Teri Viswanath: October is National Cooperative Month, and the theme this year, “The Future is Cooperative,” anticipates the increasingly vital role cooperatives play in enhancing the quality of life in rural areas…and in particular the statewide organizations that bring those co-ops together. CoBank is a national cooperative bank serving vital industries across rural America, and we recognize the significance of co-ops in fostering economic growth, creating jobs, and building resilient communities.
Hello, I’m Teri Viswanath, the energy economist at CoBank and your co-host of Power Plays. As always, I’m joined by my colleague and co-host Tamra Reynolds, a managing director here at the bank. Hey Tamra.
Tamra Reynolds: Hey Teri. You’re right. Our electric co-op statewide associations play a vital role in bringing our cooperatives together for critical, mutual benefit. On this program, you are going to hear from three CEOs of those organizations: Darrick Moe, with the Minnesota Rural Electric Association; Caleb Jones, with the Association of Missouri Electric Cooperatives; and Dave Lock, with the Grand Canyon State Electric Cooperative Association.
You will first hear the conversation I had with Darrick Moe, as he explains the primary areas for statewide engagement and the importance of bringing co-ops and their communities together to advance their interests within Minnesota.
Darrick Moe: I have really enjoyed being at MREA where we are the statewide for the 50 rural electric co-ops in the state of Minnesota. I like to say only Texas has more rural electric co-ops and we wouldn’t want to be bigger than Texas, of course.
All 50 are members of ours and we provide a variety of services for them, of course, like all statewides do. That centers around four major areas. One is our communications program, where we work to be the voice of Minnesota’s rural electric co-ops for the general public and for thought leaders and so on. We have a robust safety program. We have five folks in our safety program that go out to co-ops every day of the week and provide on-site safety training and reviews at our co-ops around the state.
We have an events and education program. I have 60 plus events a year. We’re the main source of continuing education for our members, both the staff teams as well as directors around the state. We get engaged in policy quite a bit. We represent the co-ops at the state legislature as well as do a lot of work in the regulatory environment for our members in Minnesota.
Reynolds: Let’s talk a little bit about what some things are that you’re dealing with in Minnesota from the policy perspective, not necessarily from the federal level, but from the state level, maybe even local level. How are you guys thinking about addressing some of those or looking for solutions to those?
Moe: In Minnesota, we are among the most aggressive now in terms of a carbon free standard. In 2023, the legislature adopted a carbon-free by 2040 bill. That’s more aggressive than California, for example. It is a mandate, not a goal. Every electron of electricity sold in the state of Minnesota by the year 2040 will need to be from a carbon-free generation resource. That’s the single biggest energy policy the state has passed in its history.
If you look at the grid composition of what’s generating in MISO, that’s our regional transmission organization at any particular time, it varies a lot. There are certainly a lot of hours where renewables are 50% plus of the total generation, but particularly when it’s the hottest or the coldest, there’s also plenty of hours where wind and solar are less than 10% of the generation and fossil fuels are 80% of the generation.
We do also have a couple of existing nuclear plants in the state. They’re usually filling in some of that as well. We’re going to have to basically get rid of that fossil fuel component for all the loads served in Minnesota in just 15, 16 years. That’s a major transformation in the industry being required by that policy.
In addition to having a 2040 carbon-free bill, we also have had a longstanding moratorium on any construction of nuclear energy in the state. Xcel Energy has worked hard to protect its two existing nuclear plants, and they’ve been pretty successful at that.
We’ve ramped up our work to say that that’s really not viable as we try to meet radically increasing load growth and try to do that in a way that’s carbon free. You really need to have nuclear energy as one of the tools that you can reach to in order to have a good chance of making that work.
Then net metering. Minnesota was the first state in the union in 1984 to pass a law that required that you pay full retail rate for solar generation at a home.
Co-ops have been fully integrated into that requirement since the beginning. Up to 40 kilowatts of electricity, which is roughly four times the use of an average home. Up to that size, we have to pay full retail rates. We’ve got lots of co-ops sending big checks to lots of homes that are essentially merchant generators getting paid full retail rate. About twice what they would be paying their wholesale power provider for the same electricity.
