Message to our Members

With this annual report, we close the books on 75 years of member-owned energy delivery, and celebrate the growth and prosperity that our cooperative business model has afforded us over those many years. We’ve come a long way since our first meter was energized at the Percy Donnelly farm on Dec. 23, 1939. At the close of 2014, we had 18,646 metered locations spread across 8,040 miles of energized distribution line. That sort of success was again fueled by a good year in 2014.

While 2014 certainly was not ideal for those of us braving the long cold winter, or for our farmers who struggled through a short growing season, it was a good one for electric sales. The frigid winter held on long into spring and returned early in November. A wet start to the harvest also bolstered crop conditioning sales. Those two things, coupled with robust growth in industrial and general service sales, pushed kilowatt-hour deliveries up 5.9 percent over last year to create a new all-time high for energy sales of 1.16 billion kilowatt-hours.

The fiscal impact of this steady growth is reaping benefits in our rates. In November, our power supplier, Minnkota Power Cooperative, announced a 5 percent increase in its rates effective April 1, primarily due to the completion of a 250-mile long transmission line needed to serve the growing energy needs of the Minnkota system. At the cost of $354 million, this line is now officially part of our transmission system backbone and will serve our needs over the next 30-plus years.

The good news is that the strong financial performance of your cooperative has allowed us to establish a revenue deferral plan. By deferring revenue from 2014 into 2015, we are able to absorb, or at least delay, passing along Minnkota’s rate increase through 2015.

Setting aside dollars from 2014 to help mitigate and flatten out rate adjustments is one way your cooperative works to keep dollars in the pockets of our ratepayers. The year 2014 marked a continuation of stable retail rates. We had no general rate increase last year beyond the addition of a one mill pass-through of Minnkota’s renewable energy market adjustment. That’s three years without a rate increase. At some point that will change, but our goal is to make them as small and predictable as possible.

The year 2014 was a nonlegislative year in North Dakota, so our focus was trained more on the national and regional political arenas. In June, the Obama Administration and the Environmental Protection Agency (EPA) outlined a plan to restrict CO2 emissions from existing power plants over the next decade. That draft rule came under heavy scrutiny during its comment period, and many of you were part of the 1.2 million people who filed formal comments on our behalf at the cooperative action network, www.action.coop. We are hopeful our grassroots army sent a message loud and clear that we want a common sense solution to energy regulation across America. EPA’s final rule is due in summer 2015.

Closer to home, the Minnesota Public Utilities Commission delayed the construction of a crude oil pipeline through its regulatory siting process. This proposed project would carry Bakken crude oil from western North Dakota through our service area into Superior, Wis. When constructed, this pipeline will add to the growing number of pumping stations we have on our system that already comprise 22.8 percent of our total annual sales. With a projected in-service date of 2017, we look forward to this project getting off the drawing board and pumping oil soon.

At various points throughout last year, we migrated all of our members to calendar month billing. As of now, all member bills begin on the first of each month and end on the last day of each month. We understand that for some members this required a period of adjustment, but this small alteration in our billing cycle has helped tremendously in areas of member communication, accuracy and cash flow. We want to say thank you for your patience and cooperation on this matter.

In keeping with our longstanding philosophy of returning member equity as soon as we can, those of you who were members in 1996 received your share of $1.5 million in capital credit retirements last year. Each year, your share of the cooperative’s margin is allocated to your member account. Those dollars are kept at Nodak and used for financing and operational needs. When your board of directors deems it appropriate, those dollars are deducted from your equity account and sent back to you. In 2014, capital credit retirements averaged $153.07 per member.

Something introduced in 2014 I want to point out is our Electric Heating Rebate Program. In 2014, Nodak teamed with our power supplier, Minnkota Power Cooperative, to provide rebates for new or replaced off-peak electric heating systems. In the short time between May and December, we provided our members with more than $35,000 in rebates as part of this program. This successful program continues into 2015, so if you’re planning a new heating system, make sure you call our Energy Services Department for details.

