Energy Transition in Rural America (Spring 2022) - Dakota Electric Association
By Anna Giesting and John Micevych
Courtesy of Dakota Electric
On Tuesday, April 5th, the class visited Dakota Electric Association, an electricity distribution cooperative based in Farmington Minnesota serving suburban and rural communities southeast of St. Paul, spanning roughly from “Red Wing to 35W” (see map).
The visit featured presentations from several members of Dakota Electric management, who each answered questions from the class and later provided a tour of Dakota Electric’s control room (below are selections from the presentations).
“The future is exciting. We embrace it and are ready for it.” - Greg Miller, President and CEO
A veteran of Dakota Electric for 25 years and CEO for 20, Miller expressed pride in Dakota Electric’s reliability, affordability, and concern for the environment - all through a period of significant growth.
Since 2000, Miller shared that Dakota Electric has added over 30,000 new customers and 500 million kWh in sales (now split roughly 50-50 between residential and commercial). Slowed housing growth in the Great Recession flattened membership and sales for a few years, but while membership is growing again at nearly 1,200 members per year, sales have stayed flat due to efficiency devices and programs. Through it all, Dakota Electric continues to provide reliable service that is among the best of co-ops throughout the country and at rates 6-7% below Xcel Energy’s.
Miller shared that Dakota Electric is a member of - and buys nearly all its energy through - Great River Energy, a generation and transmission (G&T) co-op which the class is set to visit next week. He highlighted the significant shift in Great River Energy’s generation mix from coal to wind power, including Great River Energy’s diminished 300MW take from the Coal Creek station through 2030, with further decreases afterward.
Courtesy of Dakota Electric
He also highlighted Dakota Electric’s own emerging solar resources, including a recent 3MW solar facility in Farmington South (installation photo from Great River Energy press release at left), and expressed an optimism in Dakota Electric’s preparedness for distributed energy resources. A big part of that preparedness is Dakota Electric’s recent advanced meter upgrade project, which installed new smart meters for every customer and represented the single largest project that Dakota Electric has ever taken on. Miller and his team are particularly excited about the data coming in and the innovation it can unlock.
“[Dakota Electric is] known for load management” - Jon Beyer, VP of Energy and Member Services
Relatively new to Dakota Electric, Beyer has nearly 20 years of experience in co-ops split between Tri-State G&T and a distribution co-op in Pueblo, CO, and highlighted Dakota Electric’s national reputation for load management.
Beyer shared that Dakota Electric can move 35-40MW off of peak demand in the winter months, in part through water heating, and over 100MW in the summer, in part through air conditioning cycling. In addition, of Dakota Electric’s 200 largest accounts, the majority can shed load by running diesel generators. Beyer also expressed excitement for load management through electric vehicles - with only 42% of EV owners in their service area currently enrolled in a load management program.
One of the authors of this blog post prepares to be interviewed in the Dakota Electric lobby
Beyer also spoke to Dakota Electric’s member services efforts, including an annual member appreciation event at the Minnesota Zoo, a monthly newsletter “Circuits,” and outreach at county fairs, home shows, and with local groups. Dakota Electric also operates a call center, which it expects will be important for the nearly 12K members, or 10% of total membership, who have fallen behind on their bills. Dakota Electric will be sending disconnect notices following the expiration of the Cold Weather Rule in April.
Finally, Beyer discussed Dakota Electric’s role in regional economic development, including its work with GreaterMSP to attract national companies looking to locate their business within Dakota Electric’s service territory.
“[Dakota Electric is] different from many other co-ops in Minnesota” - Corey Hintz, CFO, VP of Financial Services
With Dakota Electric since 2014, Hintz emphasized the differences between Dakota Electric and other co-ops in Minnesota, including scale (Dakota Electric is the second-largest distribution co-op in Minnesota) and service density (Dakota Electric is more dense than most co-ops).
Hintz also discussed some of the challenges posed to Dakota Electric and its membership by the COVID-19 pandemic, including the need for arrearage forgiveness (a 12-month program set to expire October 2022), managing inflation (some plant equipment has doubled in price), and planning for supply chain issues (lead times of 52 weeks, up from 17 weeks, for some parts).
He also shared that Dakota Electric has lending relationships with CoBank and CFC, having bought out of a relationship with the USDA’s Rural Utilities Service over 20 years ago and more recently transitioned some of its portfolio to CoBank.
“There is already a level of oversight at Dakota Electric not seen at profit driven utilities” - Adam Heinen, VP of Regulatory Services
Heinen worked for 14 years at the Department of Commerce as a regulatory analyst and ratepayer advocate before the MN Public Utilities Commission (PUC). For Dakota Electric, he interacts with the PUC as well as federal regulators to monitor legislative and local government issues and compliance.
Dakota Electric is the only rate-regulated electric cooperative in Minnesota, a decision made by Dakota Electric’s members during the 1980’s. All petitions for rate changes go through the co-op’s board before going to the PUC. Nearly 100% of Dakota Electric’s rate requests have been approved by the PUC, something that sets them apart from many investor-owned utilities.
Part of the reason for their high approval rate is the PUC’s trust in Dakota Electric to only ask for a rate increase when it is strictly necessary. Dakota Electric’s accountability to their members and not-for-profit structure means they strive to keep rate increases to a minimum. Dakota Electric also strives to keep fixed costs low with a current fixed cost of about $10, lower than many other utilities.
Looking Ahead: Dakota Electric and the energy transition
Dakota Electric is making strides towards beneficial electrification whereby electricity is used for end-uses previously powered by fossil fuels to reduce greenhouse gas emissions. Dakota Electric has partnered with Great River Energy and Schmitty & Sons on a pilot program for a battery electric school bus. The electric school bus is being compared to a conventional diesel engine school bus to understand both the economic and emission benefits of electrification. The electric bus is 100% battery powered, charging in 4 to 6 hours, and 100% wind powered, preventing 15 metric tons of CO2 emissions annually. Additionally, the electric bus saves $12,000 annually on operation and maintenance costs compared to traditional buses.
Dakota Electric also offers two different EV charging programs to best serve their members' needs. Members can choose either the off-peak storage rate, which is lower cost but only allows members to charge their vehicles from 11pm to 7am, or the time-of-use rate, which costs more but allows members to charge their EV any time of day. Dakota Electric also offers a $500 rebate to cover the cost of a charging unit.
Dakota Electric provides several other rebates, including a $500 rebate for installing solar panels, a $500 rebate for a heat pump water heater, a $300 rebate for installing an air-source heat pump (although a higher promotional rate is offered through Aug. 31), and a $2 rebate for each LED bulb. These rebates help encourage the adoption of more energy efficient electric appliances.
These electrified appliances will be increasingly powered by renewable energy sources. Great River Energy has committed to reaching 50% renewable energy production by 2030 and is on track to reduce CO2 emissions by 80% by 2025. The class will learn more about this transition on next week’s field trip to Great River Energy’s headquarters.
Dakota Electric Control Room lead presents the Dakota Electric service area to Professor Gabe Chan and students