Reynolds: What’s the approach that you guys are taking from a grassroots perspective to help understand the impacts and communicate that to the membership?
Moe: We do that in a number of ways, including strengthening our relationship with the media. We have been successful at building stronger relationships with some of the key statewide media outlets. That allows us to stay in touch with them about what our views are. In some cases, that means that we get in print. In other cases, it just means that at least they’ve had some understanding of where we’re coming from.
It also means providing communications materials to our member co-ops, so that they can do things like put them in their newsletters. For example, I talked some about net metering earlier. Just in the last couple of weeks, we sent out a draft newsletter article about net metering that we’ve encouraged them to modify as they see fit for their own use, but then try to do as much as we can across the state to get word out about our concerns about these net metering cross-subsidies so that we have a unified effort of talking to the public, to their member owners, about some of those challenges.
We’ve ramped up our social media work in the last few years as well as part of that effort, because more and more, that’s where people go to get their information. Both here at MREA as our statewide social media sites, as well as working more with our members about building their own social media capabilities.
Reynolds: As you look at 2025, what would you say are maybe some key strategic initiatives that you guys have on the radar for next year to continue to deliver on the value proposition you have for your membership?
Moe: Continuing to expand our strategic communications capabilities and integrate those with the work that our members are doing. Net metering reform is another big bucket item.
We are getting ready to build a new building. Not really related to the big important policy stuff that you’re asking about, but certainly something that is a strategic initiative for us as an organization. We expect to get final board approval to proceed in our December board meeting. They would start construction in the spring, and we would have to be in temporary housing for about a year and they’re going to build a new building at our existing location. That’s a big project.
Then the last one I would say is the safety environment. We are working on a new apprenticeship program. In addition to the textbook education part of the apprenticeship program that’s been there for a long time, we’ve integrated new skills-based testing into the apprenticeship program. And on a fee-for-service basis, the co-ops that have apprentices that want to have us engage with them to look at, hey, out of the 200 things a journeyman needs to be able to successfully do, let’s independently identify and test those various tasks and make sure that the apprentice can do them safely and keep the power flowing reliably. So, it would be more an integrated approach between the book-learning side and the skills-based testing side. We’re working with the Minnesota Department of Labor and Industry now to try to roll out that new programmatic approach in our apprenticeship program, hopefully, in early 2025.
Viswanath: Bringing communities together to have a stronger voice in their future and keeping their workforce safe, these are terrific initiatives. You are going to hear similar themes in the conversation we had with Dave Lock. However, this time from an Arizona viewpoint.
Dave Lock: There are only six distribution co-ops in Arizona, but four of them are really large, relatively speaking to the co-op world, like 40,000 members or more. Two of them are pretty small. Regardless of size, each of them are growing. So that presents a challenge in terms of trying to keep pace with that growth. The G&T, AEPCO, Arizona Generation and Transmission Cooperatives, serves five of those six co-ops, and so they are working together to try to manage the growth that they’re seeing.
It’s also the transition away from more traditionally based generation resources to more renewable-based resources. AEPCO recently was awarded $485 million from the New ERA Program which is fantastic. That’s going to be mostly solar and batteries, that they’re going to be constructing over the next five to six years
Then on the distribution side of things, a lot of the co-ops are doing their own distributed energy programs, but it takes a lot of coordination, it takes a lot of planning, a lot of cooperation, not only amongst the co-ops, but with the other power providers in the state as well.
Another challenge that we face in Arizona is governance. We are, of course, governed as co-ops, but we also fall under the jurisdiction of the Arizona Corporation Commission.
That’s essentially a public utilities commission. There’s five commissioners and they’re elected state-wide because there’s elections every two years, and so it’s staggered terms. We’re generally facing a new cast of characters every few years, and we have to try to bring them up to speed on the co-op model and why it’s different.
Viswanath: Dave, I had an opportunity to actually sit in on one of your statewide meetings. I found that the discussion around the legislative process was a fantastic discussion. Talk a little bit about those policy issues, I’d like to hear your view on some of those issues.
