Basin Today Annual Meeting Special Edition

B A S I N T O D AY BASIN EL EC T RIC P OW ER COOPER AT I V E

A NNUAL MEE T ING EDI T ION

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M AG A ZINE

TUESDAY, NOVEMBER 8 1:00 PM

Resolutions Committee Meeting · Prairie Rose Room 101

4:00 PM

District 9 Caucus · Governors Room at Best Western Ramkota Hotel

6:00 PM – 9:00 PM

Annual Meeting Reception · Exhibition Center Hall A

WEDNESDAY, NOVEMBER 9 6:00 AM

Registration Opens · Bismarck Event Center, Exhibition Hall lobby

7:00 AM

Tours · Buses depart Exhibition Hall parking lot 1. Antelope Valley Station & The Coteau Properties Company’s Freedom Mine (or) 2. Great Plains Synfuels Plant & The Coteau Properties Company’s Freedom Mine (or)

7:00 AM – 9:00 AM

Breakfast · Exhibition Hall A

7:00 AM

Security & Response Services Breakfast · Prairie Rose Room 102-103

7:45 AM

Resolutions Committee Reconvenes · Prairie Rose Room 101

8:00 AM

Display Booths Open · Exhibition Hall A

8:00 AM

Headquarters Tour · Group 1 departs Exhibition Hall parking lot

8:15 AM – 11:15 AM

Preconference Session - Finding a Path Through a Carbon-Constrained Future · Exhibition Hall B/C

10:00 AM

Headquarters Tour · Group 2 departs Exhibition Hall parking lot

11:30 AM

Members Luncheon · Exhibition Hall A

1:00 PM

Welcome to North Dakota · Exhibition Hall B/C

1:10 PM

Welcome & President’s Message · Exhibition Hall B/C

1:20 PM

General Manager’s Address · Exhibition Hall B/C

1:45 PM

Keynote Address · Exhibition Hall B/C

2:40 PM

Coffee Break · Exhibition Hall A

3:00 PM

Operational Excellence · Exhibition Hall B/C

4:15 PM

Resolutions Report · Exhibition Hall B/C

4:20 PM

Bylaws Report · Exhibition Hall B/C

4:25 PM

Member Caucus Announcement · Exhibition Hall B/C

4:30 PM

Meeting Adjourns · Exhibition Hall B/C

6:00 PM

Social · Exhibition Hall A

7:00 PM

Banquet · Exhibition Hall B/C

THURSDAY, NOVEMBER 10 7:00 AM – 9:00 AM

Breakfast · Exhibition Hall A

7:30 AM

Display Booths Open · Exhibition Hall A

8:00 AM

Annual Meeting Reconvenes · Exhibition Hall B/C

8:05 AM

Government Action Report · Exhibition Hall B/C

9:05 AM

Supporting Growth & Innovation · Exhibition Hall B/C

10:15 AM

Coffee Break · Exhibition Hall A

10:30 AM

Commitment to Workforce & Cooperative · Exhibition Hall B/C

11:15 AM

Financial Report · Exhibition Hall B/C

11:45 AM

New Business · Exhibition Hall B/C

CONTENTS VOLUME 19 | ANNUAL MEETING EDITION

IN THIS 2 4

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ISSUE President and general manager message Basin Electric resolutions committee reviews three proposed resolutions Bylaws Review Committee proposes amendments

CONTRIBUTORS Editor: Andrea Blowers (ablowers@bepc.com) Publications manager: Mary Miller Graphic designer: Nicole Perreault Photographer: Chelsy Ciavarella Writer: Tammy Langerud

2016 ANNUAL MEETING EDITION | 1

P RESIDE N T A ND G E NE R A L M A N AG E R MES S AG E

YOU ARE BASIN ELECTRIC TOGETHER, WE ARE

STRONG

UNITED Strong and United. Two simple words, and when used together, they’re fairly audacious.

Why did Basin Electric so boldly focus our annual meeting on that theme?

It seems everywhere we look, there are challenges.

It’s been a tough year. The Clean Power Plan – as written in the final rule – is a dramatic swing from the proposed rule, which seemed doable.

We had a mild winter, which on the surface seems nice. But, couple that with the drastic and sudden drop in commodity prices, and it results in a budget deficit for 2016.

With that came the very difficult decision to implement an average 7-mill intra-year rate increase across the membership.

Those are never easy, often ugly, and felt deeply.

I applaud the action of our board and the support of our membership as we navigate these rough waters.

In a true domino effect, the reduced sales on the power side, coupled with the reduced revenue at our subsidiary Dakota Gasification Company, left us vulnerable to the financial community.

This is sounding awfully depressing.

So, why “Strong and United?” Because we are. We have a history of audacious decisions that led us to where we are today: 137 member co-ops strong with a long list of innovative firsts and serial number ones.

No one is in a better position to emerge from this perfect storm than cooperatives. No one is more resilient, nimble, adaptable and forward-thinking than cooperatives.

