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Hello, again, everybody and welcome to Lakeland Currents.

Today I'm going to talk about something with my guests that affects every single one of us.

We often have shows that maybe it doesn't impact people and they're not interested, but today the topic is something that every one of us rely on, unless you're living in the woods and burning a wood stove and you have no energy, we're talking about electricity.

And my guests today are from the Todd-Wadena Electrical Co-Op, not electrical, Electric Cooperative.

Allison Frederickson and Allison what's your title again?

Member and Energy Services Manager.

Member and Energy Services Manager and Dan Carlisle is the CEO and the general counsel.

That's correct.

And let's just talk a little bit about your backgrounds before we get into, and a full disclosure, I'm a member of Todd-Wadena Electric Co-op which I forgot the whole for title, that's interesting.

How about starting with you Allison, what's your background maybe before you got into this business?

Yeah, absolutely.

Actually, not energy based at all, I actually grew up in retail management and so for the majority of my career I spent managing Kohl's Department buildings down in the Cities.

And so I grew up in Wadena area, and we'd been in the cities for about 10 years and I really wanted to come home.

And so Todd- Wadena had this job opening and I took it, which I was honored to take.

Super excited to be part of Todd-Wadena and that was just over five years ago and it's been the best job I've ever had.

So, got to be home and with an incredible organization.

So yeah.

And Dan, I know your background was legal, you started out as a lawyer, probably not expecting to do what you're doing today, but you have a outstanding reputation and I say that in all sincerity.

What's your background?

Well, thanks Ray.

I tell you what, graduated from law school and moved to Wadena, Minnesota in 1988 and immediately began working in the private practice of law and found myself kind of migrating into the defense of rural electric cooperatives, electrical contact death cases, right-of-way cases, stray voltage litigation and was kind of an over the road travel lawyer but representing rural electric co-ops.

A little bit later in my legal career I kind of moved into the boardroom and I began representing cooperatives around the state on a variety of issues that impact governance, you know annual meetings and conducting good meetings, good governance, policymaking, bylaw revisions and amendments and whatnot.

And then in 1988 or 2018 the board of directors of my client at the time, Todd-Wadena Electric, came calling and they had a vacancy in the CEO office and asked if I would entertain the thought of taking over and also continuing on as in-house general counsel and so I've been doing that for five years now.

So you already have spent a fair amount of your career in the energy fields haven't you.

Just besides Todd-Wadena, your clients were in the energy business so it's not all brand new to you before your CEO job.

That's right.

And how many co-ops are there in Minnesota?

I think there's statistically 44, a couple of them are GNT's, generation and transmission cooperatives, but I think the Minnesota Rural Electric Association stakes claim to representing 44 cooperatives.

And you're a subset of the group River Great River Energy.

That's correct.

Back in, gosh I want to say the late 90's, Great River Energy was created and it's really the combination of two cooperatives: United Power, which I think was headquartered in Elk River, and Cooperative Power.

And Todd-Wadena was part of the Cooperative Power family.

Those two entities merged, they created Great River Energy.

And Great River Energy right now consists of 27 rural electric co-ops.

We are the owners of Great River Energy, that's where we buy our wholesale power.

And I know that there are energy organizations in the Brainerd area that have been under a lot of controversy and we're not a part of that issue with what you folks are doing, but you know, we have a lot of different power distributors and people tend to find reasons why energy costs are so high and they tend to blame it on the organization that they're working with, but it's really a complex issue buying energy and distributing it to members across the state.

Could you just talk a little bit about what that involves?

Sure.

It involves a lot.

And really, you know, you have to have a little mini history class to fully understand it and put it in context and I know we don't have time for that.

But, I mean generally speaking, the investor owned utilities and the larger municipal utilities, you know, began in the teens and the 20's, but rural Minnesota, and rural America for that matter, were largely non-electrified until the mid-30s with FDR passing, as part of the New Deal, the Rural Electrification Act and then they made low interest loans available to build out electrical infrastructure and that's when cooperatives were formed, somewhat on an ad hoc basis around the country, including in Minnesota.

You know fast forward to the early to mid 1970's our legislature said, you know what, we need to step in and kind of regulate this industry and we're going to create assigned service territories by law as a matter of statute and so they basically froze the state at that moment in time, created a map, and said okay, Minnesota Power this is your assigned service territory, Todd-Wadena Electric this is your assigned service territory.

So what a lot of people don't understand is we're limited, we really cannot expand outside of those boundaries that were established by that legislative act in 1974.

