Vol. 20, No. 4 www.eastriver.coop April, 2007
S.D. renewables
recognized in
national magazines
Recent editions of national magazines salute several renewable energy projects installed by Touch-stone Energy Cooperatives in the Dakotas during 2006.
RE Magazine
An article in Rural Electric Magazine will feature several dis-tributed generation sites in East River’s service territory. The May edition article, “Grassroots Genera-tion,” will focus on renewable en-ergy projects completed during 2006.
The projects featured in the ar-ticle include the Oak Lane Hutterite Colony wind turbines, Midwest Dairy Institute digester and North-ern Border Pipeline heat-recovery units.
Combined Cycle Journal
The four heat-recovery projects along the Northern Border Pipeline in North Dakota and South Dakota received a 2007 Pacesetter Plant Award from The Combined Cycle Journal. The plants are the first in the world to use this technology.“Basin Electric … has confirmed the viability of recovering heat from the exhaust of gas turbines driving pipeline compressors and convert-ing it to “green” megawatts,” wrote the magazine publisher.
SUBSTATION REENERGIZED... East River and Sioux Valley Energy technicians restore power after a telecommunications upgrade in March at the Brandon Substation.
Four Minnesota cooperatives
seek membership in East River
On March 26, East River received notice that four Minnesota coopera-tives are requesting a partial-requirements membership with East River, pend-ing the completion of a satisfactory supplemental power supply contract. The four electric cooperatives in western Minnesota are looking to East River and Basin to supply their load growth after May 2009.
During its April 5 meeting, the East River Board approved accepting each of these systems as new Class D members. The distribution cooperatives seeking partial-requirements membership in East River are:
Agralite Electric Cooperative of Benson, MN
Meeker Co-op Light and Power Assn. of Litchfield, MN South Central Electric Association of St. James, MN Redwood Electric Cooperative of Clements, MN
The Board also authorized the officers to sign the agreements necessary to implement supplemental sales
to these systems beginning May, 2009.
During their April meetings, the boards of these four dis-tribution sys-tems are sched-uled to consider the contract and make a final de-cision by May 1, 2007.
Agralite Electric Cooperative Benson, MN
Meeker Co-op Light and Power Assn.
Litchfield, MN South Central Electric Association St. James, MN Redwood Electric Cooperative Clements, MN
East River Board
Meeting Notes
East River receives first share
of Dakota Gasification earnings
The East River Board of Directors held its regular meeting on April 5 in Madison. General Manager Jeff Nelson updated the board on several financial and power supply issues.
East River receives $2.8 million from DGC
In March, the Basin Electric Board allocated for the first time earnings from Dakota Gasification Company. Earnings at the Great Plains Synfuels Plant in North Dakota amounted to $70.8 million in 2006 — a portion of which was distributed to members according to a Basin Board-approved for-mula. A total of $19.8 million in bill credits were allocated to Basin Class A Members, with the remaining $51 million retained by DGC for future use.
East River’s share of the Dakota Gasification bill credits is approximately $2.8 million. At year-end, the funds will likely be placed in the Margin Stabi-lization Fund and available as credits to East River member systems during the next few years.
Auditor Reports “Clean” Audit
The Board reviewed the 2006 East River financial audit presented by Ty Inglis, a partner with the accounting firm of Eide Bailly. The auditor described the examination of East River’s financial records as a “clean audit” in that the cooperative’s financial statements for 2006 represent fairly, in all material respects, the financial position of East River as of December 31, 2006.
The auditor also tested East River’s internal controls and compliance and reported that no material weaknesses were identified in the internal controls used by East River.
Large Load Update: Delayed Projects
The new three-year work plan, approved by the Board on April 5, is de-signed to build the infrastructure needed to serve several new large loads sched-uled for construction in the service territory of East River member systems. The board was updated on the status of several proposed projects.
TransCanada Corporation, which is planning to construct the Keystone
crude oil pipeline through the Midwest, has finally selected the site for its fourth pump station in South Dakota. The station will be located in Beadle County, in the service territory of Dakota Energy. TransCanada is expected to make a decision on the proposed electric service offer by East River and the affected four member systems during April.
