Neighbors helping neighbors. It’s a common phrase heard in rural America. We step up when our neighbors need help. That’s how the cooperative movement started around here. Neighbors made a promise to each other and worked to see it through. Oil and agriculture cooperatives sprung up to provide needed services. Electric co-ops were created by neighbors helping neighbors get electricity to the farm or ranch to benefit all rural families. Back then, people all across our region made a promise to each other: We’re going to work together to bring power to the prairie. People gathered together to help build their electric cooperatives by signing up their neighbors to bring electricity to rural areas that had never had it before; a service that no one else would provide. It’s made a profound difference in agricultural production, business and life in rural America. And then, those cooperatives made promises to neighboring cooperatives to create East River Electric, to provide a stable and reliable power supply to their local cooperatives.
Electric cooperatives today are still made up of member-owners that are accountable to each other. We do what we say we’re going to do. That means sticking with our commitment to provide reliable, affordable electricity to our neighbors.
Dakota Energy Cooperative headquartered in Huron has filed a legal complaint against its wholesale power supplier East River Electric Power Cooperative based in Madison. Through the legal complaint, Dakota is seeking to buy out of its long-term wholesale power contract they recently signed to take risks on the spot energy market with a for-profit company called Guzman Energy. They made a promise long ago to work together with surrounding cooperatives to create East River Electric and provide for long-term wholesale power supply. By attempting to break that promise to their fellow electric cooperatives, Dakota could end up paying more in the long run and leaving neighboring co-ops with higher costs. That’s not the co-op way.
The other cooperatives in our region want to continue working together to take advantage of economies of scale and the collective strength that our network provides and honor the promise they made to their rural neighbors. By keeping our cooperative family whole and helping our neighbors, we can continue to provide safe, affordable and reliable electricity for the long term.
In an increasingly uncertain world, people need something they can count on. For 70 years, East River Electric Power Cooperative has been serving its member cooperatives with reliable, affordable and sustainable electricity. Our member systems distribute that energy to their member-owners to power their homes, farms and their lives. We’ve stood alongside our member cooperatives for seven decades to make the lives of their members better and more convenient.
Recently, Dakota Energy’s board and management took a step to tear apart their relationship with the region’s other electric cooperatives and take a gamble by purchasing electricity on the spot market from a for-profit company named Guzman Energy. Guzman was created by a private equity firm made up of out-of-state investors. Dakota Energy’s management has pointed to the length of the wholesale power contract they just re-signed in 2015 as reason to leave the cooperative family. The best way to explain the wholesale power contract is to look to history as a guide and also look at how the wholesale power contract helps secure our future.
The region’s electric cooperatives created East River Electric 70 years ago because they had been buying wholesale power from for-profit companies because they didn’t have their own generation assets. The founding members of the cooperative system knew that they didn’t want to continue paying far-off investors and worked to create a complete cooperative system to provide their own wholesale power. They knew this shift would give them more control over their future. Each cooperative would have representation on East River’s board of directors no matter their size, following the cooperative principle of one member, one vote. Because of the long-term nature of the utility business, they knew long-term contracts were necessary to provide stability and certainty. They also knew that they could minimize individual costs to each cooperative if they all worked together to invest the money necessary to build expensive transmission, substation and generation assets.
In 2020, East River Electric members still see long-term contracts as a necessary piece of providing power for the long term. A wholesale power contract is a promise among electric cooperatives to work together, take advantage of economies of scale, and procure and provide power at the lowest possible cost. It allows East River and its power supplier Basin Electric to borrow capital at lower interest rates. Lenders have confidence in wholesale power contracts and provide attractive interest rates because of the certainty the contracts provide. Short term, risky contracts would bring higher interest rates, and therefore higher electric rates for consumers.
The bottom line is that long-term wholesale power contracts are a promise that cooperatives make to each other to provide the certainty that we all need right now.
Tom Boyko, General Manager of East River Electric Power Cooperative
We’re thinking about your future at East River Electric.
Not only that, we’re thinking of your children, your grandchildren and beyond. That’s why you created this cooperative. To provide energy today in a reliable and responsible way, and to build for the future, so access to power isn’t something the next generations even have to consider.
You have probably heard Dakota Energy is considering leaving East River Electric Power Cooperative and signing a contract with a Colorado energy broker named Guzman. This group was started in recent years by investors in Florida and promises cheap, green energy to replace local cooperatives.
We think a long-standing, not-for-profit local co-op can better serve its members and expose them to less risk. We think decisions made by our board—made up of members from each area, including Dakota Energy—keep the best interests of our members first rather than the interests of investors looking for profits.
