Randall Community Water District can generate electricity from a renewable source for its own use and doesn’t have to purchase all of its power from Charles Mix Electric Association, the South Dakota Public Utilities Commission ruled Friday.
The Lake Andes-based water district is the largest customer of the rural electric cooperative.
State regulators voted 3-0 in favor of the water district’s plan to construct a “behind the meter” system.
“It does not have the requisite skill, knowledge or know-how to design and build such a system. So it is intending to contract with an entity that would have the know-how to do it,” the district’s attorney, Patrick Glover, told the commission.
The commission’s staff recommended a ruling for the water district.
Attorney Michael Whalen represented the electric co-op and disagreed with that recommendation. “First off, simple question: Who is the development entity?”
Water district general manager Scott Pick said there wasn’t one identified at this point. The district doesn’t plan to replace all of the electricity being purchased from the co-op, according to Pick and Glover, who testified by telephone.
Whalen, who appeared in person, said the co-op had invested millions of dollars for the water district that remaining customers would have to pay.
Others opponents were Basin Electric, the North Dakota-headquartered generator of rural power; East River Electric, the cooperative that transmits power across the region; the South Dakota Electric Utilities Companies group; and the South Dakota Rural Electric Association.
SDREA attorney Darla Pollman Rogers said the commission would be “premature” to reach a decision without more facts.
“We are very concerned as well that this action may establish a dangerous precedent that would also affect all of our other members,” Pollman Rogers said.
Commissioner Chris Nelson said the water district should be able to generate power for its own use regardless of who might set up the system.
The decision applied to “that very, very narrow set of facts that were in the petition” for behind-the-meter generation, Nelson said.
Randall Community Water District would have to follow all of the normal rules and regulations, he said.
Nelson made a broader point.
“This is the realization that the utility model is changing, and frankly we’re probably a dozen or 15 years behind the curve in South Dakota, comparred to a lot of other states where these issues have been dealt with longer than we have,” he said.
He added, “I think this is really the first clear example that’s come in front of this commission where the model is changing. And because technology has driven down the cost of renewables, all of a sudden consumers are finding that maybe that’s an option for them.”