Why Connexus Energy won't raise electric rates for a fifth year

At a time when big Minnesota utilities are raising retail electric rates, CEO Greg Ridderbusch of Connexus Energy proudly notes that his electricity provider to nearly 140,000 institutional and residential customers has frozen rates for a fifth year.

Ridderbusch, who runs one of Minnesota's five largest electricity retailers, says the frozen rates were made possible through energy conservation innovation and growing investments in solar energy throughout the eight-county service territory northwest of the Twin Cities.

The secret sauce includes: cost-saving rate options now chosen by 10% of customers, which provides rebates for cutting demand during peak times and also saves Connexus money by shaving the peak demand, most expensive wholesale power purchases; two-way automated metering infrastructure; and distribution-grid tools such as battery storage and voltage controls.

"This is a great way to start the year," said Anoka County Commissioner Scott Schulte, a businessman who represents Anoka, Andover and Coon Rapids. "Anoka County appreciates Connexus Energy's hard work to control costs while supplying such reliable service."

Ridderbusch has a favorite slide, which he displayed at a 2021 presentation to the Minnesota Renewable Energy Society, which says: "When we generate power from solar, in our service territory, it saves $30 per megawatt hour" compared to the $85 per megawatt hour that Connexus pays to its power wholesaler, Great River Energy.

"Our biggest opportunity for improvement now is to lower the cost of wholesale power purchased from Great River Energy (GRE)," Ridderbusch wrote Connexus customers recently. "Connexus works to maintain the lowest distribution cost in the state — a strength offset by the highest wholesale power costs."

Therein lies the rub. Connexus is the largest of the cooperative customer-members that own and buy power from Great River.

Ramsey-based Connexus last summer announced plans to exit as a co-op member and become a customer that can negotiate rates. That also would free Connexus from a 5% limit on the amount of electricity it can generate independently from its own renewable-energy projects.

Maple Grove-based Great River has said it "welcomes the conversation" with Connexus.

"Great River and Connexus are working on a new contract that works for Connexus and doesn't harm our member-owner cooperatives," said GRE spokeswoman Therese LaCanne.

Both parties express optimism that they can negotiate a satisfactory solution. Connexus owns about 20% of Great River, which is owned by 28 co-op and other power retailers.

Great River is Minnesota's second largest electricity provider, ultimately serving about 700,000 Minnesota households and businesses. It is no slouch on renewables, generating 30% of its power from wind, a number expected to jump to 50% in 2030.

Connexus says it pays for some GRE services that it doesn't need. For example, in addition to investing in small-scale solar and high-tech conservation programs that are driven by consumer choice, Connexus also has the scale and deep enough pockets to market on its own, unlike smaller Great River co-ops, Ridderbusch said last week.

Connexus has kept its rates flat over the last four years and also gets high marks from independent rating agencies for reliability. Yet it pays the same wholesale rates as other Great River members.

Ridderbusch believes he has the leverage to lower wholesale costs from Great River if "more of our power is competitively sourced."

And Ridderbusch said he believes Connexus can easily double the power it gets from small-scale solar projects, very popular in its service territory, that now generate enough juice to power 3,700 homes at peak output, as well as more battery storage.

"We want to do more on our own and buy more economical power from GRE," Ridderbusch said.