Energy Transition: Challenges & Opportunities During System Transformation // CEO Column July 2023
2023 Legislation Will Impact Everyone Who Uses Electricity
Minnesota’s 2023 legislative session was one of the most consequential in history for LREC members and the rest of Minnesota’s 1.7 million cooperative members. The landmark 2040 Carbon Free Standard made this legislative session one with long-term impacts on everyone using electricity in the state. A lot of investment, innovation, and ingenuity will be necessary to avoid cost increases and maintain reliability while meeting the mandate of the 2040 Carbon Free Standard.
LREC’s Commitment to Investment and Innovation
Investments in our system are more crucial than ever, and historic funding from the Federal Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) requires LREC and all of Minnesota to think big to attract federal dollars. Lawmakers put $190 million into a newly created State Competitiveness Fund which will be used to attract hundreds of millions of dollars for investments in Minnesota’s energy infrastructure. LREC and other cooperatives around the state will be using these funds, including an additional $5.3 million specifically for consumer-owned utilities like LREC, for projects to improve affordability and reliability and aid in the energy transition. LREC already has applications in for funds to support a utility scale battery storage project, a residential battery program, and a project that will tie two LREC substations together for additional resiliency.
LREC Now Can Benefit From More Local Renewable Energy
The amendment to the existing power contract we have with Great River Energy that increased the opportunity for LREC to use or directly purchase renewable energy from 5% to 10% of the total monthly electricity consumed in our service territory has been finalized. We are working on ways to take advantage of this new opportunity to maximize the benefits this amendment will have for our members. We will keep you posted on our plans moving ahead.
GRE Requesting Members to Extend Power Contract
Great River Energy (GRE) recently connected with LREC and its other member co-ops to discuss extending the current power contract by 10 years. The extension would mean the power contract between LREC and GRE would expire in 2055 instead of 2045. Although extending the contract from 2045 to 2055 can present challenges, doing so would likely help GRE keep wholesale rates stable because the current GRE rate forecast already assumes the contract expiring in 2055. Long-term contracts are not unusual in the industry because they enable Generation and Transmission co-ops like GRE to lock into long-term energy source contracts that provide favorable pricing beneficial for LREC and GRE’s other member-owners.
