Great River Energy held a roundtable discussion led by Patricia Hoffman, U.S. Department of Energy Assistant Secretary for the Office of Electricity Delivery and Energy Reliability at our headquarters in Maple Grove, Minn. on Tuesday. Hoffman led a discussion of smart grid technology development, the benefits the technology can provide and factors to be weighed and evaluated.

Gary Connett, Great River Energy, Director, Member Services & Demand Side Mangement (left) and Assist. Sec. Patricia Hoffman, U.S. Dept. of Energy (right)

Participants included:

• Assist. Sec. Patricia Hoffman, U.S. Dept. of Energy
• John Hewa, Cooperative Research Network
• Steve Palmquist, Co-op consumer-member
• Ryan Hentges, Minnesota Valley Electric Cooperative
• Prof. Georgios Giannakis, University of Minnesota
• Prof. Massoud Amin, University of Minnesota
• Commissioner David Boyd, Minn. Public Utilities Commission
• Rolf Nordstrom, Great Plains Institute
• Deputy Commissioner Bill Grant, Minn. Dept. Of Commerce
• Al Juhnke, Sen. Franken’s office
• Jaco Botha, Co-op consumer-member
• Ed Jenson, Lake Region Electric Cooperative
• Jay Morrison, National Rural Electric Cooperative Assoc.
• Gary Connett, Great River Energy

We shared the live discussion on Twitter. Search Twitter for #smartgridcoop to read the conversation.

The Star Tribune ran a story today about our smart grid announcement. Read it here: Power co-ops launch $5 million ’smart grid’ project

The United Nations General Assembly designated 2012 as International Year of Cooperatives, under the banner “Cooperative Enterprises Build a Better World.” The resolution recognizes the vital role cooperatives play in the economic and social well-being of nations around the globe.

“At a time when folks are losing faith in big corporations, International Year of Cooperatives 2012 offers us a great opportunity to showcase the many ways the local, consumer-owned and member-controlled cooperative form of business benefits communities all over the world,” said National Rural Electric Cooperative Association CEO Glenn English. “It gives cooperatives a perfect venue to contrast how we differ from profit-driven companies.”

Every day, more than 29,200 cooperatives supply essential products and services to American consumers. One example can be found in the morning paper. Many of the articles may be labeled “Associated Press” or “AP.” Those stories were written by individual reporters but distributed by a cooperative news organization.

If your breakfast includes freshly squeezed orange juice, it may be from a Sunkist product. Sunkist is a cooperative formed by California and Arizona citrus growers. And the list goes on: Land O’ Lakes butter, Ocean Spray cranberry juice, Sun-Maid raisins, Welch’s grape jelly, Nationwide Insurance, Blue Diamond almonds, Ace Hardware, REI outdoor gear – they are all cooperatives.

In fact, one out of every four Americans claims membership in some type of cooperative, including 91 million served by credit unions and 42 million connected to more than 900 electric cooperatives in 47 states.

America’s cooperatives build a better world:

• Provide 2 million jobs with annual sales of $652 billion
• Electric co-ops own and maintain 42 percent of the nation’s electric distribution lines that cover 75 percent of America’s landmass
• Two million farmers are members of nearly 3,000 farmer owned cooperatives
• More than 7,500 credit unions offer financial services to 91 million consumers
• Approximately 233 million people are served by insurance companies organized as or closely affiliated with co-ops
• Around 50,000 families use cooperative day-care centers
• Roughly 1.2 million Americans in 31 states are served by 260 telephone cooperatives
• More than 1.2 million families live in housing owned and operated through cooperative associations

Source: International Cooperative Alliance

Great River Energy recently completed a transaction that resulted in full ownership of Blue Flint Ethanol LLC after it purchased the remaining 51 percent ownership interests in the biorefinery from HES Ethanol Holdings LLC, a subsidiary of Headwaters Incorporated.

“Blue Flint Ethanol has been operating profitably since it began production in 2007. Great River Energy’s ownership of the biorefinery benefits its members,” explained Jeff Zueger, chief operating officer, Blue Flint Ethanol.

Great River Energy acquired 51 percent of Blue Flint Ethanol, an ethanol biorefinery located in Underwood, N.D. Prior to this acquisition, Great River Energy owned 49 percent of Blue Flint Ethanol.

Blue Flint Ethanol is a 50 million gallon- per-year dry mill ethanol biorefinery that uses process steam generated by the power plant to create a highly energy-efficient operation. In addition to ethanol production, the facility produces dry distillers grains, a high-protein, nutritious feed for livestock and poultry, and fuel-grade corn oil.

Blue Flint will operate as a wholly owned independent subsidiary of Great River Energy. The biorefinery will continue to purchase process steam and other services from Coal Creek Station. Opportunities will also continue for Great River Energy and Blue Flint Ethanol employees to support each other with shared resources from time to time.

