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Beltrami Electric Cooperative: Load Management/Propane Prices Update (1/27/2014)

Off-peak electric heat is intended to use the capacity that is already required by loads such as auto engine heaters, but is used by such equipment only a few hundred hours per year. The electric heat uses this capacity when those other loads are not using it. There is no expensive capacity in reserve to serve the off-peak electric heat. The propane furnace is the backup and using it is much less expensive than building additional power plants so that off-peak electricity is never interrupted.

Because the savings that provide for the lower cost off-peak rate are achieved by avoiding the expense of building or purchasing extra generation capacity to meet the few hundred hours of peak demand, the systems are either off-peak or on-peak and it does not work to switch between the rates. Those using the electrical equipment during peak periods are creating an expense that impacts the wholesale power rates all year. This cost causes the average cost per kWh to increase.

Because the duration of the peak load conditions can vary greatly, it is very important to have an adequate backup heating system and enough fuel to operate for extended periods. For the 2013-2014 heating season, it is estimated that dual fuel heating systems such as and electric plenum heater used with a propane furnace will be switched to the propane 250 hours. At this point (January 25, 2014) one should still have enough fuel for a hundred hours. How this is handled will depend on each homeowner's situation. If they are watching the fuel level and can get more if needed, they may be able to have less on site, but for those that are snowbirds or have unoccupied seasonal home, I would suggest more reserve fuel for the backup system. Please don't allow the backup system to run out of fuel. This will be expensive for you and create the need to purchase expensive peak capacity for your cooperative.

In addition to using the surplus capacity in the Minnkota cooperative's system during off-peak periods to serve off-peak heating equipment, when affordable, Minnkota purchases additional power on the spot markets. This help reduces the hours that members need to use the backup heating system. Because of the extreme cold throughout the region there have been periods when market prices were extreme. Minnkota made a reasonable and economical choice to use load management to avoid costly purchases. The load management program protects consumers from skyrocketing electricity market prices.

Even with the higher propane prices this year, the best choice is to use off-peak electricity when available and the backup propane when absolutely necessary. This is much less expensive than building new power plants just to serve peak loads. The long term impact on electricity rates would be expensive.


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