An increase in power generation has helped put Basin Electric Power Cooperative on stronger financial footing after a tough 2016.
Basin CEO Paul Sukut said a “perfect storm” of low natural gas prices that lessened the competitiveness of Dakota Gasification Company’s synthetic natural gas and byproducts and mild weather in 2016, which reduced customers’ power needs, led to a nearly 12 percent rate increase for Basin customers last year.
“We’re in good shape now,” Sukut said.
Hot summer weather helped put margins back on track, record margins in some cases, Sukut said.
In order to prevent itself from getting into a similar situation in the future, the power cooperative has begun a Margin Stabilization Plan.
Sukut said this will work somewhat like a savings account, putting money aside to offset rate increases in tough times.
Sukut said DGC is still experiencing some financial stress, but the cooperative is hopeful a restructuring and the pending opening of its new urea fertilizer facility will help.
The cooperative is developing a marketing plan for the 600,000 tons of fertilizer it will produce annually, a new dynamic for the synthetic natural gas plant, according to Sukut. When Basin first purchased DGC, the plant made 98 percent of its revenue from natural gas sales. Today that number is closer to 23 percent.