We encourage you to review the accompanying financial statements, along with the report from secretary-treasurer Luther Meberg. I’m sure you’ll agree that Nodak ended 2014 in sound financial position. We will provide you with more detail about our year during our annual meeting Tuesday, March 31, 2015, at the Alerus Center in Grand Forks. Until then, I hope you enjoy the walk down memory lane provided in the following pages. The last 75 years of Nodak’s history are chronicled in those pages from the time Franklin Roosevelt created the Rural Electrification Administration and our first meter was energized through the major events of the past eight decades.

On behalf of your board of directors and the employees of Nodak Electric Cooperative, we want to thank you for your patronage in 2014 and for the opportunity to serve you. We hope to see you at our annual meeting on March 31.

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Reinvesting in your cooperative

From time to time, I’ve used this space to tout the cooperative business model – the one where the dollars left after paying our expenses are allocated back to our members and eventually returned as capital credits. That cooperative business model has served Nodak and its members well over the last 75 years and again shows a bright spot in 2014 and 2015.

The year 2014 was a good year for your cooperative in terms of net margin, those dollars left over after we pay all of our expenses. In fact, we believe it to be the best ever in that regard. In the world of investor-owned power companies, those margins become part of the stockholders’ value and potentially paid out in dividends or higher stock prices. In the cooperative world, we put those dollars to work for our consumers who also happen to be our owners. That is exactly what we are going to do in 2015.

In April of this year, our wholesale power provider, Minnkota Power Cooperative, will have a fairly modest 5 percent rate increase. The good news is because of the successful year we had in 2014, Nodak will not pass along that rate increase to our members, at least for a while. At our January board meeting, your Board of Directors approved a plan to defer approximately $4 million from 2014 revenues into 2015 to offset much of the wholesale rate increase.

What that means is although Nodak has one of the lowest markups on wholesale power cost of any cooperative across the country, at least for part of 2015 it will be even lower.

Eventually, we will have to pass along the rate increase to our members, but that will depend on factors like the weather, member growth and load growth. When our margins fall below target levels, we will then have to raise our rates to cover this increase. That could happen later in 2015 or even into 2016 or later, depending on how things go. For now, we will put our members’ equity to work in holding the line on our retail rates.

Look for the notice to our 75th annual meeting in this publication and save the date. We’d love to have you join us to celebrate and be our guest for supper.

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Save the date: March 31, 2015

Perspective

Save the date: March 31, 2015

I hope you all had a chance to read the save the date notice on the previous page for our annual meeting March 31, 2015. Every annual meeting is a special day for us at Nodak as that’s when we get the opportunity to get reacquainted with old friends and meet our new neighbors. Our next annual meeting brings the excitement of marking our 75th year of existence. Seventy-five years ago, when electricity was only available to residents and businesses in urbanized areas, local farmers and landowners banded together, took matters into their own hands and brought the power of electricity to northeastern North Dakota.

Today, few of us know what it was like to live without electricity. We can only imagine the profound impact electricity had on North Dakotans’ way of life, on our economy and on our health. Seventy-five years ago a group of forward-thinking, ambitious, rural residents brought change and shined a light on the need to turn the lights on in rural America.

Now we have a new generation of electric cooperative members. We are owners of the cooperative just like the farmers and ranchers who answered the call to light our area 75 years ago. Much like our founders, today’s co-op members embody the democratic ideals of the cooperative business model of neighbors helping neighbors with the purpose of improving the lives of our members and the communities in which we work and live.

Seventy-five years ago, for-profit electric utilities had determined the urban boundaries they wished to serve, and decided against extending their lines into the rural areas of North Dakota. These profit-minded utilities considered our low population density a poor investment and concluded it was not in the best interest of their investors. Because of the bold initiative of our founders, today Nodak members not only have the power of electricity in our homes, we enjoy the benefits of the cooperative business model. Because the cooperative is democratic, every member has one vote. Our members control and direct Nodak, not money, not politics and not profits. Any revenue left over after paying our expenses and debt service is returned to our members who purchased electricity, not to a stockholder/investor whose sole motivation is a return on their investment.

