CEO Column // August 2022

Good afternoon NIECI,

It is 7/19/22 today, and the weather is hot and humid.  Just right for the development of a strong thunderstorm!  I have had all the storms and wind I can stand for this summer.  We have trees laying on the ground and leaning over our lines everywhere right now.  The right of way that was looking in pretty good shape has a lot of potential for issues suddenly if these storms don’t stop.  We will be addressing the leaning trees; these came from outside the maintained right-of-way (20’ from both sides of our line).  We don’t have the right to cut these problem trees until they are leaning toward our lines, this is a safety and reliability issue now that we must address. 

Another thing I need you to understand about these storms, I do not budget for these.  This sounds careless and crazy; I’ve lived here for five years, and we see a couple of major events yearly.  I do understand this.  We budget for modest events, or historical outage levels.  This comes to almost $300,000 in a normal year.  The major events we saw in May and June are already excess of $400,000.  I don’t budget for these big events for two reasons.  Number one, we do not know if they will happen.  Number two, and the most important…. I would have to raise rates if we budgeted the major storms into the figures.  Anyone that reads my articles knows, there’s going to be a catch… 

We are currently working through the costs of these storms.  We won’t know the total impact until all the broken equipment has been accounted for and replaced.  We had damage to one of our substations during these events, that material is expensive and a quick trip up Mt. Everest might be easier than trying to find replacements in this market.  We will get the parts; we just must wait unfortunately.  Once the finances are in, we can go to the State of MN to request relief.  There are no insurance policies that cover electrical distribution systems.  If our claim to MN is approved, we will see some aid.  That is when I need to sit down with my staff and prepare for the conversation with the Board.  We may need to come to you for help paying for these major events we sustained this summer.  This would be a onetime flat fee in the tens of dollars per service.  As a Member-Owner we share in all costs together.  This cost was handed to us from Mother Nature and now we must manage it.  I will continue to update you and include a proper explanation SHOULD we need to make this request.

Now I’m going to share another lovely conversation with you.  The week of our annual meeting, a report was issued with concerns of MISO and rolling black/brown outs in the region.  This subject did come up at the Annual Meeting.  I’m glad it came up; we do need to talk about this.  I spent the better part of the week calling Great River Energy preparing for this conversation prior to the meeting.  Here is some information for you related to that today.

To be a MISO participant like GRE (us), you must have enough generation to cover 107% of your peak demand load.  You must have all your load covered plus a buffer of sorts.  MISO rules also allow you to purchase capacity from the yearly auction if you don’t have enough to cover your needs.  This is the point of contention.  GRE (Great River Energy) came to the auction long in capacity, we sold this capacity for a reasonable profit.  Others in the MISO footprint came to the auction needing more capacity than was available.  This is the concern of rolling black or brown outs.  Currently there is enough capacity or power produced to cover the peak demands, there isn’t the 7% buffer that MISO requires.  We have plenty of engine to get the car up the hill, we can not strap a D7 bulldozer on the bumper and still make it.  I feel very confident we are safe today; we should not see rolling black outs this summer.  We do need an answer to this issue, continuing to shut down power plants and not allowing to build new isn’t the answer as we look to more electricity being used in the future.

I will continue to update you on this issue as well.  We will need your voice in the future.  None of us want to pollute our back yards or anywhere on the Earth.  We continue to green the power generation fleet; we need to be mindful of the pace of change though.  Changes will continue to improve the air quality, but most system operators will tell you the technology is not here yet to support 100% green energy.  GRE has outpaced their transition to a reduced carbon future, we will continue along this path.  We are also very mindful of you needs and expectations to have the lights come on when you flip that wall switch.  Until we can capture energy in a cost-efficient battery, I’m convinced we need base line power plants to support our transition.  One thing to research is some of the very interesting work being done with small scale modular nuclear plants.  This technology has changed a lot since the 1970’s, could this be the answer to our energy future? 

I think I better stop there; I’ve given you all a lot to think about.  Hopefully you’ve been out enjoying the summer before it slips away on us.  I have a couple of fishing events planned yet this summer.  Thankfully Jim and Lisa got us out on quite possibly the most fun pontoon built over the Fourth of July weekend.  I always like to say, it’s not the furniture or how fast it’ll go, it’s about the company sitting on it.

By your side! Miigwech