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Cooperative Membership: You're Protected from 2021 Historic Weather Costs

  • Posted: 03.02.2021

As we saw during the cold snap over the week of February 14 and the energy emergency that followed, we were reminded that having a stable, reliable, and affordable power supply is critical to our everyday lives. By now, we have all heard the news, following the 2021 Arctic Blast, of consumers of various utilities across the nation receiving monthly residential invoices for excessively large amounts. These astonishing costs are a result of energy utilities being exposed to a volatile energy market and, in turn, passing those costs along to their customers.

Rest assured. As a member of a rural electric cooperative, you're covered.

As a member-owner of our electric cooperative, you belong to a broad cooperative network which helps spread risks across many utilities which can absorb wild swings in energy prices such as those experienced in February of 2021. The electricity that powers your home is purchased by by our cooperative from Northwest Iowa Power Cooperative (NIPCO). Through long-term wholesale power contracts with their power providers, NIPCO safely and reliably delivers low-cost wholesale power from Basin Electric Power Cooperative’s diverse energy mix along with hydropower generated from the Missouri River Dam system through the Western Area Power Administration (WAPA) to member distribution systems like ours who, in turn, delivers power to your homes and businesses.

NIPCO, as well as their power providers, Basin and WAPA, are members of the Southwest Power Pool (SPP). SPP is a regional transmission organization that is tasked with the responsibilities of ensuring reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices on behalf of its members.

Basin and WAPA own generation and transmission resources, and NIPCO owns high-voltage transmission and substation infrastructure in SPP which allows our cooperative network to sell its power into the market and buy member power needs from the market when prices are low.

During the extreme weather events of February 14-18, simply put: the amount of electricity usage in the SPP service footprint exceeded the amount of available generation. Under these conditions, simple economic theory prevails. Electric demand was higher than electric supply and electric market prices skyrocketed. The ability for Basin and WAPA to generate electricity limited our cooperative network’s exposure to these unbelievably high market prices.

With that said, our co-op still benefits from the security of long-term wholesale purchase power agreements contracted between NIPCO and its power providers. Our cooperative has an all-requirements contract for generation and transmission services with NIPCO. These long-term agreements enable participants, such as our cooperative, to share risk over time. Therefore, it is important for a co-op to be part of an organization that owns generation and transmission which can help shield you, our member-owners, against having to pay high market prices during extreme weather events.

While February bills might, potentially, be higher than expected, know that cooperative members are only billed for their consumption. How much energy you used and the time of day when you used it play a factor in your bills. Did you plug in extra space heaters to stay warm? Did you use those heaters in the early morning or late afternoon/evening when demand for energy was higher and market demand was greater? No matter how you used it, or when, your bill will only reflect consumption. NIPCO’s Class A Members, including our cooperative, will pay the same rate during and after the energy emergency as was paid before because we have long term resources available to serve our load.

You own, through your cooperative membership, your own generation. Our members are not dependent on the market to serve its electric needs. That’s the power of being connected to a cooperative power supply. That’s the power of membership in a rural electric cooperative.