How does Dixie Electric’s relationship with its wholesale energy provider affect the request to reduce energy use in January?

During the extremely cold weather in January that led to Dixie Electric and other electric providers in the region requesting voluntary reductions, we put a short video on our Facebook page to help explain what was going on and why. Hopefully it helped, but it left me thinking that the video didn’t go far enough. So, for the next two or three months, my article will focus on our relationship with our wholesale provider, Cooperative Energy, and with the regional transmission operator, MISO, who is also the reliability coordinator. There will also be complimentary information on the following pages.

The electric grid consists of three basic components: generation, transmission, and distribution. Many electric energy providers, particularly investor-owned utilities, own all or part of all three components. Others, like most electric cooperatives, usually own either generation and transmission or distribution, but not all three.

Dixie Electric is an electric distribution cooperative. That means that we don’t own or operate any generation facilities or own any high voltage transmission lines. Instead, we own and operate the substations where electric energy is delivered from the generating plants through the transmission lines. We also own and operate the distribution lines that carry power from the substations to the homes and businesses in our service area.

Since Dixie Electric doesn’t own any generation or transmission facilities, we have to purchase power to be delivered to our substations. A common assumption is that we buy all our power from Mississippi Power Company. As stated earlier, Cooperative Energy, an electric generation and transmission cooperative, is our wholesale provider. In 1941, Dixie Electric and six other electric distribution cooperatives in the state formed South Mississippi Electric Power Association, now known as Cooperative Energy.

Cooperative Energy originally acted as an agent for the member distribution cooperatives to bundle power purchases to get better pricing by purchasing in larger volumes than each cooperative could on their own. Over the years, Cooperative Energy began building transmission lines and generation to the point where today they either own or have power purchase agreements in place with enough capacity to provide all 11-member cooperatives with ???% of their requirements. Mississippi Power Company is just one of the companies that Cooperative Energy has agreements with.

Understanding our relationship with Cooperative Energy is the first step in explaining why the requests to reduce use were made. Next month we’ll continue this discussion by looking at how Cooperative Energy became a member of MISO, the regional transmission organization and reliability coordinator, and how our operations are affected.

Randy Smith, General Manager

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