Lock: Sure. In terms of the policies, interestingly, I mentioned the Arizona Corporation Commission a minute ago. One of the things they’ve done is that they’ve repealed the renewable energy requirements that were on the books, and the energy efficiency standard requirements that were on the books.
A lot of the co-ops are already pretty far down the road and they’d already met the standards anyway. We want to make sure that if a future legislature or the ACC wants to impose other kinds of requirements, if they’re realistic, of course. That’s one thing.
The other thing is, again, tying up the ACC is rate making. In Arizona, we have to go to the ACC. The boards establish rates that they think make sense, but then it goes to the ACC and it can take up to two years to get a rate request approved. Of course, with that regulatory lag, if you need a certain amount of revenue in the next 6 months or 12 months but you’re not getting the decision for two years, you can see that that causes some issues.
We try to see what we can do to expedite that process. I mentioned that there’s a lot of growth and a lot of development that’s happening on transmission and generation and distribution side of things. There is a line siting process that the ACC oversees in Arizona, and sometimes that can be pretty laborious to get through.
Trying to streamline those approval processes as much as we can is another policy challenge that we’re facing. Wildfire mitigation is another one for some of our co-ops as well that are up in the White Mountains surrounded by forests. They have a tough time sometimes being able to get the permits they need to clear the rights of way.
The last thing I’ll mention is organized markets. Arizona’s utilities are not in a formal day-ahead organized market right now. The large investor-owned utilities, looks like they’re heading toward perhaps the Southwest Power Pool. The co-ops and the Western Area Power Administration, and then the smaller electric districts and irrigation districts in Arizona haven’t made that decision yet, but they are looking at what potential markets might make sense, because I think at the end of the day, that everybody is going to have to be in some sort of a regional market. Those are some of the policy issues that we’re dealing with in Arizona.
Reynolds: Yes, you mentioned, the New ERA award that AEPCO got, Trico got a PACE award as well, which is really exciting. All of that is predicated on the commission approving the supplemental financing for some of that work.
Lock: That’s a great point, in terms of us having to go back to the ACC to say, “All right, here are the plans, and yes, we have these grant monies.” AEPCO also got a PACE award, too. I think if you total all the grants so far that, and also we got some good resiliency funds. It’s close to $700 or $800 million.
Reynolds: Dave, what are some of the items that are on the ballot in your state that you’re watching and that you guys are thinking about when it comes to how rural communities, and co-ops in particular, but rural communities overall might be impacted?
Lock: There’s a couple of interesting ballot initiatives as well, that I thought I would mention. One is really at the heart of rural Arizona. It’s something that we’re working with the Arizona Farm Bureau on to try to get passed. Its Proposition 134. Essentially what it does, is that if you want to try to get something on the ballot in Arizona, you would need to go to all 90 legislative districts and get a proportional number of signatures in order for something to get on the ballot.
Right now, and Arizona is like a lot of other western states, where the population centers are concentrated in one area, so people can just stand outside of a supermarket or a ball game in Phoenix and get all the signatures they need. That precludes anybody else in the rest of the state from having any kind of a say so on what might show up on the ballot.
This would require, as I said, signature gathers to have to go to all 90 legislative districts in order to get something to qualify. We’re trying to get that across the finish line. There’s another one that, it’s flying under the radar, but it has a pretty interesting proposition, which would require regulatory agencies in Arizona to submit proposals of regulations that would cost more than $500,000 in five years to the legislature for approval before they could take effect.
There’s something called the Office of Economic Opportunity, that would have to call the balls and strikes and decide whether or not a proposed regulation would amount to more than $500,000 in five years.
I don’t know if people are going to know enough about it when it’s time to vote, to be in favor of that, but that’ll be interesting to see what happens. Those are just some of the things that we’re looking at.
Viswanath: As you look at 2025, what are the strategic initiatives for the association? What are you looking to do with your membership?
Lock: A new thing that we’re starting this year, it’s called Community Energy. It’s a comprehensive communications plan that includes radio, TV, social media, to essentially extol the benefits of what we call community-owned power.