Our business model is one of unity. We’ve collectively joined together because we believe we will be stronger together than apart.

And, we are strong. Our history has shown it.

Innovation What may look like a bleak situation, is brimming with possibility.

U.S. Sen. Heidi Heitkamp spoke to our board in July. She discussed coal’s future. And to quote her, “The only way to save coal is through innovation.”

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She encouraged us to start thinking about ways to engage in the clean coal technology effort.

We already have a strong track record of seeking innovative solutions to challenges. Today, that effort continues.

In late August, Basin Electric finalized a lease and operating agreement with the Wyoming Integrated Test Center (ITC) to facilitate the next generation of clean carbon technology. This agreement allows the ITC to be built and operated at Dry Fork Station, which Basin Electric operates and co-owns with Wyoming Municipal Power Agency.

We are also evaluating other promising technologies including the Allam Cycle, which has potential to change the face of coal-based generation.

Our Horizons Committee at Basin Electric is a crossdepartmental team that is continually working to evaluate emerging technologies and see how Basin Electric could potentially partner in these efforts.

While the Clean Power Plan has expedited our work toward advancing clean coal technologies, we have long seen the writing on the wall.

Clean Power Plan We acknowledge we are moving into a carbon-constrained environment, and we recognize our future must take into account how we can reduce our carbon footprint. This doesn’t mean, however, we are not deeply concerned with the Clean Power Plan as written. As written, the rule presents incredible challenges to our membership.

Financially, we may have to spend billions to comply.

We’re very pleased that in February, in an unprecedented move, the U.S. Supreme Court stayed the rule, halting implementation until litigation is complete. Oral arguments were heard Sept. 27. Regardless of the ruling, it is safe to say the Clean Power Plan will ultimately be decided by the U.S. Supreme Court.

In the meantime, we remain hopeful and continue our discussions with other states to proactively develop a better path to address climate change.

Strategic planning for the future We are working to be proactive in all areas that impact Basin Electric. One of our top priorities has been to position Basin Electric for the future, so whatever hits us – Clean Power Plan or other challenges – we will be set up to address them.

For the past two years, we’ve been engaged in strategic planning. Out of this comes an annual cooperative plan, so all employees and members understand where we are, where we’re headed and why we’re doing what we’re doing.

Our work centers around the four key areas of operational excellence, supporting member growth and innovation,

commitment to cooperative, and commitment to workforce. In all of these themes, we must take into account those external forces that shape our direction: a carbon-constrained future, emerging technologies and commodity risk.

This past year, we focused on eight key objectives to help advance our plan.

Regional Transmission Organization (RTO) Central to our effort is risk mitigation and optimizing Basin Electric for operational excellence. As part of this, we joined Southwest Power Pool. Our next step, though, is to figure out a path for a west-side RTO. Through Mountain West Transmission Group, Basin Electric, along with six other electric service providers, we’re evaluating potential for an RTO on the west side.

Being in an RTO requires continual market analysis to assure we’re maintaining a good balance of load and demand.

Doing this requires long-term power supply analysis on Basin Electric’s part, but, even more so, our members’ part.

Member growth Cornerstone to all our efforts has been supporting members through waves of growth and stagnation. In the past few years, you’ve heard a lot about how we are developing to serve the Bakken.

Our power needs transcend the Bakken as you know.

Our load forecast shows a need for power on the east-side of the interconnect, namely in MISO (Midcontinent ISO). We continue to evaluate power supply options for that region, and additionally, are continuing conversations with Minnkota over potential Class A membership.

All of these efforts – the west-side RTO, load development, new technologies – lead us back to our theme: Strong and United.

While we may have begun this column with a string of bad news, we believe that in true co-op spirit, we will transcend these challenges, and in fact, turn them into opportunities.

We can’t get there alone, though. More than 50 years ago, we banded together out of need and formed Basin Electric.

Today, we must band together again – different challenges, but same essential need – to strengthen rural America and serve our members with low-cost, reliable power and services.

With that same leap of faith, we again ask you to join together on that same core belief that started us. We are stronger and will go farther if we hang together.

Wayne Peltier, president

Paul Sukut, CEO and general manager

2016 ANNUAL MEETING EDITION | 3

The Basin Electric Resolutions Committee includes (from left) David Sigloh, Don Feldman, Jack Finnerty, Dean Hummel, Richard Schneider, Louis C. Reed, Melanie Roe, Ken Kuyper (participating from District 11), Les Mehlhaff, Mike McQuistion, Mark Brehm, Reuben Ritthaler (alternate from District 10), and David Meschke.

BASIN ELECTRIC RESOLUTIONS COMMITTEE REVIEWS THREE PROPOSED RESOLUTIONS The Basin Electric Resolutions Committee reviewed the cooperative’s resolutions Sept. 13-14 at Headquarters in Bismarck, ND. The meeting started with committee members re-electing David Sigloh, Upper Missouri G&T Electric Cooperative, as chairperson.