There's a couple of exceptions and so really that's the baseline.

We operate in a legalized monopoly essentially and there's reasons the legislature did it.

They didn't want duplication of power poles and wires and infrastructure and expense and so they passed that legislation.

Well now, as we all know, things have become more and more complicated, especially recently with the passage during the last legislative session of the carbon-free by 2040 mandate.

And so now in the olden days where we would build a generation plant and it would serve our needs, that's not the case anymore.

We build a plant, we largely cannot utilize carbon fuels like coal anymore for new plants, while other countries, China, Russia for example, continue to do so.

But we're getting mandates for renewable energy, renewable resources, carbon-free resources, and now we have some benchmarks.

By 2030 and by 2035 we've got to be 90% of the way there and by 2040 we've got to be 100% of the way there.

Is that realistic?

Great question and I think you get differing opinions.

I don't think it is, and I say that, we're going to put our best efforts forward, we've got beautiful thinkers down at Great River Energy that are working trying to figure out how we're going to make it happen, but what I think we all fail to realize is as the world grows, as our country grows, as the state of Minnesota grows, and we're being pushed towards electrification of everything, hey we don't want carbon on the road so we want you to run an electric car, we want truck fleets to convert to be all electric.

My children got new iPhones for Christmas, they need to charge them.

Everybody is moving towards the electrification of our society, how do we produce that electricity?

Just a real simple analogy in my mind it's like well if you have, you know, one or two kids on the farm you maybe slaughter a pig and a cow and you feed them for a year.

But if you have four, five, six, seven children maybe we got to slaughter three cows and three pigs this year.

Well, if we need to generate more and more and more electricity to satisfy this insatiable appetite that we have for electricity, are we going to be able to keep up?

That's a big concern that I have.

What are the consequences to the organizations if you don't meet those goals?

Yeah, a little bit unclear yet, but it appears as though.

You're not going to jail.

We're not going to jail I hope.

But no, everybody is committed to try to make it work.

But if it just cannot work, if you can't get your resource portfolio in place, and you know to be honest it sounds simple, well, put up a windmill.

Well, okay, good luck.

You try to put one up Ray and find out how long it's going to take you to get that permitted.

And within MISO, which is the Midwest Independent System Operator, they run our transmission grid from Manitoba down to the Gulf of Mexico and Louisiana.

The queue, the MISO queue, is so backed up it's going to take two, three, four years to get a new wind project permitted and ready to construct.

We've got so many headwinds that we're facing in trying to make this work.

Permitting is one of them, interstate transport of electrons.

Great River Energy recently sold the most efficient coal plant in the state of North Dakota, Coal Creek Station, to Rainbow Energy, a North Dakota concern.

And one of the plans was, to meet our carbon-free mandates, we're going to purchase from a large wind farm, you know upwards of 500 megawatts of wind, and we're going to pump it back to the Metro, to the Dickinson Station near Buffalo, Minnesota on the hvdc high voltage line that we owned.

Well, one of the counties in North Dakota passed an ordinance that said you won't cross the Missouri River with renewable electricity on our watch.

This is coal country.

Wow.

So we're facing headwinds in North Dakota, we're facing headwinds in St Paul.

And those are all things driving up costs, aren't they, when you're being required to reduce that carbon.

They sure are.

Minnesota is a little unique, isn't it, in the way that it's set up with the co-ops or is that common?

Very.

It's common.

In every state?

Yes.

Okay, I didn't realize that.

I think there's one state that maybe does not have an electric cooperative and I'm not sure if it's Rhode Island or one up in the Northeast, but otherwise there's cooperatives all over the US.

Okay, well, it's really interesting.

You have energy services is that the part of the thing you manage, what does that mean?

Yeah, well, we do a lot of different things in our department but something, you know, pretty major that we do is our load management programs.

And, you know, there's two different reasons why they're so important.

Number one because they save our members money, so that's our main priority.

Explain what load management means.

Yeah, absolutely.

So load management programs essentially is we are controlling electric load during peak times, either when the market prices are very high or capacity could be of concern, which usually drives the market prices very high so electricity is at its most expensive point.

So when the peak, you know, is reaching that point, we implement our load management programs and control electric load - that could be your water heater, it could be your dual heating, it could be your air source heat pump.

And essentially, by shutting off those electric sources, we can shave that peak down, use less electricity when it's most expensive, and thus that saves our membership a lot of money.