We’re starting off in the co-op areas, to make sure that co-op members are familiar with that, but then we’re branching out to the cities as well, to the urban areas. The idea is that we just need to lay the foundation, so to speak, for people being aware of why community-owned power is different, so that when we advocate in Phoenix or in Washington, D.C., but particularly in Arizona, that people are in the, “Oh, yes, I heard about you guys.” Or, “That’s right. You’re a little different.” Just to try to be like another-- Find another arrow, so to speak, in the quiver, as we engage with those folks.
Then we are going to take that a step further. We’re going to do it within the co-op for the first year, so through ‘25. Then in ‘26, we are going to engage with the other community on power entities in Arizona.
It’s interesting, there’s not that many municipal utilities in Arizona, but there are a number of irrigation districts and electric districts. They have boards that are elected amongst their membership, so they’re similar to a co-op, but they’re not a co-op. They’re very similar in that their customers or their members, so to speak, are their customers, they’re not for profit, so there’s a lot of similar characteristics. We think we can broaden that model. We could have a larger reach across the state of Arizona to try to deliver that message as well. It’s going to be a real big project. We have a logo that our communications director created, which we’re going to tag everything with. It’s called Community Power. I think it’s pretty cool. We’ll see how that goes.
Viswanath: Wonderful. A grassroot development on community-owned power. Getting back to your roots.
Reynolds: Finally, our last interview is with Caleb Jones from the Association of Missouri Electric Cooperatives.
Caleb Jones: In Missouri, we have 40 distribution co-ops across the state of Missouri. We have six transmission cooperatives across the state of Missouri. Then we actually have a generation co-op as well. It really makes us a little bit unique in some of the issues that we face, some of the challenges that we have. I think one thing that we’re certainly very proud of is we generate all of our own electricity. We don’t have to go out on the market very often. I’m sure there’s times where we’ll go out on the market if the price is right, but the electricity that goes to the 600,000 households that we serve is actually, I call it locally grown, but locally generated here in the state of Missouri.
Reynolds: So, if you could maybe give us a feel for what are the top, say, three to five challenges that your member co-ops are facing in the state of Missouri today?
Jones: As we look at the reliable, affordable electricity, focus of the electric co-ops here in Missouri, probably one of the biggest factors we have seen is really inflation.
The cost of keeping the lights on is continually increasing. In the last four years, the cost of transformers have gone up 98%. The wires you see as you drive down a gravel road in rural Missouri, that wire has gone up 61%. The underground cable that connects those wires to your house has gone up 84%.
We serve 80% of the footprint of Missouri and we serve 90% of the poverty-stricken counties. If you think about that, we’re seeing this pressure of making sure the lights stay on, and then equally, a similar pressure of making sure that those rates stay as low as possible for our member-owners at the end of the line. And, it’s certainly the biggest challenge that we have. I don’t think you can go to any co-op boardroom in the state of Missouri without hearing this discussion of how are we going to try to keep our members’ rates low, and how are we going to ensure that those lights turn on whenever they flip that switch?
Reynolds: How are you thoughtful around what that means to making sure that your co-op stays financially sound so that you can continue to deliver that electricity?
Jones: It’s certainly a challenge. We’re really lucky being member-owned. We actually have people that are directly affected by this in the boardroom making those decisions, so I’m confident that our co-ops are doing the right thing. It’s certainly something that has been discussed time and time again in the boardroom.
One thing that we have seen that, I don’t know if we’ve seen a lot of other states really address it or deal with it, is anytime that you see an increase in the cost of electricity, you start seeing outside groups that are trying to profit off of our member-owners, try to interject themselves to have a new magical way to save everyone money.
When it comes to outside groups, we’ve seen a large portion of these groups really that are solar-based reaching out, trying to push our member-owners into putting solar on their homes or at their farms.
There are instances, I’m sure, somewhere where it does make sense, but what we’ve done is we’ve actually built a website using scientific data, not done by us actually from the federal government, and allows our member-owners to go onto the website, look up where their co-op is. And they’re able to actually calculate what the payoff would be if they were to put on solar panels on their house. The website is www.shouldibuysolar.com.
Viswanath: That’s wonderful. Other ways in which policies might be changing the way that we’ve had to think about reliability and affordability?