Over the past 75 years, this business model has served us well. During that time, Nodak has grown from what was initially considered a poor investment by these profit-minded utilities, to one of the larger electric cooperatives in the United States. Today, we provide our members with more than one billion kilowatt-hours annually. We serve members stretching out over almost 9,000 square miles of service area, and do so on 8,000 miles of power lines – all owned by our member-owners.

There’s a lot of history behind that growth, and although the future will not be without challenges, there are bright times ahead. On March 31, 2015, we all will celebrate accomplishments of our forefathers and unite to overcome the challenges ahead. I’d like to encourage you all to save the date and join us for a historical perspective of Nodak Electric Cooperative and commemorate the milestone birthday of Nodak’s 75 years. We hope to see you all then. Until then, I hope you have a happy and safe holiday season.

 

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Win a trip to Washington, D.C.

Win a trip to Washington, D.C.

I’d like to draw your attention to the advertisement on page 8 announcing Nodak’s participation in the Electric Cooperative Youth Tour. In June 2015, one well-deserving high school student from our service area will join youth from around the state and across the country on a weeklong, expense-paid trip to Washington, D.C.

 

To apply for this unforgettable experience, students from this year’s 10th and 11th grade classes will submit essays on the subject, “If you were asked to influence other students your age to become more actively involved in their electric cooperative, including attendance at the electric cooperative annual meeting, what would you tell them and why.” One worthy essay will be chosen and its author will represent Nodak in our national capitol next summer.

 

Fifty years ago, the National Rural Electric Cooperative Association began coordinating youth tours in Washington, D.C. While still a senator from Texas, Lyndon Baines Johnson inspired the idea of the youth tour by suggesting that youngsters be sent to the national capitol “where they can actually see what the flag stands for and represents.” The first years of the tour included approximately 400 young people from 12 states. Today, more than 1,500 students and more than 250 chaperones participate in the youth tour annually.

 

Youth tour directors from each state will arrange visits with their state’s U.S. representatives and senators’ offices, federal agencies and other educational and sightseeing activities. Student delegates get a chance to see their national capitol up close, learn about the political process and interact with their elected officials, while gaining an understanding of American history and their role as a citizen. They may even have some fun while participating in this valuable leadership experience.

 

During the youth tour, one student from each state is selected for the prestigious opportunity to serve on NRECA’s Youth Leadership Council. That individual will join the other members of the Youth Leadership Council back in Washington, D.C., again in July to gain a broader understanding of electric cooperatives and the energy industry. During this trip, leadership council members meet with NRECA leaders and youth tour alumni who work on Capitol Hill. One final time, the Youth Leadership Council will gather for about four days at NRECA’s annual meeting the following spring in New Orleans, La.

 

Since its inception, nearly 50,000 high-achieving students from electric cooperative service areas across America have participated in this program. Many youth tour alumni have gone on to lead companies, serve our country in the highest ranks of government, and to other promising careers.

 

If you meet the eligibility requirements and are interested in applying to become a part of this prestigious group of young people, send us a submission following the guidelines found on page 8, or call Gretchen Schmaltz at our office with any questions you may have.

 

Good luck and we look forward to reading your essays.

 

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www.action.coop

Go to www.action.coop and make your concerns known

On Monday, June 2, the Environmental Protection Agency (EPA) reached a milestone in the CO2 debate when they issued proposed rules for limiting carbon dioxide emissions from existing power plants. During the next 120 days, the EPA will accept comments on the draft rules from industry, the environmental community, and folks like you and me. They will then take the next year to evaluate and respond to those comments before issuing a final set of regulations by June of 2015.

The final rules may or may not look much like the initial draft, but there will undoubtedly be changes between now and final passage. Since it’s not likely Congress will be able to act, it will be up to us to make sure the EPA knows how we feel. If you haven’t already done so, please take just a few minutes and go to www.action.coop and let the EPA know you don’t want new regulations that will force an increase in the cost of electricity and erode the reliability of our power supply.

I’ve written articles before about EPA regulations and their approach to reducing carbon. If you have read any of these articles, you might assume that I’m not concerned about the environment. That couldn’t be further from the truth. Whether our electricity is generated from coal, natural gas or wind turbines, we take our responsibility seriously to provide reliable and affordable electricity while doing our best to protect the environment.