In other large load news, the developers of three proposed ethanol projects in eastern South Dakota have announced delays, related to the rising cost of corn, building materials and financing issues. The Missouri Valley
Renew-able Energy project near Meckling is on hold; VeraSun Energy’s expansion
is delayed perhaps a year; and the developers of the proposed Buffalo Ridge
Ethanol project near Sherman are reconsidering options.
Mertens departs boards
Jim Mertens, who has repre-sented Whetstone Valley Electric on the East River Board for 13 years, was recognized April 5 for his many years of dedicated ser-vice. He served for 23 years on the Whetstone Valley Board, before not being reelected earlier this month.
“We offer our thanks to Jim and his wife Darlene for their fine con-tributions to East River and Whet-stone Valley,” Jeff Nelson said.
Grant Application OKed
The Board also authorized East River to apply for a $740,000 U.S. Department of Agriculture Rural Development zero-interest loan and a $300,000 grant on behalf of the South Eastern Development Foundation.
If approved, the funding will re-capitalize the nonprofit organ-ization’s revolving loan fund to stimulate economic development in Clay, Lincoln, McCook, Minnehaha, Turner and Union counties in southeastern South Dakota.
East River and the REED Fund have each agreed to contribute $30,000 toward the local match.
Financing Growth
& New Facilities
Board approves application
for $86 million RUS loan
During the April 5 meeting, the East River Board approved several long-range planning documents and authorized management to submit an applica-tion for an $86 million Rural Utilities Service (RUS)-guaranteed loan. The documents that support the loan application include a Load Forecast, a Range Engineering Plan, a three-year Construction Work Plan and a Long-Range Financial Forecast.
The
2006-2021 Load Forecast
projects an increase in energy sales of 4.2 percent annually, because of increasing residential, commercial and industrial development in the service territories of our member systems, re-ported Greg Hollister, Assistant General Manager-Administration. During the next 15 years, energy sales are projected to increase from 2.4 million MWh last year to an estimated 4.5 million MWh by 2021.The new
Long-Range Engineering Plan
covers the time period 2007-2025. Engineering Services looked at electric system load growth, cur-rent or potential transmission problem areas and recommended solutions, some which will be addressed in the upcoming three-year work plan, reported Jim Edwards, Assistant General Manager-Operations.The next three years will see a major increase in investment for facilities to serve a variety of new large loads. The approved 2008-2010 Construction Work Plan calls for approximately $77 million in projects.
The
Long-Range Financial Forecast
for 2007-2020 includes pro-jected load growth, work/engineering plans and estimates for the rising cost of bulk power, materials and other expenses.“East River’s annual revenue requirements are projected to rise from $90 million in 2007 to nearly $240 million in 2020,” Hollister said. “The average wholesale rate to members is projected to increase 3.1 percent annually over the 14 years of the forecast. During the first five years, however, the average rate is projected to increase 7 percent annually and level off after that time.” In addition to funding the three-year work plan, the RUS loan will also fund a portion of the 2007 construction activities. After reviewing and ap-proving the supporting documents, the East River Board approved submit-ting an application to RUS for an $86 million facilities construction loan.
Debt limit increased to $350 million
By the year 2010, East River’s debt is projected to increase from its cur-rent level of $102 million to $182 million, with the expected approval and advancement of the $86 million RUS loan.
Consequently, the Board voted to raise East River’s debt limit from $150 million to $350 million to allow for future investment in new facilities. The $150 million debt limit was set in 1977.
The East River Board ap-proved the 2008-2010 Construc-tion Work Plan, which calls for approximately $77 million in projects. The next three years will see a major increase in investment for facilities to serve a variety of new large loads.
The Work Plan includes:
$44.6 million in major sys-tem additions — including 14 new distribution substations, one new high-voltage power supply substation and building 160 miles of transmission lines to serve load growth. Approximately $20 mil-lion is earmarked for installing facilities to serve the Keystone Pipeline project.
