Electric cooperatives: amid industry change, reliability and affordability are crucial

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Electricity gets more essential to modern living every day, but electric cooperative executives are warning that without thoughtful policy decisions, future reliability challenges loom.

Demand for electricity is increasing for transportation, digital communications and other sectors of the economy while reliable baseload generation plants are being retired, NRECA CEO Jim Matheson said in a March 7 media teleconference in Nashville, Tennessee, as co-op leaders gathered for PowerXchange, NRECA’s annual meeting of members.

“We’re either replacing plants with less capacity, no capacity, or replacing them with renewables that are intermittent and not always available,” Matheson said.

Matheson, joined by representatives of distribution co-ops and generation and transmission co-ops, expressed broad concerns for consumers and businesses that rely on uninterrupted and affordable electricity.

“We are seeing capacity constraints across the board while we are in a rapid generation transition in our country,’’ said Chris Jones, CEO of Middle Tennessee Electric Membership Corp., a Murfreesboro-based distribution co-op that serves about 335,000 meters. “The meat and potatoes of our industry will remain affordability and reliability.”

Maintaining that reliability at costs consumers can afford is becoming increasingly challenging as the materials needed to meet production demands for essential components like transformers are diverted for electric vehicles and other new products. Co-ops are also among the utility interests urging federal regulators to consider near-term reliability before implementing standards that could exacerbate shortages of essential components.

“We’re shipping transformers out of stock faster than we can restock,” said Buddy Hasten, CEO of Arkansas Electric Cooperatives Inc. The Little Rock-based statewide cooperative association operates ERMCO, the nation’s leading supplier of transformers for electric cooperatives.

“We’re seeing a two-year lead time on orders for our most common transformers,” said Hasten, adding that before COVID-19-related disruptions, lead times of six to 13 months for large orders were common. “It can take two to three years to deliver large units” needed for substations and large industrial applications, he said.

Co-ops are industry leaders in developing renewable energy projects and research aimed at preserving existing generation resources while reducing their environmental impact. But there is growing concern that the early closure of existing generating assets could lead to shortages and disruptions rivaling those caused by extreme weather events.

“It has to be at a pace that makes sense,” said Suzanne Lane, CEO of Kansas Electric Power Cooperative, a G&T headquartered in Topeka. “Our members are very concerned about reliability.”

Co-ops leaders are also advocating for Congress to streamline the permitting process, as it currently can take a decade or longer under the National Environmental Policy Act process to obtain approvals to fully commission new generation or connect new sources to the transmission grid.

“Two years ought to be enough time to complete any review for siting,” said Matheson, adding that NRECA member co-ops are poised to take advantage of dozens of new federal programs designed to expand energy production or strengthen grid assets. One of those programs is a nearly $10 billion U.S. Department of Agriculture initiative to lower carbon emissions.

In addition to generation and transmission and supply chain issues, co-ops are also tackling cybersecurity and physical infrastructure threats aimed at portions of the grid under direct co-op control. That includes nearly 3 million miles of distribution lines and about 17,000 substations.

“Every utility in America is going through that right now,” Matheson said.

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