Court Rules in Favor of East River Electric, Dismisses Dakota Energy Power Contract Lawsuit
A three-judge panel of the 8th Circuit Court of Appeals has ruled in favor of East River Electric Power Cooperative, upholding a lower court’s ruling to dismiss a lawsuit brought by Dakota Energy Cooperative seeking to terminate its wholesale power contract early in order to buy power from Guzman Energy, a for-profit, Colorado-based energy broker. The ruling upholds a contractual commitment between East River Electric and Dakota Energy, confirming that Dakota Energy must honor its long-term power contract until its agreed upon termination date of December 31, 2075, and that no provision in the wholesale power contract or East River’s bylaws allows for early termination of that obligation.
“Dakota Energy’s member-owners are the real winners here,” said East River Electric’s CEO/General Manager Bob Sahr. “East River Electric is a not-for-profit, local wholesale power cooperative that has provided dependable energy, some of the lowest rates in the nation and reliable infrastructure to its members for more than 70 years. We look forward to serving Dakota Energy and the rest of our members for generations to come.”
The legal dispute started in November 2020 when Dakota Energy, an electric distribution cooperative based in Huron, S.D., which provides power to areas in Beadle, Hyde and Hand counties, filed a lawsuit seeking to exit its long-term wholesale power contract with East River Electric. Federal District Court Judge Lawrence Piersol in April 2022 granted summary judgement to East River Electric and its power supplier Basin Electric Power Cooperative, dismissing the case. Dakota Energy appealed to the 8th Circuit Court of Appeals. The 8th Circuit Court of Appeals affirmed Judge Piersol’s ruling.
“The courts have spoken clearly twice now – Dakota Energy has not met the legal standard for pursuing its claims,” Sahr said. “The contract stands, and it’s past time to stop wasting member-owners’ money on attorney fees.”
In 2022 alone, East River Electric invested more than $75 million in local transmission projects for its member cooperatives. Over the years they have spent millions in the Dakota Energy territory to respond to growth and provide members with affordable electricity.
“A lot more goes into the electric utility business than just buying energy,” Sahr said. “East River’s member cooperatives own us, and our dedicated workforce responds during storms, builds and maintains a reliable transmission network, and supports local economic development all at some of the lowest rates in the entire country. We’re here for the long haul and work only for the members at the end of the line.”
East River Electric is a wholesale power cooperative headquartered in Madison, S.D., which is owned by and serves 24 electric co-ops and one municipal electric system in eastern South Dakota and western Minnesota. It has long-term power supply contracts with its member systems to ensure long-term reliability and cost control.
“A hallmark of the cooperative business model is members working together to achieve more, as a group, than they can accomplish individually,” Sahr said. “This case is about more than a contract – it’s about a bond and commitment to work together with your neighbors for the greater good. East River’s members set the stage for our historical success when they formed us and our cooperative business model, and working together as a group will be the key to our future success.”
To read the 8th Circuit Court of Appeals decision Click Here.
To read the Federal District Court’s decision Click Here.