$16.4 million – for power quality and reliability enhance-ments projects
$8.4 million – for on-go-ing system replacement and life extension projects
$4.2 million – for East River building additions
$3.4 million – for tech-nology integration projects
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1 9 7 1 1 9 7 3 1 9 7 5 1 9 7 7 1 9 7 9 1 9 8 1 1 9 8 3 1 9 8 5 1 9 8 7 1 9 8 9 1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 2 0 1 9 2 0 2 1 2002 LF 2004 LF 2007 LF MWH 2007 Growth Rate = 4.2% (2006-2021) 2004 Growth Rate = 1.7% (2003-2019) Historical Projected
East River Total Energy Requirements 1971-2021
Three-year
work plan
set at
$77 million
News & Views
4 co-op bills
pass in S.D.
The 2007 session of the South Dakota Legislature was very suc-cessful for electric cooperatives.
Working together with SDREA, electric cooperatives sponsored four energy-related bills. All bills were passed by wide margins and signed by Governor Mike Rounds.
Cooperative-sponsored legis-lation that goes into law on July 1 include items that:
affirm compliance with the existing National Electric Safety Code at the time of the con-struction of electric facilities as a legal defense against negligence lawsuits.
provides indemnification for rural electric directors from lawsuits, while acting on behalf of the cooperative.
recognizes hydropower as a renewable resource.
establishes a method for determining the value of wrong-fully-damaged trees and plants by utilities and others.
Cooperative lobbyists also monitored a variety of other bills affecting the utility industry. New laws will affect the sale of inves-tor-owned utilities, the siting of new power plants and recouping investments for installing man-dated environmental improve-ments.
Minnesota passes 25% x 2025
state renewable energy standard
Several new laws passed during the 2007 sessions of the Minnesota and South Dakota legislatures that will impact electric cooperatives.
Several bills were introduced in the Minnesota State Legislature to de-velop a State Renewable Energy Standard. Cooperative officials worked hard to provide input on renewable energy issues and their impact on utilities during the debates.
A compromise agreement was reached for a 25% by 2025 Renewable Energy Standard, which was signed by Governor Pawlenty on Feb. 22. The goal calls for producing 25% of the state’s energy from renewable resources by 2025. The agreement lists five steps for reaching the standard by 2025 for most utilities, including electric cooperatives.
Electric cooperatives and utilities were able to include “off-ramps” in the law, giving them the ability to deviate from the Renewable Energy Standard in case of issues involving: economic competitiveness, negative rate impact, reliability, transmission limitations and renewable generation equipment un-availability.
The qualifying renewable resources are wind, solar, biomass, biogas, refuse-derived fuel and hydropower plants of less than 100 MW. All megawatts from each of these renewable resources count equally, according to the new law. The state will also develop a system for trading renewable energy credits so utilities can buy credits if necessary and resources can be located out of state.
The new law will require the installation of several thousand megawatts of additional renewable energy resources. Incorporating great amounts of renewable energy into the grid will raise a number of issues and affect the three East River Member Systems located in western Minnesota and East River’s power supplier Basin Electric.
Minnesota’s Renewable Goal -- Five Steps:
7% by 2010
12% by 2012
17% by 2016
20% by 2020
25% by 2025
East River
News & Views
Survey says: NewsLines readers are
satisfied with online newsletter format
Forty readers answered some or all of the questions in the NewsLines Reader Survey during February and early March. Through this online sur-veying tool, readers responded to seven questions comparing the new Internet-based publication with the formerly mailed hardcopy newsletter. The paper newsletter was replaced with the electronic publication in January 2006.
Of the survey respondents, 56 percent were East River employees. The remainder was a mix of Member System directors, staff, East River retirees/ spouses or others.
Some 63 percent of the respondents said they read the electronic edition “about the same” frequency as the tra-ditional paper version. Meanwhile, 30 percent said they read the online version more often.
The new online version contains about “the same amount” of information as the hardcopy version, accord-ing to 69 percent of the respondents. In contrast, 28 per-cent thought the online version offered more information.
