Dairyland Power Cooperative may have to schedule power plant outages this winter to conserve coal. They would have to purchase power on the market to ensure their customers have power. The La Crosse-based utility relies on coal to generate power at plants in Alma and Genoa.
Those plants receive coal via barge and train. Burlington Northern Santa Fe railroad ships the coal, but this year Dairyland said they aren't getting enough coal to sustain power during winter.
As a consequence, Dairyland is considering the possibility of scheduling power plant outages to conserve coal and ensure it is available for the higher demand winter period. To ensure customers' lights stay on, Dairyland would purchase power on the market, likely at a higher price.
In the event of a planned outage Dairyland would purchase power on the market to fulfill member cooperative energy needs. Therefore, consumers in the cooperative service territory would have their energy requirements fulfilled and would not have their power go out.
Purchasing higher-priced power from the market could result in increased costs to Dairyland's member cooperatives in the form of rate impacts. "We can't speculate on how the individual member cooperatives would address those potential costs, i.e., whether it would result in a higher energy bill for the member-consumers," said Katie Thomson, Senior Communications Specialist for Dairyland.
Dairyland doesn't have direct retail customers. As a generation and transmission cooperative, they provide the wholesale electrical requirements for 25 member "distribution" cooperatives in four states including Wisconsin and Minnesota. Those member cooperatives, in turn, provide the power to their local consumers.
One of those member cooperatives is Tri-County Electric. They are a member-owned electric distribution cooperative serving three counties in Minnesota including Winona, Houston and Fillmore and parts of Olmsted and Mower counties and we also serve portions of Howard, Winneshiek and Allamakee counties in Iowa. TEC has about 13,000 electrical services.
Brenda Tesch, with Tri-County Electric, said if Dairyland has to purchase power on the grid, one option TCE has to ensure their customers don't have to pay more for power is what's called a revenue deferral.
Because Tri-County is a federal borrower, they have to meet financial requirements on a calendar year basis. They can't carry over extra revenue year-to-year. However, in case of special circumstances, TEC can get approval from the government to carry those margins into the next year and use then to offset any potential costs. "That way we don't need to raise rates, we have the extra dollars," said Tesch.
Tri-County Electric has discussed with local representatives their concerns with potential power plant outages and their concern with an increase in coal transport on the railroads.
In a statement released to News19 BNSF said "All customers have been impacted by our service challenges this year. We are working with them directly on their service issues while we continue to execute our short and long-term efforts to improve service across our network."
One reason Dairyland is seeing delays in their coal shipments could be that figures released in July show BNSF is now transporting about 35 percent more crude oil than it did one year ago, creating more demand for railroad deliveries.
James Hill, Executive Director of the La Crosse Area Development Corporation said, "In our history different commodities, business cycles have created run up in demand only then to wane as new technology comes along. We need to be mindful that even though this is a strong demand cycle right for this type of oil that could change in 10 or 15 years."