Iowa, North Dakota utilities say they're owed $77 million for providing power during polar vortex

Utilities in Iowa and North Dakota say they're owed $77 million for agreeing to provide energy during February's deadly polar vortex that caused power blackouts across the southern and central United States.

Basin Electric, a large North Dakota power provider, and the North Iowa Municipal Electric Cooperative Association, a group representing 13 municipal utilities in the state, filed a complaint with federal regulators earlier this month, seeking payment for efforts to provide energy during the massive wave of Arctic cold that hit the U.S. in February.

At issue in the complaint is whether the North Dakota and Iowa utilities — asked to provide electricity from eight dozen power facilities, including some that are infrequently used — should get paid, even though some operations were temporarily offline during the destructive storm.

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The utilities told the Federal Energy Regulatory Commission that Southwest Power Pool, an Arkansas-based electric power transmission group that serves all or parts of 14 states, should pay them $79 million for electricity operations they made available during the energy crisis. They said $2 million should be knocked off the bill for times when the units weren't operating.

Of the $77 million, roughly $5 million should go to the Iowa utilities.

Southwest Power Pool, whose service territory includes part of Iowa, declined to comment on the complaint while it's pending with federal regulators.

The February storm left an estimated 5 million people, including more than 4 million in Texas, without power. Many residents were without heat or water for days. 

At least 100 people died in the storm that in Texas froze natural gas wells and wind turbines, limiting energy supplies while demand for heat and electricity skyrocketed.

In mid-February, Southwest Power Pool, called SPP, warned for the first time in its 80-year-history it expected to be unable to meet the power needs of consumers — despite tapping all available power generation within its territory — and would require controlled interruption of service to homes.

SPP asked Basin Electric and the Iowa utilities to commit most of their generation operations to help meet the exploding demand, even those plants that are infrequently used and typically only brought online to meet peak demand.

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A couple weeks later, Basin and the Iowa officials learned that SPP had decided not to pay the groups for their plant operations because some facilities were temporarily offline due to lack of fuel, maintenance or staffing problems.

Valerie Weigel, Basin's director of asset management and commodity strategy, said the tariff between SPP and its members dictates that a plant can't be "decommitted" unless there's too much generation on the grid that threatens the system's safety.

"We certainly weren't in a period of time where we had too much generation on the grid," Weigel said.

From the utilities' perspective, "it's really a fairly simple case," said David Lynch, a Des Moines attorney who specializes in utility regulation. SPP asked for the power generation, and the North Dakota and Iowa utilities agreed to provide it.

"It doesn't matter if the plants ran," Lynch said. The utilities believe: "'We were there. We did our best ... You owe us,'" he said. 

Weigel said the utilities experienced costs they could have offset using different market tools had SPP notified them the electric generation operations were no longer committed to addressing the energy crisis.

Natural gas and electric prices exploded during the February storm: SPP said electricity costs hit an all-time high of $4,274.96 per megawatt hour. The average cost for 2020 was $17.69 per megawatt hour.

Lynch said with big weather events, "the money gets real big, real fast."

Texas residents again lost power last month, due to high temperatures and demand. On Wednesday, SPP warned utilities and their customers to conserve energy through July 30 given hot weather, high power demand and concerns about available generation.

Basin Electric, based in Bismarck, North Dakota, provides wholesale electricity power to about 140 rural cooperative members in nine states, including Iowa. North Iowa Municipal Electric Cooperative Association's 13 municipally-owned utilities include Spencer, Algona, Grundy Center and New Hampton. It's based in Humbolt.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.