While online publication requires lower-resolution photographs for users with dial-up Internet service, the photo quality was considered acceptable by 95 percent of the respondents.
Downloading the electronic newsletter was comparable to other online publications for 92 percent of survey responders. About 8 percent had down-loading speed issues.
Concerning news coverage, 86 percent said the amount of information contained in the newsletter each month was “about right.” A few wanted more coverage and a few less coverage of cooperative/utility industry issues. The information in NewsLines was considered valuable or very valuable by everyone who responded. Their overall satisfaction rating with the online publication was 68 percent satisfied and 30 percent very satisfied.
“Thanks to the readers who responded to this survey,” said newsletter editor Tom Schoening. “East River Member Services will consider your in-put when making future decisions regarding this publication.”
Save paper; join e-mail list
Dispatcher promoted
to journeyman status
Daven Gile was promoted to Jour-neyman Dispatcher effective April 1.
He began with East River as a la-borer in 1975 and transferred to appren-tice lineman in 1980. He achieved the rank of journeyman line-man in 1984.
In 2005, Gile transferred to the Dispatch Center as an apprentice dis-patcher.
Technician joins
Engineering Services
An engineering technician with 11 years of experience recently joined Engineering Services. Michele Whitlock began April 9 as an engi-neering assistant working with com-puter-aided drafting equipment.
She previously worked nine years in the Office of Road Design for the State of South Dakota at Pierre, S.D. Earlier in her career, she was a drafter for Alkota Cleaning Systems for two years.
Michele graduated from Black Hills State University with an asso-ciate degree in drafting. She and her husband Dan recently moved to Madison with their two young boys. He is an engineering technician for the City of Madison.
If you currently receive a mailed hardcopy newsletter and have Internet access at home or work, please call: 605-256-8049
or e-mail: [email protected]
to join on the NewsLines e-mail address list. Elec-tronic newsletters arrive faster and save paper, stamps, energy and landfill space.
Gile
Whitlock East River ’s Roger
Wubbena (right) helps with electrical safety lessons during FFA Week at Tri-Valley School near Lyons.
National Convention
spotlights South Dakota
P .O. Box 227 Madison, SD 57042
Governor receives national award
for assisting SD co-ops with ice storm
Gov. Mike Rounds recently received a national award for marshaling state resources to assist eastern South Dakota electric cooperatives, including East River, following the devastating ice storm of 2005.
The National Rural Electric Cooperative Association presented the gover-nor with its “President’s Award” during the association’s annual meeting on March 21. This award, which recognizes outstanding one-time contributions to rural electrification, has been given out only 10 times since it was estab-lished in 1991. Rounds was recognized for his work in assisting electric coop-eratives in the restoration of power following the November 2005 ice storm and blizzard, which devastated eastern South Dakota.
The governor placed in action the state’s crisis center, which provided co-operatives with needed assistance. The National Guard and Department of Transportation helped transport replacement power poles and equipment, plowed snow so crews could get into work areas, and removed hazardous storm debris. State workers also arranged for emergency generators and contacted cooperative members without power to ensure their safety during the frigid ordeal.
The governor worked with adjacent states to relax transportation regula-tions so trucks could more quickly deliver replacement power poles and equip-ment. In addition, Rounds advocated a federal disaster declaration for the dev-astated counties. In addition to receiving federal damage reimbursements, the impacted electric cooperatives also received partial reimbursement from the state.
National Community
Service Award shared
by SD co-ops
South Dakota Touchstone En-ergy Cooperatives shared a national award for partnering with a youth-citizenship program.NRECA presented the National Community Service Award to rep-resentatives of the 31 South Dakota electric cooperatives on March 20 during the association’s annual meeting. The annual award recog-nizes the cooperatives’ support for Kids Voting South Dakota, through which students learn about elec-tions, issues and citizenship.
“This project uniquely com-bines three of the co-op principles — education, the democratic pro-cess and concern for community – to build strong, informed leadership for both our government and our cooperatives,” said NRECA CEO Glenn English.