Sub-zero weather in the middle of February is nothing new to South Dakota. But the frigid weather which stretched across the entire central portion of the United States in the middle of February was unusual and brought an unprecedented chain of events to our service territory.
The energy emergency that was declared by the Southwest Power Pool (SPP) on February 14 was caused by extreme cold, high electric demand, and low supply across 17 states. Unfortunately, that combination of conditions led to outages on three substations within the Northern Electric service territory on February 16. We would like to thank our members for their patience during those outages and for conserving power during the energy emergency to help protect the entire grid against longer and more severe outages.
Our experiences in February demonstrated how critical a stable, reliable, and affordable power supply is to our lives. By now, we have all probably heard the news out of Texas of residents getting monthly residential electric bills of more than $10,000 because of the February energy emergency. Those astonishing costs are caused by utilities being fully exposed to a volatile energy market and passing the costs along to their customers.
These stories coming out of Texas bring the question: Can that happen to us here?
The short answer is no, and here is the reason:
As a member-owner of our electric cooperative, you belong to a broad cooperative network which helps to prevent the wild swings in energy prices that we saw in other parts of the country where some utilities are fully exposed to the energy market. Those utilities simply buy electricity on the market and do not generate their own power.
The electricity that powers your home begins with Basin Electric Power Cooperative, which owns the power plants and generation facilities that supply our cooperative with a diverse energy mix. East River Electric Power Cooperative is the transmission cooperative in our network that owns and operates more than 3,000 miles of transmission lines and 250 substations across South Dakota and Minnesota. Through that infrastructure, East River safely and reliably delivers wholesale power from Basin Electric and hydropower from the Western Area Power Administration to Northern Electric Cooperative.
East River and Basin Electric are members of the Southwest Power Pool (SPP). Basin Electric owns generation and transmission resources, and East River owns transmission and substation infrastructure in SPP which allows our cooperative network to sell power on the market when prices are high and buy power on the market when prices are low. Selling excess generation is a hedge against wild swings in the market. It helps Basin Electric, East River, and Northern Electric provide you with stable electric rates all year.
Northern Electric works together with East River and Basin Electric to share risk and avoid the fluctuations in the energy market like we saw in Texas. For-profit energy brokers can be exposed to fluctuations in the markets and consumers pay the price. This is why it is important for a co-op to be part of an organization that owns its own power plants and transmission facilities which can help shield you, our member-owners, against having to pay high market prices.
Northern Electric members can expect to pay the same rate during and after the energy emergency as they paid before because we have long-term resources to serve our load. It is a cooperative system that has provided safe, reliable, and affordable power to our members for decades. It is the power of being a member of our cooperative network.
By: Char Hager
Northern Electric Cooperative CEO/General Manager