Is that voluntary for everyone?

It is 100% voluntary yes and, you know, there are different requirements.

So if you're going to enroll your heating system, we have to make sure you have a backup heating system.

You know we would never want to freeze up somebody's home in order to control their heat.

So we do have some good things in place to make sure that your comfort is, you know, and your home is protected while you're still enrolled in the program so.

And we are in a large agriculture area, with a lot of irrigation pumps running in the summer, which affects your load pretty drastically I would guess.

Greatly.

Actually, Todd-Wadena is in the top five irrigation load in all of Great River Energy cooperatives yes.

Wow I would have thought more south of us.

Yeah, no.

Interesting.

So we have a very big irrigation load.

And we do have an irrigation load control program where our irrigators do save quite a bit of money, especially on the demand component of their systems, and so that's in place as well.

And you have some really great incentives because I think I've used all of them, including electric lawnmowers.

Yeah.

We installed a heat pump in our home with a backup propane as a backup.

And these new heat pumps are so incredibly efficient, I think 230 or 40% efficiency.

People say well that's not possible but it is, they can heat on down to what 27, 28 degree temperatures outside.

And actually now they're creating cold climate air source heat pumps, which are projected to go up to -20 degrees.

Wow and still get heat?

And still get heat.

So the technology continues to evolve and it's, you know, that's, you know, when Dan mentioned beneficial electrification, all of those incentives are to help our members move towards beneficial electrification, things that save them money but also give them better comfort, more efficiencies.

So it's a win-win across the board.

And how big a geographic area are you serving?

We, you know, we touch upon parts of eight different counties and we're approximately 60 miles north and south by 35 miles or so east and west.

Wow it's a big area.

Yeah so every time there's a storm you're responsible for getting back out and getting those lines up and in our particular home we're underground which has been a real nice thing but five miles away if lines go down underground doesn't make a difference I guess.

I think it's a very expensive process to go underground with transmission lines, isn't it?

It's much more expensive than overhead that's for sure, but there are instances where it just makes sense and in the big picture it may be, in the long haul it might be less expensive.

Sure.

And I know you've done a number of exhibits on electric cars and I have a neighbor who has an electric, I think it's a Chevy Volt, and I think he gets about 270 miles out of that in the summer, about 30 when it's 20 below.

Yes the cold weather definitely impacts the range.

And I look at these commercials on electric Ford F-150 trucks or whatever, and these things just aren't going to be real practical in our climate, I don't think, with the current technology when you can only go 30 or 40 miles to do that ,what are you thinking here?

Well, yeah, we've got a little ways to go and I think that Allison and I were both kind of internally chuckling because we want to set the record straight here.

We're always being accused of promoting electric vehicles, you know I'm tired of you promoting these electric vehicles a member might say, I'm opposed to them and you always have an article in the newsletter or you have some on display at your pancake feed, you know why are you doing that?

Well, the truth is we believe that part of our role as leaders of the Cooperative are really to get the facts, get the absolute facts.

We don't want to answer a question that a member might have about an electric vehicle, the range in the middle of winter for example, simply by googling it or reading about it in a magazine and then parroting the answer to a member.

We want to have firsthand knowledge.

So in our fleet we do have one electric vehicle that we use to drive to the Cities to attend meetings or drive here or there.

We're mandating every one of our employees has to check it out, and they have to write a review to Allison and her team afterwards, so that we're actually trying to learn and be an educational resource for our members.

So that's a disclaimer for everybody out there.

We're not promoting electric vehicles, we're simply trying to be a good source of information so we can honestly answer questions.

And I think that's great that you're providing an opportunity for people to go sit in one, you know, and they're so quiet.

But, like you said, if you can't go more than 40 miles in the middle of the winter, that's not something that's going to be very practical for most of us.

It is more practical in the South.

You know you see lots of the Teslas and those kind of cars in Florida, but they don't have the cold weather that we have.

Or even in the Metro where your commute really is only 20 miles for the entire day.

You know there are, you know, applications that it will work for, but it's not going to work for everything.

But our members do turn to us for anything electric related and we need to be the experts on it and so that's why we continue to educate ourselves.

Where are you seeing cost going in the next five, six years for electricity for the home, for the homeowner.

Well that question is the source of a lot of experts studying down at Great River Energy, compiling a lot of data from the member cooperatives, the 27 co-ops, to try to figure what is our demand going to be, what kind of capacity do we need out there, do our current wind contracts and MISO market prices cover our needs.

