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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Line worker profession is a great opportunity

May 2007

We have just gotten through the graduation season, and there are a new bunch of high school graduates who may or may not have plans for their future. We older folks know very well that the decisions they make and things they do over the next few years will have a profound effect on the rest of their lives.

One option for young adults is to consider a profession in the electric utility industry. Little research is necessary to find out that the average compensation in the utility business is very good regardless of where you live.

Opportunities in the electric industry have always been good, but they may be at their best in the near future. This will be especially true if you have an interest in being a line worker, or an interest in working in one of the trades associated with power plant operation.

I will talk mostly about the line worker’s profession, because that is the business Nodak is in being a distribution cooperative. For starters, the opportunities will occur because Nodak and many other electric utilities have an existing workforce with an unusually high average age and years of service. We are a small utility with only 67 full-time employees at this time. Of those 67 employees, 15 have over 30 years of service and another 16 have over 25 years of service. We expect that roughly 50% of our workforce will retire over the next 10 years. In addition, we occasionally have employees leave the organization for other jobs, or because their spouse has found a better job in another location.

The point here is that Nodak is not alone in this situation. Most electric utilities are facing similar succession planning issues, which is expected to put a strain on availability of trade workers such as journeymen linemen. Likewise, the power plant industry also has an aging workforce, coupled with the fact that many new power plants will be built over the next couple of decades.

So, you might ask, “what does it take to be a journeyman lineman?” In Nodak’s case, we generally hire people for these positions who have completed a lineman’s course at a trade school. There are excellent programs available at Bismarck State College and in Wadena, Minnesota. The lineman program takes less than one year and is very affordable. When we hire someone who has completed this course, they begin their employment as an apprentice. The Apprenticeship Program continues for another three years after being hired. During this period, the apprentice line worker’s salary increases until they are certified as a full journeyman lineman.

The lineman’s profession isn’t for someone who wants to always work 8:00-5:00 and never wants to work in inclement weather. If, however, you want a great profession with a relatively modest investment in education, this is it. If you are, or if you have in your family, a young graduate who is looking for a plan for the future, you may want to find out more about the lineman profession. A good start is to go to the Bismarck State College website on the Internet and click on “academic programs.” Follow the path to the Line Worker Program, and you will find information about the curriculum, as well as a contact person. A second thing you might do is find a journeyman lineman and talk with him. We can steer you to one if necessary, and I guarantee you will find they will be more than willing to talk to you about this great profession.

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Electricity is a good value

March 2007

I’m glad three years have elapsed since I had to write a column such as this one. I wish it were longer.

Effective with our April billing period, we will be increasing our retail electric rates by about 5.3%. This will coincide and offset an increase we will pay for our wholesale power from Minnkota Power Cooperative. Our Wholesale Rate is in fact going up by 8.5% at the same time. Since our wholesale power bill makes up about two-thirds of our total operating expense, we can get by with a smaller percentage increase in our retail rate.

The good news today is exactly the same as the news I conveyed three years ago. That is, even though the cost of electricity from Nodak is going up, the increases have been minimal for several decades. If you adjust for the value of the dollar, you are paying considerably less for electricity today than 15 years ago. As an example, a rural residential account using 1,200 kilowatt-hours in a month in 1992 paid $94.80. With our new rate going into effect in April 2007, the same account will pay $103.50. That amounts to a 9.25% increase over 15 years. In contrast, the Consumer Price Index has increased by more than 40% during this same period of time.

We haven’t included a lot of detail about the new rates because the increase is pretty even across the board. That means, each rate class received the same increase, and in fact, each component of each rate class will be increased by roughly the same amount. For that reason, it doesn’t matter how much power you use or which rate class (residential, commercial, or industrial), your cost of power will go up by about 5.3% in April.

We don’t anticipate the need for any further rate changes at least for the next couple of years. In 2009, Minnkota will be phasing in the cost of expensive environmental upgrades on their power plants. We may incur additional wholesale increases at that time, which will again affect our retail rates. Hopefully, the adjustment at that time will again be minimal.

All of our retail rates are available on our website at www.nodakelectric.com. We invite you to visit our website for that information, along with much more about your electric cooperative.