Basin Electric staff then updated the committee on transmission/regional transmission organization efforts, load growth and new resource development, legislative and regulatory issues, and finances/rates.

The committee reviewed continuing and current resolutions for possible changes. In addition, three new resolutions were proposed. They include: • Energy supply and diversity: This resolution is the result of streamlining three existing resolutions into one.

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• Grassroots leadership: This resolution demonstrates Basin Electric’s commitment to educating youth about our rich cooperative heritage and values of rural electric cooperatives.

• Climate change Basin Electric’s resolutions never before have addressed climate change at-large, according to Chris VandeVenter, Basin Electric legislative representative.

“As we face a carbon-constrained world, this resolution addresses how we as a cooperative want to portray ourselves to legislators,” he says.

The committee will meet again Nov. 8 and 9 to finalize the proposed resolutions, which will be presented to the membership for approval during Basin Electric’s 2016 Annual Meeting.

BYLAWS REVIEW COMMITTEE PROPOSES AMENDMENTS Basin Electric’s 2016 Bylaw Review Committee met Sept. 14 at Basin Electric’s Headquarters in Bismarck, ND. During the meeting, the committee elected a chairman and voted to recommend amendments to several bylaws.

The committee, made up of one manager and one director of each district, elected Vic Simmons, Rushmore Electric, as chairperson.

The committee’s role is to review the bylaws and propose amendments, review amendments proposed by other members or the board of directors, and provide recommendations to the membership.

Aside from minor revisions, proposed amendments addressed: • The expulsion of Kit Carson Electric Cooperative as a Class C member in District 5.

• The addition of Mid-Yellowstone as a Class C member in District 8.

• The addition of Members 1st as a Class A member, and PRECorp, Fergus Electric and Tongue River as Class C members within District 10.

• The deletion of special language that gave PRECorp, as a distribution cooperative, a board seat.

• The revision of language to reflect District 10 would be a G&T cooperative, not a distribution cooperative.

Doug Hardy, general manager of Central Montana Electric Power Cooperative, expressed words of caution about adopting the amendment pertaining to the addition of Members 1st as a Class A member. While it’s the right thing to adopt, the committee’s recommendation should not be construed by the membership that the Bylaw Committee would support any Class C member leaving its G&T Class A member to join another G&T Class A member, he said.

The proposed amendments were included in the Notice of Annual Meeting mailed in mid-October. The membership will vote on the proposed amendments during Basin Electric’s Annual Meeting.

Resolutions

Bylaw Review General Manager

Director

District 1

East River

Les Mehlhaff

Thomas Boyko

James Ryken

District 2

L&O Power

David Meschke

Curt Dieren

Aryln Zylstra

District 3

Central Power

Mark Brehm

Tom Meland

Mark Brehm

District 4

NIPCO

Louis C. Reed

Matthew Washburn

Louis C. Reed

District 5

Tri-State

Jack Finnerty

Mike McInnes

District 6

Central Montana

Melanie Roe

Doug Hardy

Melanie Roe

District 7

Rushmore Electric

Richard Schneider

Vic Simmons

Richard Schneider

District 8

Upper Missouri

David Sigloh

Claire Vigesaa

David Sigloh

Dean Hummel

Kevin Mikkelsen

Tim Velde & Casey Wells

District 9 District 10

PRECorp

Philip Habeck

Mike Easley

Reuben Ritthaler

District 11

Corn Belt Power

Donald Feldman

Ken Kuyper

Donald Feldman

Board Rep.

Basin Electric

Mike McQuistion

2016 ANNUAL MEETING EDITION | 5

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ANNUAL MEETING HIGHLIGHTS TUESDAY RECEPTION

KEYNOTE

BISMARCK EVENT CENTER

DR. JULIO FRIEDMANN

Tuesday, Nov. 8 @ 6-9 p.m.

Dr. Julio Friedmann is senior fellow at Lawrence Livermore National Laboratory, where he serves as the lab’s chief expert in energy technologies and systems.

He is one of the most widely known and authoritative experts in the U.S. on carbon capture and sequestration. He has testified before the U.S. House, U.S. Senate, and several state legislatures, published in Foreign Affairs, Financial Times, and The New York Times.

Wednesday, Nov. 9 @ 1:45 p.m.

WEDNESDAY PRECONFERENCE

ENTERTAINMENT

FINDING A PATH THROUGH A CARBONCONSTRAINED FUTURE

TIM GABRIELSON Tim Gabrielson has been entertaining and speaking for more than 25 years. He headlined his own show, Keep It Funny, at Mandalay Bay Casino, Las Vegas and he is the author of “Lemons to Laughter.” Join us for the annual meeting social and banquet.

Wednesday, Nov. 9 @ 8:15 a.m.

Wednesday, Nov. 9 @ 6 p.m.