Renewable Energy

Today's changing energy landscape is bringing more attention to renewable energy resources, including wind. East River and its member electric cooperatives support generation that is safe, reliable, cost-effective and environmentally responsible.

Cooperatives must adhere to all applicable federal and state laws when working with a member-consumer to connect wind generators to the grid. When considering the installation of a wind generator, a strong emphasis must be placed on safety considerations for the cooperative's employees and member-consumers; protection of the cooperative's and member-consumers delivery system; and fairness to other member-consumers of the cooperative from a cost (billing) perspective.

A written agreement between the cooperative and the member-consumer is developed to ensure proper communication and protections are in place, prior to connection of the facility to the grid. Consideration must also be given to established requirements for installation, maintenance, metering, switching and liability insurance. Your local cooperative can provide you with a complete list of all of the requirements.

The general requirements include paying for any interconnection studies, and the interconnection and metering equipment necessary to protect the safety of the cooperative representatives. This equipment is required to maintain the integrity of the delivery system, and to properly meter the electrical production. The member-consumer is also expected to carry liability insurance. The owner of the wind generator must pay for the necessary metering equipment used to measure kWhs delivered back to the grid by the member-consumer.

As rural electric cooperatives, we are your partners in providing you with safe, reliable electric service. We have requirements in place to address issues of safety, grid integrity and cost fairness. Those requirements ensure that cooperatives can (1) protect the safety of member-consumers and cooperative employees (2) maintain the integrity and reliability of the grid and (3) establish mechanisms to ensure adherence to the cost causation principle.

Member-consumers are encouraged to discuss any concerns with their local electric cooperative representatives to resolve questions or issues associated with connecting a wind turbine to the grid. As your rural electric cooperative, it is our goal to work with our member-consumers to address questions and concerns. Your local board of directors makes decisions concerning the policies of the cooperative. If the requirement is one where the cooperative has some discretion, the board could review it. However, many of the requirements are based on federal or state statutes and regulations and cannot be modified.

The concept of a "cash crop" may apply to farmers who rent or lease land to large companies who own and operate several wind turbines. The wind farm near Highmore, South Dakota is an example of company-owned wind turbines operating on farmer-owned property. In these types of instances, payment(s) are made to the landowner for the use of their land. This is in contrast to an individual who actually owns a wind turbine.

Cooperatives require metering capability to measure electricity drawn from the grid by the member-consumer and metering capability to measure electricity delivered to the grid by the member-consumer. There are some situations where this can be accomplished with one meter. Other situations may require two meters or even three meters.

Installing your own wind turbine is an individual decision for each member-consumer. A cooperative's role in this process is to help educate the member-consumer regarding the co-op's expectations in this process. The cooperative, together with the member-consumer, is also responsible for compiling a written agreement. First and foremost, the local electric cooperative must protect the safety of cooperative member-consumers and employees, maintain the integrity and reliability of the grid, and establish mechanisms to ensure cost fairness.

The cooperative will try to help you obtain information you deem relevant to your decision-making process. However, the decision is one you must make on your own or with the assistance of consultants hired to provide you with advice.

Your local electric cooperative will pay rates based on "avoided cost" for kWhs that the member-consumer generates and delivers to the grid.

This avoided cost standard is pursuant to federal regulations. The avoided cost standard represents the costs the utility does not have when it buys energy from a customer owned generation resource.

Since the utility must have in place all of the other facilities for delivering power to the customer, even if the customer is sometimes generating some of their own power, the value to the utility is limited. This value is expressed as the "avoided cost" and is priced to represent the cost of the fuel needed for the cooperative to generate the equivalent amount of kWhs the customer has delivered into the grid.

Our standard rate for customer owned generation is $0.0173 per kWh. This rate is reviewed annually, and adjusted to the cost of fuel as required by federal regulations.

For wind generation sized 150 kW or less, our Small Renewable Generation Rate applies and is $0.0375 per kWh. In Minnesota, however, wind generation less than 40 kW is paid to the consumer at the average retail rate.

It is very common for businesses and individual homeowners to carry liability policies to insure against various types of losses or claims. Conceptually and generally, customers should not view carrying liability insurance on a wind turbine any differently than the liability insurance that is carried to drive an automobile. Insurance on automobiles is carried to provide coverage for damages to others and their property. This basic business principle applies to carrying liability insurance for a wind generator. Just as it is true for other personal property, it is up to the owner of a wind generator to assume responsibility for insurance coverage.

There are many different interpretations of "net metering" or "net billing". The standard cooperative metering arrangement is for the consumer to pay for the kWhs delivered to their property based on a tariffed cost-based rate. This rate is designed to compensate the cooperative for the costs it incurs to generate the kWhs and to deliver the kWhs through the transmission system and distribution system. As a member of East River Electric and your local electric cooperative, we will pay the wind generator for the kWhs delivered to the grid at a rate that is developed pursuant to federal regulations based on an avoided cost basis. (In Minnesota, net billing is required for small generators of 40 kW capacity or less.)

Net metering is a mechanism where the kWhs being delivered to the grid by a customer are netted against those being delivered to the customer by the cooperative through the metering process. In those instances where the price the cooperative is required to pay for kWhs delivered to it by a customer (based on avoided cost principle) is less than the rate being charged to the customer for the kWhs being used by the customer, the "netting" of kWhs delivered can create a windfall for the customer. Net billing performs netting through the billing process.

This is one of many mechanisms that can be used to deliver subsidies to consumers installing wind generators. Other subsidy delivery mechanisms include the state income tax structure, federal tax structure and property taxes to name a few. It is also a mechanism that causes the customers owning wind generation to avoid paying for their fair share of the costs associated with poles, wires, substations and transformers necessary to deliver the kWhs to their premise.

Net metering is one of many mechanisms that can be used to deliver subsidies to member-consumers installing wind generators. It is also a mechanism that allows the member-consumer owning wind generation to avoid paying for their fair share of the costs associated with poles, wires, substations and transformers necessary to deliver the kWhs to their premise. If customers do not pay their fair share of costs necessary to provide them with electric service then other cooperative customers must pay these costs.

If a consumer generates their own power, and only wishes to receiver power from the cooperative when their generation is not running, they can apply for Standby Service. This rate reflects the cost to maintain adequate facilities, power supply resources, and transmission access to serve the customers needs. The timing and duration of the need for standby service is undetermined and the cooperative must price this class of service accordingly.

For wind generators 150 kW or less, the rate is based on the avoided cost principle or the Small Renewable Energy Rate. For larger wind projects, up to 20,000 kW, the Commercial Wind Energy Rate is available and is $0.0335/kWh.

Because wind is an unscheduled unpredictable energy source, a separate payment for capacity is not included.

Many factors are involved in the site selection process for a wind project. Early in this process, wind developers use publically available land ownership records to find and contact landowners.