You may not know East River Electric well since we spend our energy promoting our member cooperatives rather than ourselves.
We are the rural energy supplier for nearly every county in Eastern South Dakota and several counties in Western Minnesota. We’re based in Madison, S.D., and made up of 24 local cooperatives and one municipal electric system whose names you do know, including Northern Electric, Dakota Energy, FEM Electric, Lake Region Electric, Central Electric and more. Those members made a promise to each other to create East River to secure energy and distribute it for the benefit of all of our members. We build transmission infrastructure to new areas based on expectations of future growth. We maintain and repair power lines, substations and other infrastructure to reliably serve the region’s homes, farms and businesses.
We were started 70 years ago by local residents and members of area cooperatives because they recognized that by working together, we could lower risk, coordinate infrastructure, secure better pricing and take advantage of many other ways to improve service for members.
All those reasons are still important today.
Our board at East River Electric is made up of representatives from each of the 25 areas we serve. They set our direction, and we execute. We are beholden to not only that board, but also each of the members they represent in homes across Eastern South Dakota and into Minnesota.
We are not beholden to investors. No one’s profits come before our members. We are here for you.
We’ve done a good job of serving our members for the last 70 years. In surveys, 98% of our members say our cooperative family meets or exceeds expectations. In 2021, we’re looking at a third consecutive year with flat rates, and we use revenues to maintain or improve reliable access to power for our members. We operate a cost-based business, which means that any excess funds are returned to the membership. In the past 10 years East River has returned $2.3 million to Dakota Energy. That’s something you wouldn’t see from a for-profit company.
We care about South Dakota. Through our Rural Electric Economic Investment (REED) fund, we have invested more than $100 million in the region to promote growth and contribute to job, business and wealth creation.
We understand that green energy solutions are growing in the U.S. East River Electric members currently get 37% of their energy from renewable sources, with plans for steady and fiscally responsible growth. We also use traditional energy sources that have proven to deliver reliable power for the last 70 years. We change and adapt in ways that limit risk for our members while taking advantage of new developments in energy production.
Focusing on your future also means we have your interests and future generations’ interests in mind when negotiating pricing. We know this area; we live here. We are experts in market analysis and tracking long-term price trends. We don’t have knee-jerk reactions to sudden changes in spot market prices or supply, and as a result, we have had low and stable rates for our members for decades.
For the last 70 years we’ve put our heads down and done the work that lets you know that when you flip a switch, the power is there. When something is that reliable, it’s easy to stop thinking about who’s making it happen. If you’re not thinking about us, it means we’re doing our job well.
We look forward to continuing to do that job well for the next 70 years and beyond. Regardless of whether you’re thinking about us, we’ll definitely be thinking about you.
If you would like to learn more about this matter, please read our recent press release. You can also reach out to us direct at 605-256-4536.
East River Electric Power Cooperative was created 70 years ago by the region’s rural electric cooperatives to provide wholesale power supply. That mission continues today as East River’s 25 member electric distribution systems have ownership in East River Electric which gives them access to a reliable network of transmission lines and substations. On Nov. 6, 2020, Dakota Energy Cooperative filed a legal complaint against East River Electric in Lake County requesting an exit fee to withdraw from their membership in the cooperative.
Dakota Energy is a member-owner of East River, along with 23 other distribution electric cooperatives and one municipal electric system in eastern South Dakota and western Minnesota. Dakota Energy members are therefore owners of East River through their membership in Dakota Energy. In fact, Dakota Energy, along with cooperatives throughout eastern South Dakota and western Minnesota created East River.
“Unfortunately, Dakota Energy has stated that they intend to purchase power from Guzman Energy,” said East River General Manager Tom Boyko. “Guzman, a for-profit company operating out of Denver, has targeted rural electric cooperatives in an attempt to lure them away from their local cooperative power suppliers.
Dakota Energy, along with East River’s other member systems, signed its current East River wholesale power contract five years ago. The signing of those contracts was the independent decision of each local board and helps the cooperative network to finance ongoing operations and future infrastructure needs. The wholesale power contract enables the cooperatives to work together and take advantage of economies of scale to provide for affordable and reliable power long into the future.
The utility business is a long-term enterprise and cannot rely on the volatile market for its power supply. Consumers invest in their cooperatives to serve each other long into the future. East River’s contract with its two power providers, Basin Electric and the Western Area Power Administration (DOE) run to 2075 and 2050 respectively. East River’s contract with Basin was signed after Dakota Energy signed their contract with East River in order for East River to have a long-term firm power supply for member-owners like Dakota Energy.
