by Brad Dolinski, CEO
Good afternoon NIECI,
We had a serious blast of winter followed by a glimpse of spring. This swing in temperatures and winter conditions had some serious effects on our industry. I will dive into this shortly.
On the positive side, all our snowmobilers out there are grinning ear to ear with the arrival of snow. I know a group of anglers excited for a lucrative annual fishing event happening this weekend. Events like these bring out the fun winter in Talmoon has to offer. Thanks Jim, your efforts put smiles on many faces!
During January we had ten days of extreme cold conditions. So, we say it gets cold in northern Minnesota every year. This event was important because the cold spread across the nation. When the temperature drops across the nation the demand for natural gas increases dramatically. Many power supply peaking plants operate off this same supply of natural gas, very large amounts of natural gas. This will cause dramatic supply and demand pricing spikes in MISO.
Along with the limitations of natural gas there were other significant impacts to note. The DC line from North Dakota to Minneapolis had an issue. This led to one of the circuits remaining down during the freeze. The wind did not blow significantly during this time either. We have a large reliance on wind power in Minnesota; when the wind doesn’t blow, we need power from other sources.
Thankfully our peaking fleet responded to the need for reliability. The fleet was forced to run on fuel oil during the cold snap because of the price and availability of natural gas. This came at a cost in MISO. Local market pricing in our MISO Zone hit an average of $265/MWh with a peak of $704/MWh. In context we expect to pay in the range of roughly $25-$57/MWh for the same power costs.
This leads me to the point that I need to make. I need to discuss the Power Cost Adjustment with our Board of Directors this month. NIECI received a PCA of roughly $120,000 from the cold snap in January. This PCA is charged to us when events outside the control of GRE happen. Our Board of Directors has the decision to pass these charges back to members or hold them depending on the situation. NIECI used to pass the PCA, no matter the amount, monthly back to the member. We haven’t done this for several years. We may need to pull this lever once again.
If the board chooses to pass the PCA to members, I will recommend spreading it over several months. Possibly with favorable conditions in MISO we could see reduced charges. Worst case scenario, we will have to pay about $.02/kWh more for the power we consumed in January. I will keep you posted on the results of this situation as I know more.
By your side! Miigwech
Brad
