Load Management Strategy

December 2001

Our winter weather got off to a quick start with nearly a foot of snow in some parts of the region on October 24. We were thankful that our system outage problems were minimal in view of the weather conditions. Understandably, the road conditions made work very difficult for our linemen. Restoring power was made more difficult, and it took longer than normal. Nonetheless, the situation could have been worse if we would have gotten sleet rather than snow.

We have again been thankful for the great weather after the October 24 storm. The added month of fall weather allowed us to complete a lot more of our construction schedule. Also, the cost of doing line work is considerably less with good ground conditions than it is with mud and snow present.

We are now definitely into our winter season. It is the time of year we begin implementing our winter load management program which involves thousands of our residential and commercial customers. Nodak is one of eleven electric cooperatives that own Minnkota Power Cooperative. Minnkota provides our power, either from generation owned by the system or through firm contracts with other power suppliers. The optimum strategy for the power supply side of our business is to have enough, but not too much, generation available for your needs. During certain times of the day and certain days of the year, you as a group of consumers demand more electricity than at other times. It is our job to make sure you have it available every minute of every the day regardless of the cost. It is very expensive to build power plants to accommodate peak needs, so we have created incentives to lower those needs during peak periods. We have offered lower incentive rates for specific loads such as space heating, if we can turn those loads off during peak periods.

Our load management strategy, including the off-peak incentive rate, goes back nearly 25 years. For those who recall the early days, you will remember it was anticipated that a dual heating system could be interrupted up to 400 hours during a typical winter season. Thousands of customers accepted that potential amount of control and signed up for a low, Off-Peak Rate.

As years went by, far less than 400 hours of load management was necessary. This was largely due to the fact that, more often than not, Minnkota could purchase cheap power in the regional power market even during winter peak periods. Rather than implement load management, Minnkota would purchase additional power from the regional power pool at very reasonable rates and provide uninterruptible service to everyone. During these years, it was not unusual that our off-peak customers would be subject to load management less than 40 hours during the entire winter season.

In recent years, availability of cheap power during winter peaks has diminished. During the 2000-2001 winter season, it was rare that low-cost power was available in the regional power pool when we were experiencing a peak situation. For this reason, load management was necessary much more frequently than in previous years. In fact, last year was really more typical of what was expected when we began the program 25 years ago.

This winter, we expect about the same level of load control. There is no indication that cheap power from the regional market will allow us to avoid load control like it did much of the 1980s and 1990s. However, even with more extensive load management, such as last winter season, the value of our low Off-Peak Rate is still very good. The most important issue in the future for a home with off-peak heating is that you have a quality backup system to be used during the period when your electric system is interrupted. While the total hours of interruption during a winter season is a small percentage of the total heating season, it will be frequent enough and long enough that a quality backup system is necessary for you to be comfortable at all times. Heating homes and businesses with an electric dual heating system has provided the best combination of low-cost and rate stability of any heating option during the past 25 years. With a quality dual heating system, we expect the same advantages will exist in future years.