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.

Continue Reading »

Energy conservation and efficiency

May 2009

Perhaps you have noticed in recent years our emphasis on marketing and load building has decreased and for all practical purposes has been eliminated. At least recently, we have begun putting more emphasis on promoting energy conservation and efficiency which of course, if effective, will reduce our energy sales.

Being a business administration graduate, this has been somewhat of a tough swing for me. Electric utilities are businesses with large amounts of fixed costs. Fundamental 101 Economics dictates that the best way to reduce per unit cost in our type of business is to increase sales and spread those fixed costs over more kilowatt-hours. So, why are we and most other electric utilities getting away from the traditional best practice for this type of business?

As it turns out, there are two basic driving forces for this change. First, virtually all electric utilities are in need of added generation capacity to meet our growing demand. New generation is always more expensive than existing generation, and with the newer environmental regulations, it is expected to be a great deal more expensive. This has spawned the theory that it may be less expensive to “find” generation capacity in our own system by incenting existing customers to use less energy. The theory could hold true even if the electric utility needs to spend money providing these incentives. What it really means is that from the utility standpoint, encouraging energy conservation and efficiency may have an adverse effect on our system requiring higher electric rates. Ironically, it still may be a good idea because the alternative of building additional expensive generation will increase our rates even more.

The second basic driving force toward energy conservation is the American Recovery and Reinvestment Act of 2009, otherwise known as the Federal Stimulus Package. Included with this Act is an allocation of millions of dollars for each state to be directed toward the energy sector. The funds allocated to North Dakota will in turn be distributed through a state program. The North Dakota State Energy Program is currently being drafted, but it is almost certain to contain incentive money to promote efficient use of electricity. Likely uses of the funds will be rebates for the purchase of efficient energy devices, such as compact fluorescent light (CFL) bulbs and programmable thermostats. There may be incentives to install geothermal or high efficiency air source heat pumps.

When the state program is developed, we intend to be at least one source of information as to how you can take advantage of the program and cut your energy usage. We hope to do this by including information in the Nodak Neighbor, providing information on our web page, and having knowledgeable people who can answer your questions about energy saving opportunities. Watch for this information, as it will be useful if you wish to mitigate higher energy prices in the future with more efficient use of this energy.

Continue Reading »

Facility charge: a fair and equitable way to recover fixed costs

March 2009

Without a doubt, the most despised part of our electric bill is the facility charge. This is the part of your bill you pay each month, even if you don’t use any electricity. I was once told it is kind of like having a cover charge to come to Nodak and do business.

Facility or fixed charges with electric utilities are necessary for rate equity among ratepayers. For each of the 16,000 metering points in our service area, we make a significant investment, and we must maintain that investment to ensure reliability and safety. We also must have a system of meter reading, billing, and customer service functions in place to take care of customers. This system includes trained people, office facilities, and state-of-the-art technology to provide the level of service expected by the general public. The cost of all of these facilities and services must be maintained, even if you elect not to buy any electricity during a specific period. The cost of these services are appropriately billed on a per customer per month basis rather than in proportion to the amount of electricity purchased.

A common question is, “why do some consumer classes pay a different facility charge than others?” The answer is that required facilities tend to differ among different consumer classes. In high density urban areas, accounts require less distribution line per account, and they are typically served with multiple accounts per transformer. For this reason, urban accounts require a lower monthly facility charge than rural accounts. Commercial accounts require large transformers, more expensive metering, and often require three-phase service and specialized equipment. For these reasons, commercial accounts require a higher monthly facility charge than residential accounts.

Following our recent rate increase, one member asked why his facility charge increased when nothing changed at his account. The answer is that the facility charge is an average of the cost to provide facilities for all consumers, and it covers the cost of owning, maintaining, and supporting these facilities. The total of these fixed costs does in fact increase every year, and this component of our rate needs to be periodically adjusted.

Roughly 10% of our annual revenue is billed through the facility charge. If we eliminated the facility charge, we would need to increase our rate per kilowatt-hour a proportional amount. While we would receive adequate revenue to pay all of our expenses, there would be some consequences. Those who use at or near average consumption would see little change in their total bill. Minimal users would be getting a free ride, as they would be paying little or nothing for the facilities serving their account, along with the billing and support required to serve their account. The free ride would be picked up by the larger users who would pay more than their share for these costs.

As you can see, it is our responsibility to not only have a facility charge in our rate structure, but to do the best we can to ensure it is designed to be fair and equitable among the different rate classes.

