Some rural co-ops embrace renewable energy, keep rates flat
In a field in Ramsey north of the Twin Cities, a solar array is producing power from the sun.
What's unusual about this array are the large white boxes connected to it that are the size of shipping containers. They’re batteries that store energy when the sun is shining, to be used when electricity cost and demand are high.
Connexus Energy, the state’s largest electric cooperative, built the Ramsey project and another in Athens Township three years ago. It was the first large-scale, solar-plus-battery storage project in Minnesota.
Greg Ridderbusch, CEO of Connexus Energy, said it's one the reasons Connexus is able to keep its electric rates flat for the fifth straight year.
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"It's saving our membership a lot of money every year by being able to time shift the use of energy to very expensive time periods,” he said.
Connexus' members are interested in greener electricity, but most don't want to pay more for it, Ridderbusch said.
"Our solar arrays that we put in are less expensive than the cost of electricity that we buy from the grid,” he said. “So we're doing both things that our members want."
About one-third of Minnesotans get their electricity from a rural electric cooperative.
While Minnesota’s largest investor-owned utilities, including Xcel Energy and Minnesota Power, are increasing electric rates this year, some rural electric co-ops are holding rates steady.
And although rural co-ops in the past have depended heavily on electricity generated by fossil fuels, some are now embracing renewable energy, driven by the falling cost of wind and solar as well as the demands of their green-minded members.
“We are moving to a much more green, sustainable grid, just like the rest of the energy industry is, and in many ways we’re leaders in doing that,” said Darrick Moe, CEO of the Minnesota Rural Electric Association, which represents the state’s 50 rural electric co-ops. “At the same time, we’re keeping an eye on affordability.”
Bottom-up model
Rural electric cooperatives were formed back in the 1930s to bring electricity to rural areas, where 90 percent of farms and homes didn't have it.
Farmers joined together to purchase generators, transmission lines and other equipment to connect their homes and farms to power, said Gabriel Chan, an associate professor at the University of Minnesota’s Humphrey School of Public Affairs.
Unlike investor-owned utilities, rural electric co-ops are not-for-profit. They're owned by their members, who elect a board of directors.
What makes the co-op model unique is that its owners are also its customers, who are directly impacted by its decisions, Chan said.
"I think what this has done is it's created a real natural incentive to do things like install energy efficiency or demand response,” he said.
Those efforts include installing smart meters that allow members to track their energy use, or control water heaters so they operate at night, when electricity demand is lower.
Connexus, for example, offers its members incentives to use less electricity during times of peak demand, like hot summer days.
Connexus member Danika Peterson signed up for the program when she moved to Andover three years ago. She gets a text alert notifying her when there's an upcoming peak time.
The next day, she logs into her Wi-Fi-connected thermostat from work and adjusts the air conditioning a few degrees warmer. The following day, she gets an email from Connexus telling her how much money she’s saved.
Peterson likes the program because it saves money on her electric bill — about $200 over the past three summers — and it’s up to her to decide whether to participate.
She said her family members have experimented with unplugging different appliances to see how much they can reduce their electricity use.
“Sometimes it's fun to see if we do this, how much will we save?” Peterson said.
Clean energy future
Across Minnesota, rural electric co-ops vary greatly in size, geography and their willingness to adopt renewable energy.
Wright-Hennepin Cooperative Electric built the state's first community solar garden at its Rockford headquarters back in 2013. It's since added more gardens, along with more options for members to participate.
Bob Sandberg, Wright-Hennepin's vice president of power supply and business development, said co-ops are able to move more quickly to develop new programs without having to get approval from the state Public Utilities Commission, as investor-owned utilities do.
"You're able to create it, and the direct feedback is right from your own membership — whether they are on board with it, they like it, are they participating,” Sandberg said.
Most rural co-ops get the majority of their electricity from larger wholesale cooperatives. Those contracts typically limit the amount of power they're able to generate themselves.
Connexus is one of 28 member co-ops that own Great River Energy, the state’s largest generation and transmission cooperative.
Great River Energy allows rural co-ops to self-produce up to 5 percent of their energy, but Connexus would like to do more, Ridderbusch said.
Great River has a committee studying whether to increase that 5 percent cap, said spokesperson Therese LaCanne.
In the meantime, Great River is moving away from electricity produced from fossil fuels — including selling its Coal Creek Station power plant in North Dakota — and seeking more renewable energy sources, said David Ranallo, director of communications, culture and member services.
Ranallo said Great River is on track to reduce its carbon dioxide emissions by more than 80 percent by 2025.
“Those sometimes difficult decisions to close plants or sell plants and reduce our output from them have [put] us on track to meet those carbon emission reductions ahead of many other utilities, and also are returning in spades with our rate forecast,” Ranallo said.
But not all rural electric cooperatives have been able to stave off rate increases. Many are facing higher wholesale electricity costs and supply-chain issues related to COVID-19.
Lake Country Power in northeastern Minnesota is raising its electric rates for the first time in six years. A typical member will pay an extra $10 to $16 a month.
General manager Mark Bakk said equipment is costing a third more on average than before the pandemic.
"Copper wire that we have to buy is over 100 percent more than it was,” Bakk said. “A big item like a substation transformer that used to be $350,000 is over $500,000 now."
Bakk said other rural electric cooperatives are likely to feel similar inflationary and pandemic-related pressures, if they haven’t already.
Seeking reforms
Because rural electric co-ops aren't regulated the same way as bigger utilities, they've sometimes faced criticism for not engaging members enough, or being transparent about business decisions.
Duane Ninneman is executive director of the Montevideo-based nonprofit Clean Up the River Environment, which has lobbied for rural co-op reforms. He said many members don't even know they get their electricity from a co-op, or that they have a say in how it's governed.
But increasingly, co-op members are going to demand greater say in where their power comes from, and what they pay for it, Ninneman said.
"The world of power generation is changing rapidly and dramatically,” he said. “And co-ops need to keep up with both the technology, but how they relate to the people that they serve."
And with the coming growth of electric vehicles, there’s a “huge opportunity” for co-ops to invest in the delivery of electricity for those vehicles and make sure rural residents aren’t left behind, Ninneman said.
“Co-ops cover 85 percent of the geography in Minnesota,” he said. “They ought to be the drivers in creating that infrastructure and selling the electricity that powers transportation in Minnesota.”