East River is a not-for-profit, cost-based utility, which means that the margins it makes over and above the costs to provide power go back into the communities it serves. The wholesale power co-op is owned by its member systems and East River’s board of directors is comprised of representatives from its member co-ops. Those members set East River’s strategic direction.
The vast majority of rural South Dakotans are served by electric cooperatives. Those consumers, like Dakota Energy’s consumers, own their cooperative and in turn own East River and in fact have an equity ownership in East River.
“East River appreciates our members and the end consumers and hope we can continue our decades long relationship. Dakota Energy Cooperative is still a member-owner of East River and we will continue to provide them with the same level of service and respect that is provided to all of the co-op’s members,” said Boyko. “East River exists to enhance the value of all of our member systems. We hope to resolve this legal action in a manner that will keep our cooperative family whole so that we can continue providing safe, affordable and reliable power to the region’s consumers.”
Scott Seitz is awarded a clock with a plaque for appreciation of his years of service.
East River Electric Power Cooperative recently presented service awards to 22 employees with years of service ranging from five to 35 years.
“I’d like to congratulate this year’s service award recipients and thank them for their dedication to East River Electric. We are especially proud of everyone for continuing to work hard and provide our essential service during stressful times such as we are facing this year,” said East River General Manager Tom Boyko.
Digital Communications Systems Foreman, Scott Seitz, one of this year’s service award recipients, began working at East River 35 years ago.
“I was hired as an apprentice microwave technician in the telecommunications department in 1985. Technology is continually changing and trying to keep up with the technology has been a continuous education process, making the last 35 years go by fast. Being surrounded by a great workforce within our department has made this job enjoyable and much easier. I have met a lot of great individuals and developed lasting friendships with individuals both within and outside the organization due to this job,” said Seitz.
Liz Avery, Human Resources & Administration Manager, celebrated her 30-year work anniversary. “From my first day, I found the work interesting and challenging,” shared Avery. “East River provides an engaging culture that pushes us to do our best. From technology to the people, to the industry itself, so much has changed over these past 30 years. I have had made many lifelong memories and friends along the way!”
A listing of the awards is as follows:
• Five years: Erica Fitzhugh, Joe Henderson, John Knofczynski
• Ten years: Adam DesLauriers, Michael Dunbar, Todd Hansen, Melissa Johnson, Paul Letsche, Clay Tanner
• Fifteen years: Chris Anderson, Sam Anderson, Wade Bialas, Kurt Donelan, Tony Englert, Rory Johannsen, Kyle Weber
• Twenty years: Curt Wiedman, Bryan Wieman
• Thirty years: Liz Avery, Tim Dockendorf, Brad Ebdrup
• Thirty-Five years: Scott Seitz
Bill Drummond, former executive director of the Mid-West Electric Consumers Association, was presented with East River Electric Power Cooperative’s highest honor, the Eminent Service Award, during the organization’s 70th annual meeting Sept. 9, 2020, in Sioux Falls. The award is given annually to individuals who have made significant contributions to East River and the cooperative movement.
Drummond dedicated his career to rural America and the region’s cooperative movement. His decades of work helped to strengthen electric cooperatives and public power to improve the lives of people across rural America.
“The energy industry has faced many challenges over the past several decades, and Bill helped our industry navigate them,” said East River Board President Jim Ryken. “During his tenure at Mid-West, Bill led efforts to protect against harmful legislation and repeated attempts to sell federally owned infrastructure assets and switch to market-based rates. Because of his steadfast leadership, the federal power program remains strong and continues to serve millions of consumers with renewable hydropower across the region.”
Drummond led the Mid-West Electric Consumers Association for 6 years where he managed the association of 300 consumer owned utilities and public power districts across nine states and represented Mid-West members in the Missouri River Basin, standing up for preference power and the consumers served by these utilities.
Before taking on the role with Mid-West, Drummond was the administrator and CEO of the Bonneville Power Administration and prior to that served as deputy administrator. Earlier in his career, he worked as the manager of the Western Montana Electric Generation and Transmission Cooperative, a position he held for 16 years. Prior to that he also created and managed Prairie Power Limited, Canada’s first generation and transmission cooperative and also worked for the Public Power Council in the Pacific Northwest and the Idaho Public Utilities Commission. He is a graduate of the University of Montana and earned a Master’s degree from the University of Arizona.