Cavalier MPA Report 2026

CAVA L I CITY ER ORANGE

The Benefits of a Municipally Owned Utility

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The Benefits of a Municipally Owned Utility

TABLE OF CONTENTS Executive Summary.................................................................................................... 3 Introduction................................................................................................................ 4 Power Supply.............................................................................................................. 5 Affordability................................................................................................................ 6 Reliability.................................................................................................................... 8 Local Control and Service........................................................................................... 9 Economic and Community Impact ���������������������������������������������������������������������������� 10 Partnering with Missouri River Energy Services ��������������������������������������������������������11 Conclusion................................................................................................................. 12 2

EXECUTIVE SUMMARY The Municipal Power Advantage® (MPA) report outlines the many benefits of operating a municipally owned electric utility. These benefits go well beyond keeping the lights on — some deliver measurable financial impacts, while others provide community value that is harder to quantify but equally important.

DIVERSE POWER SUPPLY PORTFOLIO

For the City of Cavalier (the city), Cavalier Municipal Utilities (CMU) is more than just an energy provider — it is a vital community asset. The public power business model enables CMU to provide numerous benefits to the customers it serves, including: AFFORDABILITY: CMU’s customers enjoy electric rates up to 25% lower than the average rates of other regional rural electric cooperatives (RECs) and investor-owned utilities (IOUs), depending on their customer class.

This cost advantage is due to lower wholesale power costs, tax-exempt financing and the utility’s not-for-profit status, which allows the city to reinvest in the local electric system and the community.

From 2021-2024, transfer payments, donated services, free street lighting and other donations to the city totaled over $1.5 million. These transfer payments, donations and discounted services help pay for expenses and projects typically funded through sales tax, property tax and other fees.

MORE AFFORDABLE

MORE RELIABLE

RELIABILITY: CMU delivers reliable power to its customers by proactively maintaining its electric utility through continually investing in local infrastructure and advanced technology solutions.

LOCAL CONTROL AND SERVICE: The city’s electric utility is communityowned and governed by the city council. Additionally, local residents are employed to work at the utility, and they care about their community and serve family, friends and neighbors every day.

COMMUNITY AND ECONOMIC IMPACT: CMU offers discounted rates for qualifying loads, provides energy-efficiency rebates and extends utility services for business retention and attraction, and the city offers numerous grants and incentives to customers. In addition, dollars from utility staff salaries and the resulting purchases from local businesses are recirculated multiple times throughout Cavalier, further contributing to a healthy local economy.

The city is also part of a nationwide mutual-aid network of public power communities. If a major storm causes widespread power outages, these communities work together to restore power quickly and efficiently.

LOCAL CONTROL AND SERVICE

COMMUNITY AND ECONOMIC IMPACT

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INTRODUCTION

Cavalier Municipal Utilities (CMU) supplies power to residents and businesses in Cavalier. As a public power utility, CMU prides itself on providing reliable electric service with affordable rates, local control and exceptional customer service. The city also provides water, wastewater, garbage and mosquito control services in the community.

1875

CITY FOUNDED

The city’s municipal electric utility is one of approximately 2,000 community-owned electric utilities in the U.S. that serve more than 55 million Americans.

1902

From SMALL TOWNS to LARGE CITIES

UTILITY ESTABLISHED

1,223

CAVALIER’S POPULATION

936

SERVED BY PUBLIC POWER

TOTAL ELECTRIC METERS

$ 1.27 M UTILITY OPERATING REVENUE IN 2025

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1 in 7 CUSTOMERS IN THE U.S. ARE

In a community served by a municipal utility, customers are the owners and have a voice in how the utility is operated. The utility is governed by the Cavalier City Council, which is comprised of seven elected officials — six council members and the mayor. Acting together, the council enacts policy and governs issues relating to the city and its departments.

CAVALIER’S POWER SUPPLY

Cavalier is committed to using renewable and carbon-free resources while maintaining reliable and cost-effective electricity for the community. The utility’s power supply is provided

by Western Area Power Administration (WAPA) and Missouri River Energy Services (MRES). The electric utility has a power supply contract with WAPA through 2050, and it also has a supplemental power supply contract with MRES that is secured through 2056.

A DIVERSE POWER SUPPLY WAPA supplied 95% of Cavalier’s energy requirements in 2025, and that power is clean, renewable, reliable hydropower from dams on the Missouri River. The supplemental power supplied by MRES helps reduce risk through diversity — both in fuel source and geographic location. The power provided by MRES also focuses on environmental stewardship by developing renewable and carbon-free resources.