Continue Reading »

Rate changes effective January 2009

November 2008

There’s no way to sugarcoat this article. In fact, maybe the word announcement better describes this particular communication than the word article. The announcement is that we need to increase our retail rates in January 2009. For residential accounts, the rate increase will average about 8.5 percent. You will first see the effect of this rate change on the electric bill, which is payable during the first part of February.

By far, the majority of the revenue that is needed with this rate increase is because of higher wholesale electric bills we will be paying to our power supplier, Minnkota Power Cooperative. In March of 2008, Minnkota increased our wholesale rates by 3 percent. We made no changes to our retail rates at that time. In March 2009, the Minnkota wholesale rates will again be increased, this time by 13 percent. The effect of these two wholesale rate increases will be that our 2009 wholesale power bill will be at least $5 million greater than our wholesale power bill in 2007.

For our general service, typically residential accounts, the monthly facility charge will increase by $2 per month in 2009. The per kilowatt-hour used charge will be a flat 7¢ per kilowatt hour. In 2008, you paid 6.5¢ for the first 4,000 kilowatt-hours and 6¢ for anything over 4,000 kilowatt hours. The percentage increase on your power bill will depend upon the amount of power you use and which of the three general service categories you fall under.

Our off-peak rate for 2009 will increase from 3.6¢ to 4¢. This is a lesser increase than the general service rate increase on a cents per kilowatt-hour basis, but on a percentage basis, it calculates out to 11.1 percent.

If there is a bright spot in all of this, it is that electricity still has the best price stability of any form of energy. Also, electricity from any utility in North Dakota is far less expensive than many other parts of the country.

Continue Reading »

Billing cycle to be adjusted due to AMR conversion

September 2008

One of the biggest, if not the biggest, projects we have had over the last 30 years has been our conversion to an automated meter reading system. The capital investment in this system is more than $5 million, and the conversion has required an immense commitment of employees throughout our organization. In the world of electric utilities, we are quite small, and this type of project places a strain on the workload of our line workers, technicians, engineers, and billing people.

We are pleased that after a little more than one year, we are “seeing the light at the end of the tunnel” with this project. Nearly all of our meters have been replaced with new meters, and more than two-thirds of these meters are now being read with the new automated system. We expect to have the ability to read all of our meters over our power lines by year-end.

One of the last steps in the project, which is most confusing to everyone, relates to an adjustment in the billing dates. With the old meter reading system, there was a long delay between the period of time when power was used and when a bill was sent out. Meter reading was a time-consuming process, and we needed to get all of the readings before we could process the bills for a specific month. Two to three weeks elapsed from the time the power was used until the bill was sent out.

The new automated meter reading system will allow Nodak to literally read all of your meters in just minutes. With this system, very little time elapses from the time you use power until we send out the next bill. You can probably see what develops during the conversion. The first bill after your meter is converted to the new system comes relatively soon after your previous bill. This doesn’t mean you are receiving a double billing, it only means there is a one-time shift in the timing of these bills. From then on, your monthly bill will be much closer to the actual period of time the power is consumed.

We understand a cash management concern can arise when two monthly billings come closer together than normal. For this reason, we are more than willing to work with anyone who needs extra time to pay the bill they receive just after the conversion to the new system. Because of the confusion with the change, we are sending a letter to everyone just before the new bill comes to alert them to the situation.

Another problem which can arise when two monthly bills come within a couple of weeks is that the payment of the first bill may be in the mail when the next bill is sent out. When that situation arises, the second bill will show a previous balance, which in essence, has been paid. We are asking everyone to make sure they don’t pay the previous balance if it was recently mailed.

Fortunately, this transition to a new meter reading system is a one-time thing. The new state-of-the-art system will be much better and will save the cooperative money in the long run. For those of you who have been reading your own meter, it will save you the burden of doing that in the future. For Nodak, the new system will create huge efficiency benefits, as well as provide us with more accurate and more current billing data.

We appreciate any cooperation we can get making this necessary, but complicated transition.

Continue Reading »

Lieberman-Warner bill could double cost of electricity

July 2008

On June 6, 2008, the United States Senate effectively shelved the Lieberman-Warner Climate Security Act. The proponents of the bill made a motion to end debate and move to a final vote. Such a motion requires 60 votes to pass, and it failed by a vote of 48 in favor and 36 against. Senator Dorgan voted against the motion, and Senator Conrad, who was not present, indicated he also would have voted against the motion.

Clearly, the bill sponsors, Senators Joe Lieberman, Connecticut Independent, and Senator John Warner, Virginia Republican, along with committee chair Barbara Boxer, California Democrat, knew the motion would fail. The strategy of the motion was to table the bill and bring it back after a new president is elected. Both presidential candidates have indicated their support for some form of legislation which will reduce the country’s level of greenhouse gas (GHG) emissions. The proponents believe the Climate Security Act can be passed in 2009 with few, if any, amendments. So, what will the bill do if passed by Congress?

