NEWS RELEASE

FOR IMMEDIATE RELEASE                                                                                         03/04/2021

Willmar Municipal Utility’s customers should not see higher electric rates as result of winter storm

Last week Willmar and its power suppliers saw an unprecedented perfect storm of events that affected the reliability of the power grid throughout the central U.S. Despite this perfect storm, WMU does not expect to raise rates to its electric customers due to the historic cold weather that caused significant increases in energy demand on the U.S. power grid last week. WMU also doesn’t expect a rate increase from its power suppliers.

The event highlighted the critical need in the electric industry for a diverse, flexible and robust generation mix to ensure that there is always sufficient electricity available.

Severely cold temperatures throughout the region caused a high demand for electricity. At the same time, many electric generating plants failed to perform during the extreme weather event, particularly in the southern U.S.

• Wind units failed to perform due to lack of wind in the region, along with icing conditions in the south.
• Solar failed to perform due to heavy cloud cover.
• Coal and gas generation in southern states failed to perform due to freezing of gas wells or freezing at the plants themselves
• In addition, limited gas supplies across the region played a significant part in the crisis situation.

Willmar has four power providers.

• Western Area Power Administration (WAPA) supplies a specified amount of hydroelectric power to our community from the dams on the Missouri River, and
• Missouri River Energy Services (MRES) supplies the remainder of the power used in Willmar. MRES has a diverse mix of resources in terms of both fuel sources and geographic locations, including: 
  • Hydroelectric
  • Coal
  • Natural gas
  • Wind
  • Solar
  • Diesel
• Central Municipal Power Agency and Services supplies a specified amount of nuclear power
• Great River Energy supplies a specified amount of power from a mix of resources.

All MRES electric generation plants operated to the fullest extent possible during the emergency event and performed well. The natural gas power plant, located in central Iowa and operated by MRES, switched to diesel fuel operation when natural gas was curtailed.

During the winter storm, several MRES member communities in Iowa, Minnesota and South Dakota successfully operated their local diesel generators to support power supply in the Southwest Power Pool region.  SPP is one of two regional transmission organizations (RTO) serving MRES members that oversees the reliability of the electric grid and operates a wholesale power market in the central U.S. Members with generating units in the Midcontinent Independent System Operator (MISO) RTO region were not asked to run their generators.

When renewable resources are not available and fossil fuel generation is needed to provide energy and reliability support, WMU offsets the carbon emissions produced by the fossil fuels with our purchase of Renewable Energy Credits (RECs). REC are proof that electricity was generated by qualifying clean, renewable facilities and are fed into the electric grid on our behalf. WMU will purchase RECs to offset all carbon emissions from fossil fuels throughout 2021.

The diverse resources in the power supply mix that serves Willmar provide protection for our community against the unavailability of particular fuel sources, such as wind and natural gas during this event. Along with providing energy and reliability support for the region, the generating assets of MRES provide protection against high market prices. The MRES generators, which operated during the crisis, will be paid the market price for energy generated. These market payments will cover the costs of generation.

Additionally, MRES has an energy risk management program that enables it to maintain stable rates during extreme events like the polar vortex. Under the program, MRES makes advance energy purchases in the MISO market at fixed prices. These fixed-price purchases lessen the exposure to fluctuating prices in the energy market and add another layer of financial protection for MRES and its members.  

“The final financial impact to MRES and its members of the higher energy market prices during the February 2021 polar vortex is currently unknown.” said MRES Senior Vice President and Chief Financial Officer Merlin Sawyer. “However, the MRES financial risk management strategies, along with the operation of our power plants, allowed us to meet our capacity and energy requirements while avoiding exposure to the daily energy market. We do not expect to be adversely impacted by the recent high energy prices and we don’t anticipate any negative rate impacts to our members. Without the risk management strategies, a rate increase would have been likely.”

Many resources throughout the U.S. failed to perform during this extreme weather event. However, the resources serving WMU were available, reliable and flexible and they performed as anticipated. “Our long-term relationship and power supply contract with MRES gives us confidence that we can expect affordable, reliable electricity well into the future,” said John Harren, General Manager of Willmar Municipal Utilities.

For more information, contact Christopher Radel Energy Coordinator at cradel@wmu.willmar.mn.us

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