Part II: Understanding the decision to join a regional transmission organization

Last month we talked about Dixie Electric’s relationship with Cooperative Energy, our wholesale energy provider. This month we’re continuing that conversation by discussing Cooperative Energy’s relationship with Midcontinent Independent System Operator (MISO), the regional transmission organization (RTO) and reliability coordinator (RC).

Cooperative Energy made the decision to join MISO, beginning in 2013. It was a difficult decision, but ultimately the one that made the most sense. Joining MISO has been favorable, particularly from an economic perspective. Like most things that have advantages, there have also been challenges. Being able to share in using the lowest available cost of power throughout the MISO region also means being responsible for sharing the reliability for the other members in the region. This may mean occasionally be faced with the decision to ask our members to reduce their electric energy use as we saw in mid-January.

Cooperative Energy has always had reliability levels it was responsible for meeting. Before joining MISO, it only included the 11-member distribution cooperatives that it serves. If Cooperative Energy lost a generation unit for some reason and was unable to purchase power on the market to replace it, the members were responsible for reducing enough load to match the generation available. Depending on the size of the unit that was lost, the reduction could have been substantial for each system. In MISO, because of the amount of reserves that are typically available, the levels of reduction for each member system is much less than if Cooperative Energy operated independently.

Cooperative Energy serves 11-member distribution systems statewide. Of those 11 systems, seven of them are in or next to Entergy’s service area. Since Cooperative Energy didn’t have generation or transmission facilities in the western part of the state, a relationship with Entergy was formed to provide better service for those members in the Entergy area.

Here is a little history.

In 2012, Entergy began investigating joining an RTO. When Entergy began researching joining a RTO, Cooperative Energy did the same because of the interconnection between the two companies.

Once the decision was made to join MISO, two things became clear:

Operationally, it meant giving up a significant amount of control over when generation units would be called to generate electricity. MISO will always call on the most cost-effective units to run at any given time and that may or may not include Cooperative Energy’s units. Also, MISO will always be focused on which units are most economical at any time and not necessarily what made the most sense from an operational standpoint.

After taking the operational issues into consideration, from an economic perspective, it still made sense to join MISO. Entergy’s decision to join MISO seriously affected Cooperative Energy’s member distribution systems and its operations. In MISO, Entergy’s generation and transmission facilities would be dedicated first to the MISO system, leaving Cooperative Energy and its member systems, who are in the Entergy area, in a difficult position. Costs to move power through the MISO area to reach those members would be higher, and there would be operational considerations that would make it more difficult. These factors helped confirm Cooperative Energy’s decision to also join MISO.

I hope this helps explain how we got to the point in January where we were required to ask members to reduce their use.

Randy Smith, General Manager

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