The language in the bill sets reduction levels of greenhouse gas emissions equal to 1990 levels by the year 2020 and to reduce emissions by an additional 65% by the year 2050. The obvious question everyone should have is what would this do to the cost of electricity? The short answer to the question is that it would increase the cost significantly.

The biggest target for reduction of greenhouse gases is carbon dioxide from power plants. There is no technology to remove CO² from the stack of a power plant. Sequestration of CO² is an option, but the cost is extremely high. Another option in the bill is a cap and trade provision whereby a power generator could buy allowances in lieu of actually reducing their carbon emissions. It is expected the allowances will be very expensive and will essentially be a huge tax added to the cost of production. The Electric Power Research Institute (EPRI) has estimated that this cap and trade approach could cause electric bills to double or even triple. How many of us are ready to have our electric bills follow the recent escalation of gas prices?

Former Federal Reserve Chairman Alan Greenspan has been quoted as saying “cap and trade systems, or carbon taxes, are likely to be popular only until real people lose real jobs as their consequence. There is no effective way to meaningfully reduce emissions without negatively impacting a large part of an economy.”

Maybe the most disturbing thought about the Lieberman-Warner Bill is that it very likely will have little or no effect on climate change. While we in the United States would be cutting back our carbon emissions and having an adverse effect on our economy, countries like China and India will be building hundreds of new coal-fired power plants. China has estimated they will build 500 new coal-fired power plants by 2015, and India is planning another 200 coal plants over the next seven years.

When the Lieberman-Warner Climate Security Act reemerges in 2009, the public needs to be more involved. We need to better understand the economic impact this bill would have, and we need to contact our elected officials to let them know how we feel about the bill’s passage.

Continue Reading »

Capital Credit Checks: an extra benefit

May 2008

By now, most of our members should have received a capital credit check in the mail. The check may be a result of power you purchased in the years 1992 and 1993, or it may be a result of power you purchased in 2007. For some of you, it could be both.

Capital credit allocations and payments from a cooperative are kind of confusing, and it’s no surprise they are often misunderstood. I have often said they’re not as good as cash in the bank, but they are better than the proverbial “kick in the pants.” Actually, they are a lot better. When you purchase electricity from Nodak, unless we have a really bad year financially, you will earn a small piece of equity in the business. It’s isn’t like stock you buy with cash, and you can’t redeem it for cash at will. In fact, there are no guarantees you will ever get anything for your allocation of equity. It simply means that you and about 25,000 other current and past members have equity ownership in the cooperative assets.

This allocation is done every year, and right now, our members have “ownership” in about 45% of our assets. The lending institutions have claim to the other 55%. Now comes the payment part. Every cooperative has a strategy regarding when, and if, they will “retire” members’ equity by issuing capital credit checks. Nodak’s policy is to pay off members’ equity in the form of cash in 20 years or less. As you can see, we are now paying off equity that was earned 15 and 16 years ago. The funds to pay these capital credits come from debt financing, current year’s margins, or a combination of both. For this reason, a small part of the rate you paid in 2007 is being used to pay back capital credits earned 16 years ago.

So, why don’t we just forget about this complicated capital credit stuff and just keep the rates lower? First and foremost, we need to finance a portion of our assets with equity. We can’t finance 100% of the cooperative assets with debt. No lending institution would do that, and if they did, the interest rates would be much higher. You, the ratepayer, would pay for that added interest expense in your electric bills, so in fact, your electric rates would not go down. In essence, a small amount you pay for your electricity goes to equity, which you will likely get back 15 or 20 years from now. If we didn’t do that, a similar amount would be needed to pay off high debt financing, which you would never get back.

Finally, why are we paying back part of the equity earned in 2007 already in 2008? The answer is because our margins in 2007 were higher than budgeted. For the size of our cooperative, we need margins between $2 million and $2.5 million to keep our present equity/debt balance. Because we had a very good year, our margins ended up to be in excess of $3 million. For that reason, your board decided to retire 25% of last year’s margins immediately, which is really a rebate on your purchases for the previous year. This is done only when the board feels that the previous year’s margins were higher than needed.

Your capital credit check is truly an extra benefit of doing business with a cooperative. It may not be as big as the economic stimulus check you get from Uncle Sam, but I’m sure everyone will be able to put it to good use.

Continue Reading »

Load control and wind energy

March 2008

By the time you receive this issue of the Nodak Neighbor, hopefully, we will be past the subzero weather for another winter.