So where do I see it going?

I can tell you this, we're expecting at Todd-Wadena Electric to see about a 1.1% increase in our wholesale electric costs for 2024.

Beyond that, we anticipate them to rise but not in a Draconian manner.

We anticipate a relatively flat trajectory.

It will rise but it's not going to be a big hockey stick curve or anything like that.

I've often wondered about, as a homeowner, I used to be in the energy business way back when we had an Energy Information Center in Staples, and I've often wondered if people think it's practical to put a windmill or solar panels on their home as opposed to letting the co-ops start investing in that area.

My personal feeling is unless you got a lot of money to spend, it's better to let the co-op purchase like you said you're going to be purchasing some from wind farms.

It doesn't seem to me yet to be very practical to do these things at your local home.

Would you agree with that?

Well, I guess we have to dissect the question a little bit in trying to come up with the answer.

With respect to solar, if we were enjoying the climate of Hawaii or California it might be a little bit more appealing, but we have, you know, so many cloudy days like what kind of solar capacity do you think we've gotten in November so far with the gloom and the doom that we've had, not much.

Solar is really going to take off when we get our battery technology such that we can capture the steady charging and discharge cycles that'll be incumbent on powering a home or a business.

With respect to wind, on a wholesale level Great River Energy has kind of hitched its wagon more to wind by far, than solar.

We know that wind blows in the winter, wind blows in the summer, wind blows in the middle of the night when there's no sun shining.

Wind has proven to be a better resource on a large scale two, three, four, 500 megawatt level and so we've invested more heavily in that.

On a small scale, however, in order to be a qf under the codes that we have to apply, meaning a qualified facility, the name plate capacity has to be under 40kw in size.

In order to get a payback on something that small, it's going to take a little while, and we get questions, Allison's team all the time, about is this accurate?

I was at a trade show in St Paul over the weekend and, you know, they told me that in three years the system will pay for itself.

Well, you know, we have to be careful because we don't want to disparage anybody's product or any concept but a lot of times our members aren't being told the truth and, you know, the truth is if you put up solar or wind at your home and you're under 40kw, you have the ability to net meter and interconnect to our system.

It obligates Todd-Wadena by law to purchase your excess energy that you don't consume.

Well who's paying for that, your neighbor down the road is paying for that.

In a sense you're being subsidized.

That's one of the concerns that's constantly being raised about it is the subsidization, the cost shifting.

Is it fair for Ray to be able to have solar or wind when his neighbors up the road who don't have to pay for it and subsidize him.

That's a very good point.

Is there any planning or what kind of planning in general does the co-ops and Great River do in case if there's a brown out, a massive energy problem, is there a backup plan in the state for something like that?

Yeah, I mean that's that's an excellent question, and Great River Energy maintains a fleet of what are called peaking plants and some of the peaking plants have been strategically identified as cold start plants to help restore substations and power facilities downstream in the event that we have a mass outage and then MISO, as manager of the grid, calls for a startup we're equipped.

They actually do drills, they train on it, they make sure the backup fuels are ready to go and the generation facilities are in tiptop shape.

That's interesting to know.

We have, I think, the most reasonable energy cost probably in the country in Minnesota.

I mean there might be states more isolated with fewer people of course, but I think that our co-ops do a phenomenal job of keeping those costs down as much as you possibly can, and I know that's something I'm sure at the Great River level you're always trying to deal with.

Yeah, no, that's a good observation and thank you for the compliment.

We'll take it because our board of directors, it's one of the hallmark indices of a cooperative is local control, local democracy.

And so our seven person board of directors is elected, they watch the business like a hawk.

They care about their neighbors, they try to make the smartest decisions.

There's no frivolity and we do really have our members' best interests at heart when we make decisions.

I believe that.

We are out of time.

Is there anything you wanted to say that we didn't touch?

I'm going to defer to Allison.

I think we covered everything.

We covered everything mainly.

And people can get a hold of you through the website.

Yes.

Todd-Wadena Electric website.

Or they can always call our office, too.

Are you open Saturdays?

Monday through Friday.

Monday through Friday, okay.

Monday through Fridays.

Well, I think it's really interesting and you're on the cutting edge of new things all the time in your business, aren't you.

Yes, we are.

So that's very exciting.

Well, thank you for joining us, it's great to talk to you, and you're doing a great job.

Thank you.

A pleasure to be here.

You've been watching Lakeland Currents.

I'm Ray Gildow, so long until next time.