Jones: We’ve got a very supportive legislature, a very educated legislature that’s been so far really supportive of the co-ops. We have had some pretty significant wins in the last few years. The biggest win for us this past year was a transmission and distribution sales tax exemption.
In Missouri, you don’t have to pay sales tax if you generate electricity. We actually took that law, expanded it, and basically gave our co-ops the ability to not have to pay sales tax if you’re distributing or transmitting electricity as well. What that really does for all of our members is it helps keep the rates low. Our co-ops are able to purchase the supplies they need – transformers, subs, wires, poles, whatever, and not have to pay sales tax on it because it’s part of that exemption.
Another big issue that we’ve been working on in Missouri is net metering. The co-ops are forced to buy any excess solar electricity generated from a residential home, and we’re also not allowed to charge anything for the usage of our infrastructure or lines or poles or anything to distribute that back out. What it’s actually doing is it’s causing the member-owners who don’t have solar to subsidize those that do.
We believe in fairness. We believe that all of our members should be treated equally and it’s something we’ve been really focused on trying to make sure that if you put solar on your home or farm, we don’t want to stop you from doing that, but you should pay your fair share of what it takes to move that electricity out elsewhere.
Jones: One of the bigger issues that we’re facing in Missouri is something that I’m sure everyone’s facing and that’s transmission issues. What we’re starting to see is pressures from the landowners, and oftentimes those are the co-ops member-owners, with concerns about how many lines are going across, let’s say, a farmer’s section of land.
We’ve been spending a lot of time, effort, and energy trying to help towards co-location of lines, making sure that if there’s a line being built across, it’s in one area. Considering we’ve got 130,000 miles of line across the state of Missouri, we’re starting to see a lot of outside groups, whether it’s third-party line builders, or investor-owned utilities want to partner with us and try to co-locate across to our member-owners’ land.
Reynolds: One of the more important co-op initiatives in Missouri is bridging the digital divide and providing high-speed internet access to the rural communities within the state. Caleb explains the importance of these programs.
Jones: I believe broadband is the lifeblood of rural Missouri. It is really a chance for those that grew up on a farm like I did to have an opportunity to come back home to the farm. There’s so much, so much value in having fiber out in rural areas. Not just for people wanting to work from home, but also making sure that the next generation of rural Missouri gets the opportunity to continue to live in rural Missouri. We’ve seen a substantial push across the state of Missouri really realizing the economic value. We’re starting to see, not just residential but industrial growth in rural Missouri because we have broadband out in rural areas.
Viswanath: As we expand that lens and think about what’s important to your statewide association, tell us what the strategic initiatives are going to be going into 2025.
Jones: Another strategic initiative that we’re really focused on is making sure that all of our co-op employees go back to their families every night. We’ve been spending a lot of time, effort, and energy focused on safety.
Making sure, not only that all of our linemen and co-op employees are trained on what to do and what not to do, but also going out and making sure that the public understands what’s safe and what’s not.
We have a team of safety instructors that go out to co-ops every month and put on safety seminars for their staff and their linemen. We’ve built out a facility here in Jefferson City, Missouri that linemen come to and get up-to-date training on the newest technologies that’s available.
We also facilitate and manage the apprenticeship lineman through the journeyman lineman process, which is a five-year process, it requires a lot of classroom work. We house all of that here at the statewide. Also we have a group that does all of this testing. We go out to their co-ops, check all their equipment, make sure that it’s safe so that they have, not only safety training, but they have safe equipment to work with too. We actually reach out more, I think, to the co-ops to make sure that everybody can get home at night after work and very focused on the safety aspect of our co-ops.
Viswanath: As you can see our statewide associations play a crucial role for their electric cooperatives – communicating their community needs with one voice, mobilizing resources, generating investment and collectively contributing to their state economies.
Reynolds: I really enjoyed engaging with these statewide leaders and I hope that all of you have enjoyed the conversation. Join us next month when we spotlight the need for affordable, reliable electric generation and the role that flexible, modular assets can play in meeting that need.
Viswanath: That’s right we will be joined by David Millar from Wartsila and John Igo from Mainspring Energy as we take a deep dive into this exciting technology. Please join us then and goodbye for now.