For everyone, this winter has put a strain on the cost of heating homes and businesses. For those who have off-peak heating systems, there is always concern about how often we implement load management and require you to switch to a backup heating system. As it turned out, we had a rough time out of the chute this heating season. Scheduled power plant maintenance didn’t go well, and an eight week planned maintenance project turned into an 11 week project. Worse yet, the power plant was out of service when the heating season was getting into full swing, and we had to use load control much more than expected during that period.

Some of you who have off-peak heating systems may have noticed that the amount of load control dropped off substantially after the first of the New Year. You may also be aware that our power supplier, Minnkota Power Cooperative, brought a large wind farm online about the same time. I have been asked more than once whether or not there is a correlation between the wind farm and less load control. The short answer is, yes, the addition of the 100 megawatt wind farm definitely helped to reduce the need for load control. The next question, obviously, is why don’t we build more wind generation and reduce further the need for so much load control. Minnkota will, in fact, build more wind generation, but it can’t be for the purpose of reducing load control hours. The problem with that logic is price.

While we are getting wind energy delivered at a very good price from the Langdon wind farm, it is still higher priced than what we are charging you for off-peak heating. Wind energy isn’t valuable to Minnkota because we can resell it as interruptible power; it is valuable because it is often less costly than what can be purchased from the regional market. It is also valuable if the wind turbines happen to be generating during peak conditions. There is much more likelihood this will happen during the winter season than the summer season. We often experience peaks in the winter when it is cold and the wind speed is high. In the summer, we often experience peaks when it is hot, humid, and no wind.

Prior to the first of the year, we had a lot of load control related to power plants being out of service. The Langdon wind farm was not online and not available to help us out. However, even if it had been online, it may not have helped because power plant downtime has nothing to do with wind conditions.

The good news is that our total amount of load control this season, even with the rough start, will be pretty much as expected. The projection from Minnkota for load control this heating season was about 350 hours for a dual heating system. Even though things didn’t go as planned, it doesn’t appear the total hours will be much higher and will likely be around 400 hours for the heating season. With that level of load management, a typical homeowner is still getting about 85% of his/her heating requirements from electricity at a very low rate.

Continue Reading »

Your role in the director election process

January 2008

Each year in this issue of the Nodak Neighbor, we begin the process of the Nodak director election. You will note we have included a list of members who have been appointed to the director Nominating Committee. This committee will accept nominations for three positions open on the board of directors. This process represents one of the most important differences between an electric cooperative and other forms of electric utilities.

Each year, the door is open for you and every other member of the cooperative, to take an active role in the election of the board, which governs your utility. Your role may be as little as simply making a commitment to vote during the director election in April. You might want to go to the next step and actually attend the annual meeting of the cooperative on April 12, 2008 and vote in person. If so, in just three hours, you will learn quite a lot about Nodak, participate in the election process, have a chance to win one of many door prizes, and eat a great noon meal served by the Alerus Center. When it’s all over, you still have half the day left to do a little shopping in Grand Forks. If you haven’t been to one of our annual meetings, I would encourage you to give it a try.

The ultimate involvement in the director election process is to step up and run for one of the three director seats, which are open each year. Being nominated is easy. You can contact one of the members of the Nominating Committee, or you can have 15 fellow members sign a petition, and you are on the ballot.

Probably, the biggest change to the director election process in recent years has been the option to vote by mail. The obvious advantage of doing this, of course, is that all members have the opportunity to vote, even if they are unable to attend the annual meeting. There are a few disadvantages, however, with this option. First, there is some added expense for the cooperative, even when we have included the ballot as a “tear out” in our Annual Report. Second, it is nearly impossible to have a true secret ballot without adding even more expense. We have been criticized for requiring that the ballot be signed, but of course, we need to know who votes by mail so they don’t vote more than once. Third, voting by mail causes a bigger challenge for candidates as far as campaigning for the position. No longer can a candidate simply come to our annual meeting and sell himself/herself to the voters before the election. With mail-in ballots, most of the votes have already been cast before the annual meeting. The election is finalized by collecting those ballots at the annual meeting and then counting all of the ballots cast.

Even with the inherent disadvantages of voting by mail, it is the consensus of the board and management that these disadvantages are still outweighed by the importance of giving everyone a simple and painless way to participate in the election process.

We encourage you to take a good look at the candidates running for these director seats when you receive your Annual Report in the mail in early April. You may then either cast a vote by mail, or better yet, come to our annual meeting on April 12 and cast a vote at that time.

Continue Reading »

Off-peak heating program is still best heating option

November 2007

If you are one of more than 5,500 Nodak members who heat your home with off-peak electricity, you are in better shape than most entering the heating season. Short of cutting and burning wood, it is pretty hard to find a lower cost heating alternative at this time.

