Minnkota Power Cooperative and its member-owners have extended their wholesale power contracts.
After more than 83 years of operation, the bond between Minnkota Power Cooperative and its members is growing stronger.
In May, the 11 Class A member-owners signed new wholesale power contracts with Minnkota that extend through 2060. These foundational agreements create a framework for the organizations to continue working together toward their common goal of reliable, affordable and sustainable electricity.
While signing the documents is a major accomplishment, Minnkota Board Chair Mark Habedank said he is just as proud of the thorough 18-month process taken before putting pen to paper.
“We worked through the process by simply taking one step at a time,” Habedank said. “We held membership meetings, listening sessions, educational presentations and provided ample time for review and feedback. We wanted to take our time and be as transparent and collaborative as possible. In a cooperative, every voice gets heard and that was our focus from the beginning.”
One of the key changes in the new contracts is the implementation of an evergreen renewal structure. Starting in 2026, the contracts will be automatically extended by two years each even-numbered year. That schedule will continue unless either Minnkota or the member cooperative formally requests a change. Additionally, Minnkota has a board of directors policy in place to review the contracts every five years.
The evergreen structure helps provide stability and certainty for Minnkota and the members without the need for a multi-decade extension, which has historically been used in the electric cooperative industry. Maintaining a contract length of more than 35 years ensures that optimal financing can be secured for current and future projects. In addition, the contracts help demonstrate financial health to potential lenders and rating agencies.
While the membership is united through Minnkota’s role as the wholesale power provider, there is recognition that a fast-changing industry requires electric cooperatives to be flexible and adaptable. Within the new contracts, each member cooperative may receive up to 5% of its highest historical monthly uncontrolled demand from a source other than Minnkota. This amendment comes with added protections against inequitable cost-shifting amongst members.
With the COVID pandemic in the rearview mirror, much of the contract education and development meetings were conducted with Minnkota and member cooperative boards and staff working side by side.
“The process by which Minnkota engaged its members to revise and extend the wholesale power contract should be held up as a gold standard,” said Jared Echternach, CEO at Bemidji, Minn.-based Beltrami Electric Cooperative. “Member feedback was crucial to the process and Minnkota was accepting of member input without sacrificing the integrity of their contractual needs. The level of communication and transparency was key to this process. While no wholesale power contract is perfect, the process used to review and extend the contract was nearly that, and the end-product is a contract that provides certainty, security and flexibility for Minnkota and its members.”
Marshal Albright, CEO at Cass County Electric Cooperative based in Fargo, echoed Echternach’s praise for the cooperative leadership displayed by the entire membership.
“This is a major accomplishment for our organizations and shows how strong we can be when we work together cooperatively,” Albright said. “While each of the member cooperatives has its own set of unique needs, we were able to find common ground and better position all members for a future that will be driven by rapid change. Our relationships with Minnkota and the other member-owner systems help ensure we are equipped to meet this change head on.”
Wholesale power contracts have a long history with electric cooperatives dating back to their formation. Minnkota’s original contracts were signed in 1956 and have been renewed several times throughout the years. While Minnkota looks much different than when it was formed in 1940, the electric cooperative business model and wholesale power contract structure continue to show resiliency in an evolving industry.
“This milestone is a testament to our membership’s determination and steadfast belief that their collective ownership of Minnkota provides value to homes, farms, schools and businesses across the region,” Habedank said. “With these contracts serving as a solid foundation, let us continue to embrace opportunities to enhance the quality of life in our region through reliable, affordable and sustainable electricity.”
MAIN IMAGE: Minnkota Board Chair Mark Habedank and Secretary/Treasurer Colette Kujava complete the signing of member wholesale power contracts.