Great River Energy was the first utility in the United States to locate an agricultural processing facility next to a coal-fired power station. Because it was built near a power plant, Blue Flint Ethanol was able to avoid the cost of building and operating a separate boiler unit. This helped make Blue Flint Ethanol one of the most cost effective, energy efficient and environmentally friendly ethanol plants in the country.

Great River Energy has owned the Elk River Resource Processing Plant for more than a year now.  This facility processes the municipal solid waste used to make refuse-derived fuel for our Elk River Energy Recovery Station.

The plant has yet another reason to celebrate; 100 percent of the incoming municipal solid waste was turned into refuse derived fuel or recycled products in the month of October. This was the first time in the history of the project that the processing plant did not landfill any materials.

Learn more about  Great River Energy’s Elk River Resource Recovery Project:

Watch a video

Visit our website

Among the seven cooperative principles is one known as “concern for community,” which states that beyond providing service to members, cooperative businesses must work toward the development of sustainable communities.

Great River Energy works with each of our 28 member cooperatives to ensure that the communities they serve have economic activity, jobs and all of those things that make an area a great place to live. One of the most important components of livable communities is health care.

“In addition to providing reliable, affordable power, we’re out to increase the quality of life of our members,” said Great River Energy Economic Development Director Tom Lambrecht. “Health care is a vital component of community strength.”

The new Essentia Health St. Mary’s-Pelican Rapids Clinic opened in late October.

Great River Energy has helped enhance health care in greater Minnesota by helping its members earn funding from state, regional and national programs that offer grants and loans.

“Our members are tuned in to what’s going on in the community, so we help them get the financial boost that they may need to bring a project to reality,” added Lambrecht.

Great River Energy’s economic development efforts have generated $3.5 million in funding for hospitals and clinics that serve Minnesota’s cooperative members. This year alone, Great River Energy has helped three cooperatives secure financing for major expansions at medical facilities.

Through a program of the United States Department of Agriculture (USDA), Lake Region Electric Cooperative received more than $680,000 in funding for Essentia Health St. Mary’s Clinic to build a new clinic in Pelican Rapids, Minn. According to the terms of the USDA Rural Economic Development Loan and Grant (REDLG) program, the loan will be made with a low interest rate.

In February, Great River Energy assisted North Itasca Electric Cooperative in securing a $740,000 loan that will be used to remodel and expand the Bigfork Valley Hospital. The project includes a new outpatient pharmacy, 24-hour wellness area, dietary kitchen and conference rooms.

A $740,000 USDA loan was recently awarded to Lake Country Power to re-lend to the Community Memorial Hospital in Cloquet, Minn., for an expansion project. Although Lake Country Power doesn’t provide electric service to the hospital, the residents in the surrounding townships will benefit from the hospital expansion.

The economic development efforts of Great River Energy and its member cooperatives are another way that electric cooperatives are improving the quality of life in communities they serve.

In 2007, Minnesota passed a law that required all the state’s electric utilities to fulfill a quarter of their energy needs with renewable resources by 2025. Although the final goal is more than a decade away, the Minnesota Public Utilities Commission recently requested that utilities report requirement’s cost or benefit to consumers.

Great River Energy reported that in 2010 the estimated wholesale rate impact of the Renewable Energy Standard (RES) requirement to our members was $22 million. That amounts to $0.002 per kilowatt-hour (kWh), which means that a home using 1,000 kWh per month would pay an additional $24 every year as a result of the RES.

The report included costs associated with renewable generation from wind and biomass as well as administrative and transmission costs. Great River Energy’s primary reason for higher costs is that our cost of purchasing wind energy was higher than the value of that energy, on average, during the times of production.

Until energy market prices recover from the recent lows, renewable energy is expected to continue to be a cost to Great River Energy. However, if prices rebound renewable resources could become economical.

“At this point, the environmental benefits of wind energy are coming at a cost to our members,” said Great River Energy Member Services Vice President Jon Brekke. “The impacts could grow as we ramp up to the full 25 percent goal by 2025, but this depends on many complex factors including future market conditions.”

These costs are not unique to Great River Energy. Other utilities also reported on RES impacts using various calculation methods. As a result of the various methods and unique resource portfolios, there was wide variation in reported cost impacts.

Our existing renewable energy resources (including wind and biomass) will ensure that we remain compliant with Minnesota’s RES through at least 2020.

Great River Energy invested early in wind generation in an effort to claim the best sites for wind resources and transmission access. Existing projects have also benefited from federal tax incentives which are scheduled to expire at the end of 2012.

A recent survey of cooperative businesses showed that Great River Energy is among the biggest in the United States.

Each year, the cooperative bank NCB announces the top 100 cooperatives in America to demonstrate the business activity and economic power of member-owned businesses. In 2011, Great River Energy was listed 58th largest in terms of revenue.

