Connexus Energy, the largest owner of Great River Energy, wants to exit the big electricity generating co-op as a member, saying its longtime arrangement has become too costly and inflexible.
Ramsey-based Connexus on Friday informed Great River of its decision, saying it wants to be just a customer of Great River rather than an owner-member. By doing so, Connexus said it would be able to save money for its ratepayers and branch further into clean energy on its own.
"This is a big step, a huge step," said Greg Ridderbusch, Connexus' CEO. "We feel Great River has done a good job, but it is time for us to evolve forward."
Any exit by Connexus must be negotiated as it has a contract to buy power from Great River through 2045.
Maple Grove-based Great River "welcomes the conversation" with Connexus, said Jon Brekke, its chief power supply officer. "We are optimistic we are going to find a solution that works for Connexus and the interests of our other members."
Great River is owned by 28 cooperatives, and two-thirds of them must approve any new arrangement with Connexus, Brekke said. Connexus currently owns about 20% of Great River. Any vote would be tallied by the number of cooperatives, not ownership proportion.
Great River, Brekke said, has been "innovative" with its members' power contracts in the past. Still, earlier talks between Connexus and Great River on contract changes have not panned out.
Negotiations over a new Connexus deal may take over a year, according to Connexus. Great River's contracts with Connexus and other members do not have termination clauses.
Great River is Minnesota's second largest electricity provider, ultimately serving about 700,000 Minnesota households and businesses. It generates wholesale electricity for customer-owned retail cooperatives like Connexus,
Connexus has 138,000 customer-members and serves parts of Anoka, Chisago, Hennepin, Isanti, Ramsey, Sherburne and Washington counties. The co-op's eight-person board voted unanimously to end its membership in Great River.
Connexus is paying for some services that Great River provides to its co-ops but which Connexus doesn't need, Ridderbusch said. For instance, Connexus is big enough to do its own marketing, unlike many of the far smaller co-ops that are Great River members.
Connexus has kept its own rates flat over the last four years, and it pays the same wholesale rates as other Great River members. But its power costs are particularly high during the peak summer season due to its high proportion of residential customers, Ridderbusch said.
The co-op wants to lower those costs by simply buying from Great River as a customer, he said. "We know we can save our membership money if more our power is competitively sourced."
Also, Connexus wants to develop more of its own renewable power. The co-op currently has several solar arrays, which together can produce up to 20 megawatts of power, enough for about 3,700 homes. It also hosts the largest electricity storage battery in Minnesota.
Under its contract with Great River, only 5% of Connexus' electricity can come from self-generation, and Connexus is now capped out. "We are not allowed to build any more," Ridderbusch said.
Ridderbusch said Great River itself "has done a good job in sourcing" renewable power, but Connexus wants more from its own projects. Great River generates 30% of its power from wind, a number expected to jump to 50% in 2030.
If a deal can't be worked out for Connexus to remain a customer of Great River, Connexus may find itself looking for a new provider altogether of most of its electricity.
Connexus has been a member of Great River since the latter's founding in 1999. Like many co-ops, Connexus was created in the late 1930s after passage of a federal law allowing the government to help fund electricity build-outs in rural areas neglected by investor-owned utilities.
But Connexus, which started out as Anoka County Cooperative Light and Power, now serves a primarily suburban base.
Connexus was the only Great River member last month to vote against the sale of Great River's huge Coal Creek power plant in North Dakota, along with an accompanying high-voltage power line.
Connexus said the sale to Rainbow Energy Marketing won't lead to as much savings as originally expected, nor would it reduce greenhouse gases because the coal plant will remain open.
Great River had planned to close Coal Creek in a big strategic pivot last year, saying it couldn't sell the unprofitable power plant for even $1. But North Dakota government officials rallied to save it, and a deal with Bismarck, N.D.-based Rainbow was forged in June.
The deal also calls for Great River to buy electricity from Rainbow for 10 years.
The Coal Creek decision did not prompt Connexus' determination to exit Great River as a member, Ridderbusch said.