What concerns me more than the current state of climate change is EPA’s approach to regulate a solution in an inefficient and ineffective way that will change little more than the cost of your electric bill. At Nodak, our first priority is the safety of our employees and the public. It always will be. Close behind safety comes reliability and price – two things that the EPA’s new rules could affect greatly.

It’s early in the process, and much work will be needed to wade through the 1,600-page proposed rule. It’s very complex, but it will dictate how we operate our electric system and how we use electricity for the next 16 years and beyond.

What we do know, is that it places different CO2 reduction goals on each state based on a formula meant to identify each state’s ability to reduce its carbon intensity. It then leaves it up to each state to determine how it will meet these new thresholds. With each state having the flexibility to develop their own plans, carbon taxes to renewable portfolio standards and everything in between will be discussed and considered as part of this local solution.

What this means for Nodak and its members is that we all need to be prepared to spend a lot of time talking with our state legislators and regulators in the coming years. For now though, the best thing we can do is to go to www.action.coop and express our concern directly to the EPA. The EPA is trying to remove coal from our power supply, and we need to make sure they know we don’t want that to happen.

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EPA wages war on coal

If you have read these articles, or attended any Nodak meetings over the last several years, you have probably heard us talk about the Environmental Protection Agency (EPA) and its assault on coal. Lately, that assault has become more of an all-out war on coal.

North Dakota electric cooperatives own about 90 percent of the coal-based generation in the state, and more than half of the electricity you and I receive as Nodak members comes from these coal-fired power plants. Most of these plants were built in the 1970s at a time when the federal government passed the Fuel Use Act, which prohibited generating power with natural gas. Since that time, North Dakota’s electric cooperatives have invested more than $2 billion to protect the environment by installing emission control equipment on their plants and annually spend an additional $100 million to operate the equipment. This environmental stewardship has helped North Dakota become one of only seven states in the nation that comply with all federal ambient air quality standards.

That’s a quick little bit of history. Now, the rules are changing again. The EPA and our president, through a series of executive orders, are placing unattainable limits on carbon dioxide emissions in an effort to force us to abandon the clean coal foundation of our generation fleet in favor of that very fuel source that was prohibited in the ’70s – natural gas.

Aside from the fact that as a rule of thumb, natural gas is a more expensive fuel source than coal, what is even more concerning is the volatility of its price and the capability of the nation’s pipeline infrastructure to deliver the product.

According to the U.S. Energy Information Admin-istration, the price for natural gas used to generate electricity in the U.S. has increased nearly 70 percent in just the last 12 months alone, and more than 100 percent in the last two years. Add on top of that the fact that during times of highest demand, the current natural gas delivery system is incapable of servicing the need, and you have a recipe for disaster.

I’m sure you all remember last winter’s polar vortex, that period of extreme cold weather across the entire nation. As we were experiencing those 30-plus degrees below zero, power delivery was becoming very difficult across the nation. Locally, we had 30 percent of our generation mix from wind turbines provide absolutely nothing when we needed it the most. Obviously, wind turbines don’t produce when the wind doesn’t blow, but they also don’t work when it’s 30 below zero, whether the wind is blowing or not.

On a wider scale, during the polar vortex natural gas generation was dropping offline as utility operators out East had trouble finding enough natural gas to keep the power plants running. The wholesale price of electricity rose to more than 20 times the retail price consumers usually pay, and utilities with purchase power clauses in their rates were passing those high costs on to their consumers. The Los Angeles Times recently reported that homeowners in parts of Pennsylvania received bills in January as high as $1,250 for the month because their utility had to purchase replacement power in an outrageous wholesale market.

The point of this discussion is this: as coal-fired plants shut down across the nation and there is a shift to more expensive, less reliable sources, there is a growing fragility in the U.S. electric system that is likely to create price shocks. Now, as members of the energy-consuming public, we have two options available to us. We can stand idly by as costs escalate and electricity becomes less reliable and complain about it to those who will listen. Or, we can engage ourselves and tell the EPA we want all energy resources to be used in meeting our energy needs rather than all resources but coal.

