February 2023 editorial

The balance of reliability and affordability in a carbon-managed future

Marshal Albright, Cass County Electric Cooperative president & CEO

It may sound like a broken record when we bring up the words “reliable and affordable.” Those words are the “foundation” of our business model. They are being threatened as power supply volatility is increasing rapidly while the nation transitions to a carbon-managed future, straining the grid and impacting the cost of electricity.

The future is here regarding volatility in power generation and delivery. On the morning of Dec. 23, 2022, the power market was, on average, around $50/MWh, a typical wholesale market price with supply and demand in check; in the afternoon, everything changed. If you recall, Dec. 23 was a frigid (-8 degrees in mid-afternoon) and windy day in the Upper Midwest, creating a high demand for natural gas heating and power generation. As the day progressed, the need for more natural gas increased, causing a spike in demand and straining the natural gas supply for power generation. The Midcontinent Independent System Operator (MISO) issued a max generation event to all cooperatives, municipals, and utilities in the MISO region to keep the lights on. Surprisingly, the wholesale power market started to increase substantially in the afternoon; at 3:40 PM, the market peaked at $3,500/MWh or $3.50/kWh. On average, you pay about $0.11/kWh.

As more intermittent sources like wind energy are added, and baseload power from coal and nuclear are retired, power market volatility will only increase, resulting in higher energy costs for consumers. Fortunately, Minnkota Power Cooperative’s generation resources were all functioning as expected during the cold weather event. Minnkota also initiated it’s demand response system to reduce consumer load to help stabilize the grid to avoid controlled outages (rolling blackouts).

Nationally the balance of reliability and affordability is at center stage. The National Rural Electric Cooperative Association (NRECA) recently published an article in the RE Magazine sharing similar concerns with cooperatives across the nation.

Here are some highlights from the article:
"The acceleration and often chaotic energy transition away from always-available generation in favor of intermittent renewable resources is concerning. “Fuel diversity is critical to reliability, and co-ops have been raising the alarm about compromising reliability by moving too quickly on any energy transition from the beginning,” says NRECA CEO Jim Matheson.

The North American Electric Reliability Corp. again warned of reliability challenges this winter – an assessment that NRECA’s Jim Matheson called 'a clear and constant warning about the nationwide consequences of continuing a haphazard energy transition.'

Matheson said that this assessment paints a stark and disheartening picture of the reliability challenges facing much of the nation this winter. As the demand for electricity risks outpacing supply availability during peak winter conditions, consumers face an inconceivable risk of rolling blackouts; it does not have to be this way."

The energy transition from fossil fuels can and likely will happen, but not soon. It is overly ambitious to believe this can happen by the current federal target of 2035. Still, we must consider the threats to reliability and focus on the importance of allowing adequate time for technology development, including zero-carbon power supply like advanced nuclear, the use of carbon capture and sequestration, and the construction of desperately needed transmission lines to move electricity within regional markets.

Minnkota Power Cooperative will remain focused on balancing reliability and affordability in a carbon-managed future.