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Co-op’s rates not regulated
Under state law, the PUC has no authority to set electric rates for Great River Energy or local cooperatives unless their customers vote to be regulated, and most haven’t. The law assumes that co-ops, whose customers elect their boards, can set fair rates on their own. But the PUC, when reviewing utilities’ 15-year plans, can influence what power plants are built, retained or retired.
Great River Energy has blamed recent rate hikes on investments in new and existing power plants, higher coal costs, slack demand and other factors. The mothballed Spiritwood plant produces no revenue, but Brekke said it will begin operation in November 2014.
In an unusual alliance, ethanol producers are making the same argument as four environmental groups that also have questioned Great River Energy’s business decisions. They say the utility’s forecasted growth is too optimistic and doesn’t consider that higher electric rates will cause customers to curb their use of power, further reducing the need to generate it.
“We have been trying to point out these cost risks,” said Beth Goodpaster, an attorney for the Minnesota Center for Environmental Advocacy, a St. Paul-based nonprofit whose goals include cutting greenhouse gases from fossil fuels. Goodpaster said Great River Energy could save money — and cut emissions — by retiring a 47-year-old coal-fired power plant in Stanton, N.D.
The company defends its forecasts, which have been cut to just 1 percent annual growth over the next five years, a fraction of the pace in recent years. “I wouldn’t say we are overly optimistic,” Laureen Ross McCalib, the company’s manager of resource planning, said of the predictions.
Great River Energy also says the Stanton plant is efficient and worth keeping. Yet the utility recently disclosed its desire to retire as uneconomical an even-larger coal power plant in Genoa, Wis. The utility gets half the plant’s output under contract, but doesn’t own or operate that plant. Its partner and operator of the 44-year-old plant, Dairyland Power Cooperative, doesn’t agree it should be shut down. The dispute over retiring it has gone to arbitration, the utilities said.
Price concerns over the past decade have separately caused some of Great River Energy’s local co-ops to seek alternative wholesale power suppliers. Yet the company still has support from co-op members who believe that economic challenges in recent years, not bad business decisions, brought on rate hikes.
“All the distribution co-ops were growing,” said Syd Briggs, general manager of Steele-Waseca Cooperative Electric, which serves the Al-Corn plant in southern Minnesota. “The economy was doing great. … Then, not only did we stop growing, but we started to retract. Now we have too much capacity. We have to wait to catch up.”
David Shaffer • 612-673-7090 • @ShafferStrib