I think it’s fair to say we all want to preserve our most valuable natural resources. Personally, growing up right here in northeastern Minnesota, I am an advocate of eliminating anything that would adversely affect our world which includes addressing climate change.
But is it that easy to shut down all fossil fuel energy generation overnight? I don’t think so. There is a fine line between reducing our carbon footprint and maintaining reliability to serve utility members and their way of life.
With that said, Lake Country Power (LCP) as a member of Great River Energy (GRE) is ahead of schedule when it comes to converting to a greener production of electricity.
We met Minnesota’s renewable energy standard of 25% by 2025 eight years early, and we will proactively meet the state’s carbon reduction goal of 80% by 2050, 27 years early in 2023. And, with the addition of 900 Megawatts of wind energy and the development of long-duration grid-scale battery storage to aid the transition, GRE will be more than doubling its renewable energy output. LCP is proud to be a part of this group of forward-looking cooperatives.
Sale of Coal Creek Station
We are always trying to balance what is best for our members when it comes to the operation of the cooperative. Recently, we were faced with criticism by some while justifying the sale of Coal Creek Station (CCS), GRE’s coal burning generation plant in North Dakota. In July, the LCP Board of Directors voted to support the sale of CCS instead of shuttering the plant.
It should be noted that many cooperative members support the recent decision concerning CCS, feeling it makes sense to maintain reliability as we work toward our renewable goals of eventually eliminating our reliance on coal. To some, however, the sale was seen as a broken promise by not demolishing the plant.
Part of the criticism we received centered around a perceived lack of transparency. As you can imagine, the sale of a large power plant and transmission line is a very complex transaction. These negotiations require patience, adaptability and confidentiality. Both LCP and GRE have shared general information in our newsletters, press releases and social media channels, within the limits of our non-disclosure and confidentiality agreements. The cooperative model depends on member input and LCP remains committed to providing as much transparency as we reasonably can in all aspects of the cooperative.
I’d like to offer some understanding as to what goes into such decisions and specifically why LCP voted in favor of selling CCS, while giving a positive outlook on the co-op’s future.
Electric Cooperative Governance
It all begins with what’s called cooperative governance. The strength of electric co-ops is rooted in the fact that they are led by members who belong to the communities they serve. Democratic member control is a core cooperative principle. The LCP Board overwhelmingly voted yes to support the sale of CCS after thorough discussion and considering all options.
Board members play a leadership role and guide the direction of the co-op. They play a pivotal role in strategic priorities and their input is key to keeping the lights on today and well into the future.
Each of LCP’s nine board members spend significant time and energy serving their districts in a highly complex and rapidly changing industry. They have a fiduciary duty to the membership and accept the risk and responsibilities of their decisions.
Every electric cooperative adopts its own bylaws and policies; and the board as well as management exercise transparency, ethics, accountability and strive to communicate good governance practices with their membership and the public.
Value of the sale
Selling the plant offers other benefits for GRE’s member-owners compared with shutting it down. The sale is expected to save the entire GRE membership an estimated $130 million.
Should the sale proceed, GRE will contract to receive energy and capacity from Rainbow Energy, purchasing 1,050MW for less than two years and then reducing our purchases to 300MW for the next eight years. GRE has options to exit the contract if clean energy goals are not achieved.
Reliability will be maintained by continuing to purchase from Rainbow for a period as we transition to a more renewable portfolio. The contractual relationship with Rainbow will also help insulate GRE and its member-owners from supply losses and price spikes during extreme weather events.
In addition, the associated high voltage, direct current (HVDC) transmission line will be sold to a subsidiary of Rainbow, called Nexus Line. Nexus will continue to utilize the experienced transmission employees of GRE under a contract for services for the next decade.
Lastly, it preserves hundreds of jobs and creates opportunities for the people who live and work in the plant’s surrounding communities.
The sale of CCS and the HVDC transmission system that extends between central North Dakota and Minnesota is expected to close later this year, after required approvals are obtained.
The evolution of a power supply portfolio is complex and each of these steps is important as we strive to reduce emissions and maintain affordability without affecting the reliability of the electric system.
As we advance, I’m confident that Great River Energy’s new power supply portfolio will serve its members for decades with cost-competitive renewables and market energy while retaining a fleet of natural gas- and oil-fired peaking power plants to assure reliable electric service.
Lake Country Power