The EPA has already issued carbon dioxide emission limits for new power plants that effectively remove coal as an option for new plants. Soon, the EPA will release CO2 emission limits for existing plants, including the ones that operate within the Nodak Electric Cooperative system. Once these proposed regulations are released, we need everyone to tell EPA we aren’t interested in volatile pricing and questionable reliability. We want North Dakota lignite coal to remain the foundation of our power mix as it has for 70-plus years.

Keep an eye out in our publications, on our website and on Facebook for news on these new regulations and what you can do to help.

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Message to our Members

We are pleased to present you with the 2013 Nodak Electric Cooperative Annual Report. As you find your way through this message and the accompanying financial statements, you will see that we have closed the books on another successful year – a year that was marked with moderate growth, stable rates, and strong financial results.

The year 2013 will long be remembered for the winter that started early and never quit, but as we look back on the calendar year 2013 we are reminded that it began the same way it ended – very cold. These cold winter months, along with crop conditioning brought on by a late harvest, helped push our sales to a new all-time high.  In fact, 10 of the 12 months in 2013 showed higher sales than their corresponding month in 2012.

While the weather for much of the year was extreme, the construction season ended with ideal conditions to complete new line extensions and system improvements late into the year. The extended construction season allowed us to finish the year with over 135 miles of new or upgraded line, bringing our total to over 8,000 miles of distribution lines.

That amount of system improvement requires debt financing, and we are fortunate to be eligible for low-interest financing through the federal government.  During the year, we completed a loan application for financing through USDA Rural Utility Service, or RUS, in the amount of $31.2 million to finance new construction and system improvements over the next four years.

In response to a request for proposals from the federal government, we submitted an offer to take over the electric distribution system on the Grand Forks Air Force Base and Cavalier Air Force Station.  Since we already serve both of these installations with electricity on a bulk basis, we felt it would be a good fit for Nodak to also manage the electric infrastructure for them. Competing for these contracts is a long, drawn out process that has just begun, but we expect to learn more in 2014.

Legislative issues continue to be among the top concerns for our future success. Poorly founded legislation could have dramatic effects on our business and the lives of our member- owners. With this in mind, we closely monitor the agendas of our elected and appointed officials.

In 2013, the Obama Administration announced its intention to regulate carbon dioxide emissions from coal-fired power plants. With 60% of our electricity coming from coal, this is something we keep a close eye on.  New regulations were enacted that effectively halted any new coal plant construction until carbon capture technology is further developed. Regulations for existing coal plants are due out in 2014, and we continue to be your advocate in telling EPA not to over regulate this clean, affordable, abundant resource we have here North Dakota.

Closer to home, taxation issues have been the primary focus of our legislators in Bismarck. Property tax relief that has reduced the tax rates for most individuals and businesses in North Dakota affects investor-owned utilities and electric cooperatives differently. IOUs are taxed similar to other property owning corporations, but electric cooperatives pay an in lieu property tax based on kilowatt-hour sales.  In 2013, the in lieu tax we pay was reduced from one dollar per megawatt hour to $.80.  That reduction will save Nodak and its member-owners over $200,000 per year in property taxes.

In 2013, we continued our practice of rotating member equity back to the members through a capital credit retirement. In March, we issued checks totaling $1.5 million to past and present Nodak members who purchased power in 1995. Earning equity in a cooperative through the purchase of electricity is one of the many benefits of the cooperative business model. When equity is retired and paid back, it reduces your overall cost of electricity.

We encourage you to review the accompanying financial statements, along with the report from Secretary-Treasurer Paul Sigurdson, and we hope you will agree that Nodak Electric ended 2013 in a sound financial position. We will provide you with much more detail about the year 2013 during our annual meeting on Thursday, April 3, 2014 at the Alerus Center in Grand Forks.

On behalf of the entire Board of Directors and the employees of Nodak Electric Cooperative, we want to thank you for your patronage in 2013 and for the opportunity to serve you. We hope we will see you at our annual meeting at the Alerus Center in Grand Forks.

