a 50-year contract to privatize their electric, water, and wastewater systems. With the assistance of a consultant that specializes in helping small businesses procure federal contracts, we submitted our proposal and were ultimately awarded the contract.

Over the next five months, we will go through a transition process where we finalize contracts and pricing and prepare personnel and equipment for working on the Bases. Dec. 1, 2018, will be the official start date of the new agreement. From that point on, Nodak will receive a monthly payment for keeping the Base distribution systems working properly. In essence, that means we will go from serving bulk electricity to the installations to doing essentially what we do for all our other members. We will not only provide the power needed, but we will also care for the systems that bring the power to the end user.

Overall, we believe this will provide a safer and more reliable electric service to the government and the families who live and work on the Bases. For our membership, what this means is additional revenue to help take pressure off electric rates and lessen the effect of rising costs. This is a significant event for our member-owners, and we are excited to share this news with you.

Have a safe and enjoyable summer.

Mylo Einarson
President & CEO

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