Basin Electric works to protect membership from market volatility

In recent years, the power markets, natural gas markets, and commodity markets have become more volatile. In the power market specifically, there are several primary causes for volatility, including more renewable generation, an increase in natural gas prices, and more coal generation retirements.

Because Basin Electric is dedicated to providing reliable and affordable energy to its members, there are several ways it works to cushion its members from this volatility.

The cooperative’s all-of-the-above energy portfolio, which includes several different types of fuel sources, including coal, natural gas, wind, waste heat, and others, is one of the most effective strategies. The various types of resources Basin Electric utilizes have different physical parameters associated with them.

“We have resources that when they run, they need to run for a long period of time, but we also have resources that we can start up very quickly,” said Valerie Weigel, Basin Electric vice president of Asset Management and Commodity Strategy. “All of these resources work together very well to protect our membership from price volatility in the market.”

Being a part of a regional transmission organization (RTO) also allows Basin Electric to continue serving its load reliably and affordably. Basin Electric is a member of three RTOs: Southwest Power Pool (SPP), Midcontinent Independent System Operator (MISO), and Western Energy Imbalance Service (WEIS).

“Once you become a market participant in an RTO, all of your resources become pooled with other market participants’ resources. Then the RTO can look at the market and determine the most economic and reliable way for all of those resources to serve the load,” said Weigel.

Basin Electric’s membership is spread across a wide service territory, giving it the opportunity to participate in four primary market areas.

“These primary market areas all typically have different weather conditions, different wind conditions, and different resource bases, all of which provide a different price opportunity to serve our member loads day-in and day-out,” said Weigel. “Because of that wide, diverse membership, we are afforded many different opportunities to try to serve our load at the lowest cost possible on any given day.”

Because of strategic decisions that have been made by the cooperative, Basin Electric has a strong position to manage market price volatility for its membership.

“We have experienced staff that operate and maintain our facilities, a strong financial position that we can lean into, good staff that understands marketplace opportunities and take advantage of those for our membership to help serve the load at the lowest cost, relationships with counterparties, and a very strong and engaged membership that continues to support us,” said Weigel.