by Brad Dolinski, CEO
Good afternoon,
Thank you for coming to the 84th Annual Meeting of North Itasca Electric Cooperative Inc.
The challenges of our industry continue to grow. I am very thankful I work with our Board of Directors and outstanding employees. These Directors and employees guide us through the difficult times we face. Thank you for your commitment to our Member-Owners.
Lake Country Power was kind enough to share their safety trailer with us today. Thank you to the Linemen for presenting the safety demonstration. Thank you for working safely every day on our behalf. Through the wind and rain these guys are out there for all of us; we appreciate all of you! Our Line Department is the definition of dedication.
My office professionals are front line workers in my eyes. We couldn’t function without all your contributions to the success of North Itasca Electric. No matter the task, this group is up to it. They are a joy to work with, and I am very fortunate to have such a great team.
Member service is the core of what we do. We are here to serve you, the Member-Owners who built us. All my employees and Directors share in this vision. We are making some changes in the services offered to our Member-Owners. We are working on additional electrical supplies, HVAC equipment and air source heat pumps. Not to make a shameless sales pitch here, I encourage you to visit with Drew about what he has to offer you, some real energy savings. Thank you to our enthusiastic Member-Service department.
Our Board of Directors is absolutely top notch. This group of professionals study and invest themselves in our cooperative. Outside the monthly meetings we are expected to participate at many other functions. We have a seat on the Board of Directors with Great River Energy. Lloyd serves our members well in Maple Grove in that seat. We have Mr. Waller who is the Chairman of the Board with Minnesota Rural Electric Association. Many hours are spent serving the good of cooperatives throughout Minnesota with these posts. Our directors come to the meetings prepared, studied and willing to discuss the business at hand, once again serving our Member-Owners.
2023 was just a different year. I often feel like we are still on a rollercoaster of ups and downs that seemed to start around the time of COVID. We are still struggling to get equipment, and the costs are ridiculously high compared to 2018. We have all experienced the changes in our personal lives in one shape or form. Your cooperative is no different.
We had a good year in 2023 financially. For the first time since I have been here, we had a unique decision to make, do we defer monies from one year to the next? We chose to defer roughly $240,000 from 2023 margins into 2024. This was done to offset expenses expected in this year’s budget. This lessened the potential need for additional revenue from you our Member-Owners. Yes, we still had a small rate increase. This was primarily due to a rate increase from Great River Energy. These increases must be passed through to our members moving forward.
Last year in Northome I talked about the pressures we are feeling on rates, that hasn’t changed. We discussed the rollercoaster effect of rate design that worked in the past, raise rates and you’re plush for the first year or two. By year three to four we were hanging in the sweet spot, and then by year five we were barely meeting our lenders’ financial requirements. I don’t like that method. I prefer to present the budget as accurately as possible, if we need to raise rates a little at a time it seems more fiscally responsible than taking a large jump every four to five years. Additionally, the world is changing so rapidly that flat rates are almost impossible to maintain at a small cooperative.
I love my job, working with and for you my Member-Owners makes it enjoyable. I love to get out and visit with my friends and neighbors. I get asked what my concerns are or what is new at the cooperative on a regular basis.
I am still trying to comprehend the impacts of Carbon Free by 2040.
Folks, the best way I can explain this is to compare the changes to your body. Please imagine your beating heart is the centralized power plant for this comparison. We’re going to run power or blood to everywhere it needs to be in your body. As you get further from the heart, your vessels get much smaller. This same theory works with our power transmission system. As you get further from the power plant the lines get much smaller. Now let’s eliminate the power plant, or your heart. We’re going to use something different to push blood through your body but we’re going to start from your fingertips. The problem is the vessels are too small. Not enough blood can flow through the capillaries in your fingertips to supply your body’s needs. The same is true for the electrical system.
Wind and solar projects are often built away from the load centers. There become issues with what is called congestion. The lines are simply not big enough to carry all the power necessary back to where it is needed. Currently we have two options, build the system bigger or shut the turbines and solar panels off. When the turbines and panels are shut down there is still a requirement to pay for the “avoided cost” of what the facility would produce. Billions of dollars will be invested into transmission lines to carry this energy to market.
Additionally, we are not replacing like for like power plants. That huge power plant was designed to run almost wide open. Those plants were like Caddys from the 60s and 70s. Big and fast, they would just float down the road at 70 mph. The wind and solar resources we are building today run much differently. They are an intermittent resource; when a large cloud floats over a solar farm the output is drastically lowered until direct sunlight hits the panels again. If the wind isn’t blowing where you have your windmills, you won’t have power. This is the reason we need to start having different conversations than we have had in the past.
For the shift to carbon free to work, we must be open and honest about our needs. We need real storage solutions; two to four hours isn’t enough. We need forty-hour batteries, and we need them at a price we can afford. We still need spinning steel. What does this look like outside carbon emitting resources? We will need to have real conversations about small modular nuclear technologies. We will continue to have limited discussions about these technologies until Minnesota lifts the moratorium on nuclear plants.
Folks, the system is changing. All the investments in transmission lines, distribution lines, windmills, solar panels, storage technologies come at a cost. These costs will be paid for by us, all of us. If you have power, you will be a participant in these changes. I encourage you, let your voice be heard. If you are for or against these changes let me know. More importantly, let your voice be heard with your representatives and senators in Minnesota. I have many friends on all sides of the political aisle, it’s going to take all of us to make this monumental change work. Once again, we need to be open and honest about the needs of the grid before the problem hits our yard.
Speech delivered at the Annual Meeting, June 13, 2024.