Cooperative entities exist in many industries, including agriculture, grocery, hardware, finance and housing. According to NCB, cooperatives provide more than 850,000 jobs and create more than $74 billion in annual wages with combined revenue of nearly $500 billion.

Imagine if you paid for electricity the same way you pay for gas or groceries. You’d be billed one or two cents every time you watched a TV show. For a week running your refrigerator, you might be charged as much as a dollar.

Like most consumers, you probably don’t think about electricity costs in this way because electricity has always been such an affordable energy source. Great River Energy recently approved its 2012 budget that will ensure a reliable and affordable power supply.

Our board of directors, which is made up of our member-owners, budgeted a revenue requirement from members of $810.5 million in 2012, an increase from the 2011 budget of $756.6 million.

Budget drivers
Factors inside and outside of Great River Energy are contributing to gradual increases in the cost of service. One example is the cost of enhancements to our electrical infrastructure. Over the past decade we have invested in generation and transmission resources as well as environmental improvements.                                                                                 

Heavy precipitation and deeper coal seams are leading to additional work and costs at Falkirk Mine, the fuel source for our largest power plant.

Those investments are putting additional pressure on costs as a result of economic factors. Home building has fallen off, so there are fewer new members. The way people use electricity is also changing, as members are using energy more efficiently. In a cooperative business, fewer new customers and reduced sales puts upward pressure on prices.

The cost of generating electricity is also increasing, both with traditional resources and newer technology. Great River Energy’s fuel costs will be higher in 2012, primarily because costs are increasing at the North Dakota coal mine that supplies fuel to our largest power plant. In addition, a Minnesota regulation that mandates renewable energy is also leading to higher costs. In fact, costs associated with remaining compliant with Minnesota’s Renewable Energy Standard are expected to cost our cooperative about $30 million, or add about $2.50 to the average homeowner’s monthly electricity bill in 2012.

Although investments in new resources may lead to higher rates in the short term, they will provide long-term benefits to members. A diverse mix of power generation assets and purchases means that Great River Energy doesn’t expect to need new resources for many years.

Keeping power affordable
All utilities are taking measures to keep power costs down. Great River Energy has a business improvement program that has resulted in significant cost reductions. Our operating costs have remained relatively flat over the last five years, despite heavily investing in its infrastructure. In fact, our operations and maintenance budget for 2012 is less than it was in 2007.

We are also working with the communities we serve to encourage smart growth through economic development, demand-side management and energy efficiency programs. Commercial activity in cooperative communities is beneficial for end-use members and electric cooperatives.

What can you do?
Great River Energy and our member cooperatives offer a variety of resources to help you use electricity more efficiently. Most homes have the potential for enough low-cost efficiency improvements to counteract annual increases to power costs. To put it another way, even though rates may increase, your bill doesn’t need to.

Contact your electrical cooperative to discover ways to become more efficient and take control of your electricity bills.

North Dakota Sen. John Hoeven outlined a coal ash recycling bill, the Coal Residuals Reuse and Management Act of 2011, at a recent news conference in Bismarck, N.D. Great River Energy Generation Vice President Rick Lancaster also spoke in favor of the bipartisan bill that would protect the beneficial use of coal ash.

Great River Energy Generation Vice President (third from right) joined Sen. John Hoeven (at podium) at a recent news conference to speak in favor of a bipartisan bill that would protect the beneficial use of fly ash.

The bipartisan legislation, introduced Oct. 20, preserves coal ash recycling and also establishes federal standards for coal ash disposal. Under the legislation, states could either set up their own permitting program for the management and disposal of coal ash based on existing Environmental Protection Agency (EPA) regulations to protect human health and the environment, or the EPA will implement the program.

“North Dakota handles coal residuals not only with good environmental stewardship, but also with innovation and common sense. Instead of filling our landfills with coal ash, we’re safely using this byproduct to build stronger and more cost‐effective buildings and roads. This bipartisan legislation empowers states and, just as importantly, it helps to preserve and create jobs that our nation so badly needs,” said Hoeven.

Great River Energy markets more than 400,000 tons of fly ash annually from Coal Creek Station and Stanton Station for value‐added uses. This eliminates the need to landfill that product.

Minnesota recently hosted the organization that represents electric cooperatives across the country when the regional meeting of the National Rural Electric Cooperative Association (NRECA) convened in Minneapolis.

Representatives from electric cooperatives in six Midwestern states attended presentations about future mix of generation sources and the direction of national energy policy. More than 1,000 people took part in a panel discussion about the culture of safety in electric cooperatives.

NRECA is the national service organization for more than 900 not-forprofit rural electric cooperatives and public power districts providing retail electric service. NRECA’s members include consumer-owned local distribution systems and 66 generation and transmission cooperatives, like Great River Energy, that supply wholesale power to their distribution cooperative member owners.