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2013 was a very good year

As I write this article, we are in the process of closing our books for 2013. When that process is complete, indications are that we will end what has proven to be a very good year.

The term “good year” can mean a lot of different things. Our financial statements will show that December’s extreme cold weather and heavy grain drying brought on by a late, wetter-than-average harvest pushed sales numbers to a new record high. That is definitely one way we could describe 2013 as a good year.

Another way to define it would be to point out that we were lucky enough to escape Mother Nature’s wrath and the crippling storms that some of our counterparts in North and South Dakota experienced this season. We had our share of smaller weather events but managed to avoid the extreme weather that causes widespread outages. Because of that, we were able to continue to provide the same level of reliability you’ve come to expect. I think we could look at that as being a good year.

Wholesale and retail rates stayed steady throughout 2013. In these times of increasing costs and a tightening regulatory environment, a year where we can hold the line on rates is surely a good year.

Certainly, we can also point to the fact that our linemen spent thousands of hours performing an extremely dangerous job, and in all cases were able to avoid any serious injuries. Bringing our line crews home safe at the end of the day is our highest priority and our number one obligation. We can also say 2013 was a good year because we accomplished that important goal.

Regardless of how you would describe a good year, there are several ways we can look back on 2013 and characterize it as such. On Thursday, April 3, 2014, our 74th annual meeting will be held at the Alerus Center in Grand Forks. Along with plenty of good food, fellowship and our annual Board of Directors election, we will detail the events and results of 2013. I would urge all of you to come participate in this important part of your cooperative’s year.

I also want to use some of this space here to make you aware of a change you will soon see on your monthly bill. For quite some time, your service has been billed based on a mid-month billing period. Beginning in April, Nodak will be migrating to a calendar month billing cycle. We’re doing this in part because of a similar change by our power supplier, Minnkota Power Cooperative, which implemented the new billing period January 1, and also in part because it will make communication with our members better.

The cooperative will now have accurate information for monthly and yearly totals without the need to make adjustments based on estimates. Our members will now be able to have monthly usage totals instead of blending two months together, as well as billing periods that may coincide more closely with things such as monthly leases, etc.

Nodak will fully transition to calendar month billing during the April 2014 billing period that begins with the bill our members receive the first part of May. To facilitate this change, the April billing statement will include the new billing period of April 1 through April 30, plus the additional partial month from March 20 through March 31. Subsequently, meters will be read on the last day of each month with payments due by the 25th of the following month.

If you have any questions or concerns about the upcoming change in billing cycles, please give our office a call so we can help you work through this time of transition. Until then, we are looking forward to April and the warmer weather that is likely to come with it, and hopefully see you at our annual meeting.

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Holiday season reminds us to work together – the cooperative way

We are all warmed by fires we did not build, and we drink from wells we did not dig. That was a sentiment expressed at a recent cooperative meeting I attended. It’s based on the notion that a significant part of the cooperative’s mission is to enrich the lives of our member-owners through community support. When this issue of the Nodak Neighbor hits your mailbox, the holiday season will be in full swing. However, as I write this article, Veteran’s Day has just passed, and I can’t help but think how that sentiment embodies the spirit of our country’s veterans.

Veteran’s Day is the federal holiday that celebrates the service of all men and women who have served in the U.S. Armed Forces. Across the country, veterans are honored by parades, special ceremonies and services. Federal offices are closed, mail is not delivered, and school is not in session. Many of us may attend one of these events, just enjoy the day off from work, or take a moment to reach out a handshake to a serviceman or servicewoman and thank them for what they do. To me, Veterans Day serves as a reminder that every day our veterans deserve our gratitude for the fires they’ve built and the wells they’ve dug on our behalf.