If you have been taking advantage of our off-peak heating program for more than five years, you probably know that it was even better in the past. It’s not that our rate for off-peak electricity is much higher today than in years past, but what you know is that the hours of control time are much greater now than prior to 2003.

During the upcoming heating season, you can expect to have load control and revert back to your backup heating system between 300 and 375 hours. For the majority of our off-peak heating accounts, it makes little difference whether we control 50 hours or 500 hours during a heating season. If a dual heating system is working properly, a home should be just as comfortable when the backup system is operating as when the primary electric system is operating. The only difference is that the backup fuel – usually propane or fuel oil – may be more expensive than off-peak electricity. This will cause the total heating bill for a home to be higher than in past years.

As we have reported frequently, the change in hours of control results from market forces out of the control of Nodak, or our power supplier, Minnkota Power Cooperative. Prior to 2003, in addition to having excess generating capacity, we also had the luxury of buying inexpensive power from the regional market. As a result, when load control would have been necessary, we instead bought affordable energy from the market. This was a win-win decision as we sold more energy to our off-peak customers, and they, in turn used less fuel in their backup systems.

About this time of year, we are frequently asked if we are going to again have hundreds of hours of load control, or are we going to go back to the good old days. The good old days were, of course, when a customer could enjoy a low-cost, interruptible rate and yet have almost no interruption. We regret that the answer is that it is doubtful the regional market will ever allow us to return to that mode of operation.

My coined answer to many individuals the past few years regarding load control is that our off-peak heating option isn’t quite as sweet as it once was. Still, our off-peak heating program is probably the best option available for heating a home or business.

The price of fuel oil, propane and natural gas have all increased dramatically over the past five years. It is not uncommon to hear of people using these fuels whose annual heating costs have doubled over this period. Our off-peak rate in contrast has increased only 16 percent over the same five-year period. As it has been for decades, off-peak electric heat remains the best option with regard to both price and stability.

Continue Reading »

Conserving electricity makes sense

September 2007

A friend asked me recently if I thought there was a significant movement in the area of energy conservation with respect to electricity. My non-scientific answer was that on average I didn’t think there was much being done by the consumer, at least in this part of the country. If I am at all right in this assumption, there are a couple of reasons this may be true.

First, the average cost of electricity for a residential consumer in North Dakota is cheap compared to the rest of the country. In 2006, North Dakotans paid on average 6.5¢ per kilowatt-hour compared to 17.6¢ in Massachusetts, 16.3¢ in New York, and 13.5¢ in California. Even our close neighbors in Minnesota paid on average 8.14¢ per kilowatt-hour in 2006 – 25% more than in North Dakota. When electricity is this cheap, consumers don’t have the will to be bothered by something as boring as energy conservation.

A second reason little is being done in North Dakota to conserve electricity may be that there hasn’t been a recent rise in electric rates like other forms of energy. Compared to gasoline, fuel oil, propane, and natural gas, electricity prices have been incredibly stable.

Considering the low cost of electricity in North Dakota, we may even ask the question, “Does it make any sense for us to get excited about conserving electricity?” The answer is, yes, it probably does make sense. Even though the economic benefits are not as great here as in other parts of the country, we are probably making a mistake by not being more aggressive as consumers to conserve electricity. The stable, low electric rates we enjoy will not be here forever.

Based on growth patterns across the country, every utility will need considerably more generation to meet our increasing future demand. Most of our existing generation is more than 25 years old. The new generation will be much more costly and will certainly drive up the cost of electricity for all consumers.

From an economic standpoint, consumers who take action now rather than later will get a jumpstart on saving money. This will give them an early payback on whatever investment they have made. They will also be part of a movement, which will help to reduce the amount of new generation needed in the future.

There are, of course, many ways to conserve energy, and information is readily available on the Internet. Maybe the simplest and most effective action for a homeowner is to replace existing incandescent light bulbs with compact fluorescent light bulbs (CFL). The CFL bulb uses roughly 25% as much electricity as a comparable incandescent light bulb. CFL light bulbs have now gotten so reasonably priced that the homeowner actually saves on the cost of the bulb, as well as the energy savings. A CFL bulb may cost five times that of an incandescent light bulb, but it will last ten times as long.

We are fortunate we don’t have the economic stimulus for conservation that exists in many states with extremely high electric rates. This shouldn’t be a reason to be complacent. We will still do ourselves a favor if we start now to conserve our use of electricity, as well as any other form of energy.

Continue Reading »

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.

Continue Reading »
Mobile Menu Toggle
Call Nodak Electric