Members of MREA are electric cooperatives – Community-Based Energy Companies
- Private, locally-operated electric utility businesses.
- Owned and rate regulated by our customers.
- Established to provide at-cost electric service.
- Governed by a board of directors elected from the membership, a board that sets policies, procedures and rates implemented by the cooperative’s professional staff.
Cooperatives are rural economic drivers
- We employ about 5,440 people in Minnesota. These are good jobs with good wages and benefits.
- We serve 802,000 customers, or about 1.8 million Minnesotans. The median-sized co-op is 7,547 members. Cooperatives range in size between just under 2,000 to more than 127,000.
- We supply over 14.7 billion kWh per year (about 18 percent of the state’s total kWh sold) and generate $1.5 billion in revenues.
- We operate at close-to-cost (a certain level of margins is required by lenders), which provides competitive energy costs for rural and suburban Minnesota businesses and consumers.
- Revenues above our operating costs are returned to members through capital credits. An average of $26 million a year is returned to customers by the state’s electric cooperatives.
- We invest in our communities. Minnesota cooperatives typically are near the top of the 50 states in the use of Rural Economic Development Loans and Grants issued by the USDA.
Cooperatives face different challenges than investor-owned utilities or municipal utilities
- We provide electricity for 85 percent of the geographic area in Minnesota
- Our distribution network (lines and substations) is the largest in the state by far, with more than 121,000 miles of electric distribution. That’s significantly more than Xcel Energy’s Minnesota operation (28,718), or the four private power companies in Minnesota combined (40,722), which reflect significantly higher capital costs.
- We average 6.4 consumers per mile of distribution line, compared with 38 consumers per mile for investor-owned electric utilities and 48 customers per mile for municipal electric utilities.
- Our revenue per mile of line nationally ($15,000) is a fraction what it is for investor-owned ($75,500) and municipal utilities ($113,000), making it harder to spread out the cost of investments in renewable energy and conservation.
- 79% of co-op consumers have a per capita income below the state average, meaning that rate increases impact their budgets significantly.
- We have significantly fewer commercial and industrial accounts, which means conservation programs are more costly and difficult.
2016 Minnesota Legislative Session accomplishments:
We passed our offensive legislative priorities, including rail crossings and copper theft. The legislature also passed a provision we supported from the beginning to remove the 1% threshold for infrastructure projects in the Conservation Improvement Program (CIP).
Rail Crossings-HF 963, SF 877: This legislation was passed after going through six committees and three floor votes. The final bill contains a onetime crossing fee at $1,250 for private right of way crossings, and all annual fees were kept out of the bill. In addition, the legislation requires the standard crossing fee to be adjusted, on May 1st of each year, based on the percentage change in the annual average producer price index. It is important to note that the bill contains a provision that makes the fee effectively retroactive. If a utility has paid the amount of the onetime fee over the existence of the crossing, no additional fee can be charged. In practice this should mean an end to most annual fees cooperatives are paying. Another important provision in this bill is that no crossing fee is required if the crossing is located within a public right-of-way.
In addition to providing certainty on fees, the legislation addressed another concern for co-ops – timing. Beginning 35 calendar days after the receipt by the railroad of a completed crossing application, crossing fee, and certificate of insurance, a utility may start construction unless the railroad notifies the utility in writing that the crossing is a serious threat to safe operations. As such, under this new statute co-ops have a much improved level of certainty in both cost and scheduling when construction across railroad right-of-way is required.
Members can login to the Utility Rail Crossing Communication Group to access the templates listed below and to share railroad crossing applications. We have created four different templates one for each of the following situations:
- New Crossings
- Discontinuing payments on Public ROW
- New Crossings in Public ROW
- Annual Fees with Agreement Termination
Copper Theft-HF 3082, SF 2649: We worked with Minnesota Power and the IBEW to pass this bill. The bill passed in the Senate 57-0 and in the House 114-18. The Governor signed the bill on May 22nd. This legislation will assist prosecutors in charging people with copper theft. Prior to this bill, the circumstances under which a five year felony could be pursued were very limited. This bill clarifies that penalty is appropriate in any circumstance impacting any energized equipment in a substation or on a power line.
Conservation Improvement Program (CIP)-HF 2749: After working with numerous stakeholders prior to the legislative session on advancing a measure similar to this, we had not focused on it during the session because it was traveling with other provisions lacking consensus among our membership. The legislation removed the 1% threshold for infrastructure projects giving cooperatives and municipal utilities the ability to include infrastructure investments in their yearly conservation plans without first achieving 1% savings on the member side of the meter.