Volumes have been written on the sacrifices of our brave men and women in the military, and the freedom that is provided, or at least maintained on their watch. In the U.S., we are rich with personal rights and freedoms. These freedoms were bestowed on us by our founding fathers when they developed a government controlled by the citizens rather than a government that is served by its people. These freedoms are routinely denied by other governments around the globe, and in many cases they seek to limit our personal liberties and our way of life. Although they were initially granted by our forefathers, much of our personal freedom is maintained only through the service and sacrifices of our veterans. I have never served in the military, but my father was a World War II veteran. Like most servicemen of that era, he did his duty and asked for little in return. He was proud of his service, but also very stoic about any accolades. He experienced the ravages of war, but never spoke of it and genuinely hoped no one would ever have to endure them again. Even in his final days, he seemed more concerned for “our boys over there” as he called them, then he was about his own wellbeing. I’m thankful I got the chance to express my gratitude to him before he passed away, and it reminds me that veterans are good examples of service and citizenship for all of us to follow.

As we enter the holiday season and give thanks for our blessings, take a moment and think about the fires and the wells that have been provided to us by our nation’s veterans. Then, ask yourself if you are doing your part to provide for those who can’t provide for themselves, or for those that follow behind us. The old cliché of many hands makes light work is the cooperative way. Together, we can make a difference.
In a perfect world, people and nations would just get along, and we wouldn’t need armaments and veterans. Unfortunately, that’s not the way of the world, and we will continue to have unrest. As this holiday season falls upon us, we would like to wish you all peace and joy in your families, in your backyard, and across the world. From our family to yours, Happy Holidays.

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A safety lesson from Lee and Ashley

The kids are finally back in school, and for me that signifies the end of summer. With the passing of the summer season comes a flurry of fall activities and that gets me thinking about safety – especially safety around the power lines during harvest.

I want to share a pretty amazing story with you. It involves two teens from Indiana named Lee and Ashley who were riding down the road when their car started to fishtail and slid into a utility pole. That pole came down – lines and all – right on top of the car.

Most people faced with this situation would do what comes naturally – get out of the car, but Lee and Ashley knew better. Only a week earlier they had seen a safety demonstration at their school sponsored by their local electric co-op. One of the key messages relayed was “Stay in your car if it ever hits a power pole. That’s where you’ll be safe from any electrical current.”

The two did just that, and kept their family members at a safe distance once they arrived. As a result, everyone walked away with just a few minor injuries. However, without a basic knowledge of electrical safety, the outcome that night could have been much different.

The electricity Nodak provides day-in and day-out is a phenomenal resource, powering our modern lifestyles in a safe, reliable and affordable way, but electricity must be respected. If safety isn’t made a priority, what changes our lives for the better could change them for the worse in an instant.

Lee and Ashley know this from experience, and we’re striving to keep you informed of electrical safety so you don’t have to learn a similar lesson the hard way.

Safety has been a part of the fundamental culture at Nodak since day one. Being an electric line worker is ranked by the U.S. Department of Labor as one of the top 10 most dangerous jobs – on the same list as fishermen, loggers and military servicemen. We take great strides to ensure that not only those linemen out in the field, but employees at all levels, make safety a top priority.

As part of our safety commit-ment, we want to encourage you to take time to learn how you can be safe around electricity. Spending just a few minutes with some helpful resources like www.SafeElectricity.org can make all the difference when you’re faced with an unsafe situation.

I hope there won’t be any stories about Nodak members getting into sticky situations this harvest season, but if there are, a few minutes spent studying safety today could ensure a happy ending. Have a safe and bountiful harvest season!

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Carbon tax would be costly

The Obama Administration recently announced its intention to further regulate carbon dioxide (CO2) emissions from coal-fired power plants. Last year, emission limits were targeted for all new power plants. This new proposal is a presidential directive to move the Environmental Protection Agency toward including all power plants in the CO2 emissions standards. This latest move will present some significant challenges for North Dakota as regulations come out that exceed the capability of currently available technology.

The technology for capturing CO2 emissions is largely under-developed and not yet commercially available, so a likely outcome of this move would be a tax on carbon emissions. A so-called carbon tax could significantly raise the cost of producing electricity from coal to a point where the energy industry may abandon the inexpensive abundant resource in favor of a more expensive alternative. That would be a significant blow to the North Dakota economy.

As a member of Nodak Electric Cooperative, approximately 42 percent of the power you consume comes from renewable sources such as wind and hydro. The balance comes from North Dakota lignite coal. A byproduct of the coal combustion process is CO2. With more than half of our power coming from coal, any limitation on CO2 emissions could have significant impacts.

