McKenzie Electric files protest under new FERC jurisdiction

WATFORD CITY – McKenzie Electric Cooperative of Watford City has filed a protest with the Federal Energy Regulatory Commission over rates charged by its supplier.

McKenzie Electric is supplied by Upper Missouri Power Cooperative, a Class A member of Basin Electric Power Cooperative.

Basin Electric announced last week that it submitted filings to FERC to ensure it is in compliance with relevant federal rules and regulations when it becomes subject to FERC’s jurisdiction in November. Upper Missouri also submitted filings to FERC.

McKenzie, Upper Missouri and Basin Electric will no longer be exempt from FERC regulation as a result of the large increase in McKenzie Electric’s electrical loads in the Bakken.

Basin Electric reported it has invested about $1 billion in generation and transmission facilities over the past seven years to provide electricity to meet its members’ fast-growing requirements in the Bakken. Most of the power supplied by Upper Missouri to McKenzie Electric comes from Basin Electric.

In information from its legal firm, McKenzie Electric states it believes the rates paid to Upper Missouri are unjust and unreasonable because the rates include an element designed to pay for the substantial past and projected future losses suffered by Basin’s Dakota Gasification Company. Upper Missouri has not provided a policy for McKenzie to withdraw and stop paying the rates, should it so choose.

In its protest, McKenzie Electric asked that Upper Missouri be required to provide its members with the costs to terminate their contracts. McKenzie Electric’s contract expires in 2075.

“Although McKenzie purchases over 40 percent of the power sold by Upper Missouri (and Upper Missouri purchases more than 30 percent of the power produced by Basin), the structure of the cooperatives results in McKenzie having very little influence on the rates it pays for energy or on Basin’s decision-making,” McKenzie Electric stated in its protest filing. “McKenzie has no representation on Basin’s board of directors and holds only a single seat on Upper Missouri’s board, despite being one of the biggest purchasers of electric power in Basin and Upper Missouri’s territories. Consequently, McKenzie, one of the largest purchasers of electricity from Upper Missouri, has little ability to hold the Basin and Upper Missouri boards accountable for their decisions, forcing McKenzie to bear the brunt of Basin’s imprudent ill-informed business decisions that filter down through the rates paid by its direct and indirect customers.”

In a news release, Paul Sukut, Basin Electric CEO and general manager, said, “As a cooperative, Basin Electric will work with FERC and its members to resolve this issue and ensure that facilities needed to meet demand for power in the Bakken are met in a timely manner.”

The filings come as Basin Electric is evaluating additional build-out of generation and transmission facilities to meet the increased projected Bakken load growth, Basin Electric stated in the news release. McKenzie Electric’s recent load forecast predicts its load will double over the coming decade.


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