Energy Policy Forum: Minnesota’s electric co-ops, community-led energy innovators
In early January, CEE hosted its second annual Energy Policy Forum. This year, we focused on Minnesota’s electric cooperative utilities and their role as hotbeds of innovation in the ever-evolving energy field.
Despite the cold night, the Policy Forum was widely attended by co-op and non-co-op utility leaders, public utilities commissioners, state agency and commission staff, environmental advocates, cooperative members, and interested community members. The crowd gathered to learn and talk about the innovative precedents cooperatives are setting in Minnesota and beyond.
Thanks to avid tweeters, you can get a decent sense of the evening by looking at Twitter’s #CEEforum hastag feed — but the historical community context provided early in the evening is an important part of understanding how and why these rural coops are able to lead, and it’s worthy of a bit more explanation.
Minnesota has three types of energy utilities:
- Government-owned municipal utilities like Rochester Public Utilities,
- Investor-owned for-profit utilities like Ottertail Power, and
- Member-owned nonprofit cooperative utilities like Steele Waseca Co-op.
Nonprofit co-ops are often found in rural areas where electrification was delayed until community initiatives took root in the 1940's and 1950's. Today, cooperatives and their members face many of the same challenging dynamics as other utilities, CEE's policy lead Mike Bull cited low load growth, changing customer demands, massive reductions in the cost of solar and wind, and aging infrastructure among the shared challenges. (More info: Minnesota’s e21 Initiative and Utility Business Model video.)
Today in Minnesota, rural electric cooperatives serve 85% of our state (by land area) and offer some of the country’s most innovative programs and long-term thinking in generation planning and investment.
Unlike investor-owned utilities like Minnesota Power, Ottertail Power, and Xcel Energy, cooperatives are governed by their member boards. Although co-ops may ask Minnesota’s Public Utilities Commission to review and approve retail rates, rather than their own board, very few have done so. (e.g., Dakota Electric opted for the MN PUC to approve customer rates instead of their board.) Innovative initiatives highlighted at the Policy Forum — such as bulk-buy LED programs that customers can pay for through on-bill repayment or special rates for electric vehicle owners — exist not because co-ops are regulated to create them, but because such offerings make good economic sense and are demanded by members.
In that theme, three forum highlights:
- Great River Energy (GRE) is Minnesota’s largest provider of generation and transmission services to cooperatives, with 28 co-op members. Keynote speaker David Saggau, GRE’s President and CEO, spoke about the “DryFining” project completed at their Coal Creek Station coal plant in 2016. This effort, which improves fuel quality while decreasing harmful emissions, has more than doubled the flexibility of the 1150 megawatt power plant so that it can now ramp down to just 300 megawatts of generation instead of its previous minimum of 800 megawatts. This new flexibility is key to GRE’s vision of "wind as the new baseload." Facilities that were once largely either all on or all off can now ramp up to maximize renewable usage over a period of just a few hours.
- The inherent business model and history of cooperatives allows members (AKA customers) to engage with their utility in uniquely powerful ways. Members are bonded by both the need for electricity and economic development opportunities that help keep their families and towns healthy. Stories shared at the forum illustrated the value of such bonds around shared goals, and other utility models don't offer this same social web to engage their customers. As utilities and regulators think about the potential for greater efficiency, customer engagement remains a key concern. Looking to co-ops as models of successful engagement, social networking, and collective action could unlock new opportunities.
- Joe Sullivan, CEE’s manager of strategic relations, talked about developing a new white paper that includes over a dozen interviews conducted with rural electric cooperatives from 2016. Joe recounted how a number of co-ops framed their work around renewable energy efforts; the conversation wasn't about efficiency as an end, but as a means toward decarbonization. As new generations of customers and leaders like Ryan Hentges at Minnesota Valley Electric Cooperative take the helm, this decarbonization frame and the extent to which it is either embraced or rejected becomes an important new factor in energy planning. As Wind on the Wires Executive Director Beth Soholt explained, "We don't lack the technology, but the will to move down this path.”
In such a complex environment, questions linger: How are cooperatives going to deal with growing electrification such as electric cars in low-density areas? Where else can co-ops and other utilities apply long-term investment decisions beyond accelerated power plant depreciation? How can natural gas utilities, delivered fuel providers, and electric cooperatives work better together? And how far down the decarbonization path will customer demands carry co-ops?
According to the International Co-operative Alliance (a global affinity organization of all different kinds of co-ops), one of the seven universal cooperative principles is “cooperation among cooperatives through local and regional structures.” Yet beyond their own tight circles, our Minnesota co-ops’ stories and impressive accomplishments are often under the radar and undervalued.
We hope this year's forum helped underscore that you don't need to look beyond Minnesota’s state line to see nation-leading examples of investment decisions and customer offerings that benefit from outside-the-box thinking. Utilities and policymakers would do well to consider such bright spots as we continue to move into an era of evolving utility business models and creative customer engagement.
Minnesota's Electric Cooperatives: Laboratories of Utility Innovation
Energy Policy Forum: Electric Co-ops Lead Minnesota Innovation (videos & presentations)
New Utility Business Model (video)