Keystone Pipeline

June 2007

Hundreds of landowners in our service area have been in contact with representatives from Keystone Pipeline in recent weeks. The Keystone Pipeline is being built to bring crude oil from Alberta, Canada to refineries east of St. Louis, Missouri. I can appreciate how gut wrenching it might be when a company is proposing to bury a 30” wide pipeline on your land, which for all practical purposes will be there forever.

I read recently where someone opposed to the pipeline stated there would be no benefit to North Dakota as far as he could see. In this regard, I need to go on record that the pipeline will be of tremendous value to Nodak and consequently, to all of our member/owner ratepayers.

With the final routing in place, Nodak will have the privilege to serve three of five pumping stations along the North Dakota segment of this line. These pumping stations will be in Walsh County near Edinburg, in Nelson County near Niagara, and in Steele County near Luverne. The total annual power requirements for these three pumping stations are expected to be in the neighborhood of 140 million kilowatt-hours. There is potential for additional pumping requirements at these sites in the future. To put this into perspective, we are budgeted to sell about 757 million kilowatt-hours in 2007. When these pumping stations come online, they will increase our total sales by nearly 20%. There has been no event that has had this magnitude of impact on our sales since Grand Forks Air Force Base was built over 50 years ago.

The reason this is so important to Nodak is that in the electric utility world, we are relatively small to begin with; however, by nature, our business is high in fixed costs, which must be paid regardless of the amount of power we sell. If we can increase the volume of energy we sell, we can spread the cost of fixed expenses over more kilowatt-hours. This results in a lower cost per kilowatt-hour for everyone.

It is my understanding the pipeline will be of incredible value to the region due to the property taxes, which will be paid on an annual basis. Much of the region where this pipeline will be located would have little hope of attracting industry that would pay the amount of property taxes comparable to this pipeline. In view of the huge issue the property taxes were during the last legislative session, the timing could not be better.

One of the biggest reasons this pipeline is good for North Dakotans has nothing to do with how much we pay for our electricity, or how high our property taxes are. The most important issue is that this country has a serious problem with some of the countries we do business with for the energy we need. Canada is certainly not one of those countries. We, as citizens, should be ecstatic whenever we can buy oil from a country that is not harboring people who are trying to kill us. This doesn’t mean the landowners in eastern North Dakota shouldn’t be treated fairly. It only means we don’t have a long list of choices to displace Arab oil, and it is important to capitalize on every one of them.