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East River Electric invests millions to promote Dakota Energy’s expansive growth
Since 2007, East River Electric and its members have invested millions to help Dakota Energy serve growth in its membership. Dakota Energy’s sales of electricity measured in megawatt-hours (MWh) has grown significantly, thanks in large part to a pair of large consumers. Let’s go back in time to show you the differences in their consumer base and the impact it’s had. Back in 2007, 78.4 percent of Dakota Energy’s electric sales were to residential, farm and small commercial classes of consumers. The remaining 22.6 percent of sales went to larger businesses that pay a rate made up of a few different components than the residential or farm consumer because of the large amount of infrastructure needed to serve those larger consumers.
The changes since 2007 are stark. Over the next few years, Dakota Energy saw a large increase in large consumers when a large turkey plant and an oil pipeline pumping station started operations in their service territory. By 2019, Dakota Energy’s large consumers made up nearly 51 percent of their total sales, a huge increase from 22.6 percent in 2007. The remaining 49 percent of sales in 2019 were to residential, farm and small commercial accounts.
The nature of the larger consumers necessitates a lot more investment in transmission infrastructure and very little investment by Dakota Energy alone because they have very little infrastructure to serve the business. The bulk of the investment comes from East River and its members.
Looking specifically at the oil pipeline pumping station, all of the investment in infrastructure was made by East River’s membership. At the time when the oil pumping station came online in 2009, Dakota Energy’s total annual revenue was $7.75 million, East River’s membership stepped up to provide nearly as much, $7.36 million, to invest in the infrastructure just to serve the oil pipeline pumping station. Dakota Energy’s membership sees the benefit of the increased sales and revenue while East River and its members take the bulk of the risk. This led to a larger percentage of Dakota Energy’s wholesale power costs making up their total costs because of the larger amount of electricity they were buying from East River. The larger businesses include more investment by the wholesale power suppliers, so it makes sense that Dakota’s percentage of overall costs would include a larger percentage going to wholesale power costs.
The value of being part of a cooperative family is vast, but one of the important features is the ability to spread risk across a larger area. Dakota Energy, as part of the East River membership, shared the risk of putting the transmission infrastructure in place to serve the turkey plant and oil pipeline pumping station. That’s the power of cooperative membership.