There are a lot of unknowns with this announcement from the administration. We won’t know until at least next year what will be considered acceptable emission limits or implementation timelines. One thing is certain, though. Without commercially available and economically feasible technology to capture CO2, these regulations will drive up the cost of electricity on North Dakotans and across the country.

New technologies are best developed by attracting investment in research and development necessary to find solutions rather than artificially drive up the cost of doing business through regulations and taxes. What we need is a thoughtful, deliberate approach that empowers all sectors of the energy industry to work toward new ways of utilizing all of North Dakota’s abundant resources.

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Message to our Members

When we look back at 2012, one way we like to describe it is: eventfully uneventful. There was the hustle and bustle of a growing cooperative with many new faces and exciting new projects and challenges. The one notable thing we didn’t see was a significant storm. Although we had one relatively minor storm event that caused outages for some of our members, we were lucky enough to escape the severe storms that all too often cause widespread outages, severe damage and huge restoration costs.

One of the exciting things we have to share with you is that Nodak reached a notable milestone in 2012. For the first time, Nodak sold more than 1 billion kilowatt-hours (kWh) in a single year, which represents a 3.7 percent increase in total kWh sold. We started the year with reduced sales from an abnormally warm winter, and also witnessed the closing of the ADM ethanol facility in Walhalla, N.D. However, robust increases in purchases by TransCanada and overall strong sales in the fourth quarter were enough to overcome the slow start.

While sales growth was a significant factor in a positive financial result for Nodak, that was not the typical case for the rest of the Minnkota system. In fact, nine of the 11
co-ops and all 12 municipals that comprise the Minnkota Joint System experienced losses in sales in 2012. In aggregate, Minnkota’s sales to Joint System members fell by 1.7 percent from 2011 to 2012.

The good news is that despite these losses our wholesale rate stabilized in 2012. The new Minnkota budget does not include a wholesale rate increase for 2013, and current projections for 2014 show a similar trend. With wholesale rates finally leveling off, we look forward to some predictability in our costs and therefore our rates.

After several months of careful planning and preparation, we deployed our iPad project in spring 2012. Each of our electrical teams was given an iPad with up-to-date maps of our system and member account information. This innovative use of technology allows our line personnel to access real-time data, enhancing their ability to manage outages as well as streamline many of our processes so we can provide better service to our member-owners.

This constant evaluation of our business practices and scrutiny of our cost of operation is what allows us to be successful on such thin margins. Only a dozen years ago our cost of wholesale power accounted for 58 cents of every dollar our members paid to Nodak. In 2012, 83 cents of every dollar was sent to Minnkota for wholesale power, leaving only 17 cents for the rest of our operation. Finding ways to meet your expectations more cost-effectively is one of our highest priorities here at Nodak – right behind keeping our line crews safe and keeping the lights on.

Another notable event in 2012 was the energizing of the Devils Lake East End Outlet. In June, the massive outlet that consists of five large pumps and a 5-mile pipeline began pumping Devils Lake water into the Tolna Coulee. These pumps will help ease the decades-long flooding that has finally started to show signs of letting up.

Another bright spot for Nodak in 2012 was the continuation of our business relationship with TransCanada and the Keystone pipeline. We saw significant increases in kWh sales during the year to TransCanada, which is now our largest member and represents almost 20 percent of our total sales volume.

From a distribution perspective, I would say 2012 was an excellent year. We accomplished all of our goals with respect to system improvements and line maintenance and our off-peak heating program continues to provide financial benefits to our members.

We encourage you to review the accompanying financial statements along with the report from Secretary-Treasurer David Hagert. We hope you’ll agree that Nodak ended 2012 in sound financial position and that we fulfilled our mission throughout the year by efficiently providing you with quality electric service while keeping you, the member-owner, in the highest regard.

On behalf of the entire Board of Directors and all the employees at Nodak, we want to thank you for your patronage in 2012 and for the opportunity to serve you. We hope to see you at our annual meeting at the Alerus Center in Grand Forks on Thursday, April 11, 2013.

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