We also invite you to attend your annual meeting at the Alerus Center in Grand Forks on Saturday, April 14, 2007.

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Looking ahead at the Year 2007

January 2007

In a couple of months, we will be publishing our 2006 Annual Report. Along with the financial statements, we will be giving a very positive summary of a year that went very well. I won’t cover all of the details at this time, but I can say that we had a year with no electrical accidents to our employees or the public, no serious ice storms, no rate increases, and we had operating margins above budget. In short, we wish we could clone last year and repeat it every year in the future.

In 2007, we have a number of issues that will need much of our attention. First of all, this is a legislative year, and we may have bills submitted that need our support or opposition. The last four legislative sessions, there have been bills introduced by the investor-owned utilities to change the Territorial Integrity Law and thus take away our service area around cities. In all cases, these bills have been soundly defeated or withdrawn when it was obvious they had no chance of passing.

We expect there will be proposed bills this session that address the development of renewable energy. We are very supportive of further development of renewable energy, especially wind energy, provided it can be done in a responsible manner. To us, responsible essentially means that the risk of higher electric rates for our members is kept as low as possible.

In 2007, we will be required to hold a public hearing to comply with the new Federal Energy Act. During this hearing process, our board of directors must consider adopting net metering and time-of-use rates. During this public hearing, members have the opportunity to intervene and provide testimony in support or opposition to these issues. Notice of this hearing has been published in the newspapers and in our Nodak Neighbor. There is also information about the hearing available on our website www.nodakelectric.com. When you reach the home page on our website, you only need to click on “PURPA Notice” to access this information.

One of the differences in 2007 from the previous years is that we will almost certainly need to have a small rate increase. Our wholesale power costs from Minnkota Power Cooperative will be increasing by about 10% effective April 2007. With no other changes, we will need to increase our retail rates by 5% to 8% to cover the added cost of our wholesale power. It will be our goal to keep the rate increase as close to the 5% level as possible. We will be able to give you better information about this in the March issue of the Nodak Neighbor.

We hope that one year from now we can give you a year-end summary that is at least close to the one we have for 2006. We know already we won’t be able to match the “no rate increase” statement, but there is more to our service than the cost. We hope you will feel our overall service meets your expectations.

Happy New Year and Best Wishes for the coming year.

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The value of scrap metals and stolen copper wires

November 2006

The soaring price of copper and other metals has had a dramatic effect on Nodak in two ways. One of the two is somewhat costly, but mostly annoying. The second is very costly.

With higher costs for metals, the value of scrap metal has increased proportionately. Scrap copper today brings roughly twice what it did only two years ago. Because of this, people are more diligent in salvaging and selling copper and other forms of junk metal. Some are way beyond being diligent in that they are stealing copper wires from uninhabited farmyards. In some cases, the power has still been energized at a vacant farmyard when the wires have been cut down and removed. Needless to say, the thieves are taking some risk by cutting wires that have power flowing through them. Some of the wires being cut down from vacant farms belong to Nodak, while some are wires owned by the property owner. In either case, the cost to replace the stolen property is many times the relatively small value of the scrap copper. This, of course, compounds the frustration for both us and the property owner.

In one case, when a thief was caught by the property owner, he told the owner he was from Nodak and he needed to replace some bad wires. He, in fact, had already cut down some of the wires which were the owner’s property. He said he would return later with the new wires, which of course never happened. In this case, the pickup which the thief was driving was green and looked somewhat like the green vehicles driven by Nodak employees.

The second and more costly impact to Nodak with soaring copper prices is the price we pay for our conductor and transformers. By year-end, we will have installed roughly 1.7 million feet of underground conductor. The price of this conductor is $.70 per foot more than two years ago. As you can see, the added extra cost for conductor alone is over $1 million for the year 2006.

There is nothing you as the public can do about our increased cost of construction due to higher metal costs. There may, however, be things you can do to help with the theft of wires from vacant yards. Keep an eye open for things that look unusual. You may want to especially make note if and when you encounter someone at a vacant yard who seems not to belong there. We don’t want you to put yourself in an unsafe situation, but perhaps you can write down their license plate number if possible. You should then give this information to the local sheriff’s department and let them conduct the investigation.

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