WAPA Federal Hydroelectric Red Rock Hydroelectric Project Nuclear Natural Gas Wind Coal Diesel (Excludes Municipal Generation) Solar Solar

(Under Development)

CAVALIER′S POWER SUPPLY MIX WAPA HYDRO*

95% LESS THAN

RRHP** 0.1% LESS THAN WIND 0.1% LESS THAN

SOLAR 0.1% LESS THAN NUCLEAR 0.1% COAL

NATURAL GAS

1% 1% LESS THAN

DIESEL 0.1% MARKET PURCHASES 2%

LESS THAN

OTHER 0.1% 0%

25%

50%

75%

100%

This chart does not represent environmental attributes associated with the power 0 and no environmental 25 100 supply mix, claim50is made by this75chart. *Western Area Power Administration (WAPA) **Red Rock Hydroelectric Project (RRHP)

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AFFORDABILITY WHOLESALE POWER SAVINGS Cavalier pays lower wholesale power supply and transmission costs compared to the average price per kilowatt-hour (kWh) of other regional wholesale suppliers.

Based on the Environmental Protection Agency’s greenhouse gas calculator, this is the equivalent of the electricity used in about 267 homes per year.

Data source: https://www.epa.gov/energy/ greenhouse-gas-equivalencies-calculator

COMPARISON OF 2024 ESTIMATED REGIONAL WHOLESALE RATES - CENTS PER KWH

11.0

9.8

10.0 9.0 CENTS PER KWH

8.0 7.0

5.8

6.0

5.9

6.2

6.4

2

3

4

6.7

6.7

6.9

7.4

5

6

7

8

7.5

7.6

9

10

5.0 4.0 3.0 2.0 1.0 0.0

3.9

1

7.6

7.7

7.7

7.8

7.8

8.2

8.3

8.4

11

12

13

14

15

16

17

8.7

8.8

18

19

AVERAGE

From 2008 through 2025, the city saved over 1.9 million kWh, including 3% distribution line losses, and over 389 kilowatts (kW) in cumulative on-peak demand savings.

WHOLESALE POWER SAVINGS

CAVALIER

The city actively participates in the Bright Energy Solutions® (BES) energy-efficiency program offered by MRES, which provides cash rebates for residential and commercial customers when they purchase new energy-efficient equipment. When this equipment is installed, it helps the city reduce the wholesale demand and energy purchases from MRES, ultimately saving customers money.

As shown below, the blended power supply and transmission cost for the city in 2024 was 3.9 cents per kWh, represented by the blue bar. The average wholesale composite rate of 20 area power suppliers was 7.6 cents per kWh (red bar), about 49% higher than Cavalier, or a difference of 3.7 cents per kWh.

OTHER UTILITIES

The city purchased nearly 17 million kWh from WAPA and MRES in 2025, and the utility saved more than $618,000 in wholesale power costs compared to the area wholesale average. This cost savings reflects the WAPA allocation and purchases from MRES, which is calculated by multiplying the total purchased kWh (16.7 million) by the savings rate of 3.7 cents per kWh. These significant cost savings reflect the direct financial benefits the city receives from its WAPA allocation and purchases from MRES. Because Cavalier operates its own not-for-profit electric utility, lower wholesale electric costs keep rates lower and help fund necessary community projects and initiatives.

ADDITIONAL ONE-TIME BENEFITS CAVALIER CUSTOMERS RECEIVED NEARLY

$125,000 IN BES REBATES

*2008 -2025

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In 2020, the MRES board of directors (board) approved a one-time refund for 10% of its members’ power supply bills from August 2019 to July 2020.

Cavalier received about $12,000 from the refund. In 2021, MRES secured a settlement from the Federal Energy Regulatory Commission, which gave the city over $71,000 as part of a transmission refund. The combined refunds of more than $83,000 helped fund a satellite site for Career and Technical Education at Cavalier High School.

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CUSTOMER SAVINGS A residential customer using an average of 850 kWh per month will save an estimated $18 monthly on their electric bill in 2025 compared to regional REC and IOU customers. The average monthly bill of commercial customers in all categories is less than comparable commercial customers of regional REC and IOU customers.

AVERAGE USAGE (KWH)

CURRENT CAVALIER MONTHLY BILL

CAVALIER COST PER KWH

IOU/REC AVERAGE MONTHLY BILL

CAVALIER BILL LESS IOU/REC

% DIFFERENCE

IOU/REC AVERAGE COST PER KWH

RESIDENTIAL

850

$89.91

$0.106

$108.19

($18.28)

-17%

$0.127

COMMERCIAL SINGLE-PHASE

1,100

$123.30

$0.112

$138.28

($14.98)

-11%

$0.126

COMMERCIAL TRIPLE-PHASE

4,250

$423.75

$0.100

$449.95

($26.20)

-6%

$0.106

LARGE POWER - LOAD FACTOR 73%, 80 kW

42,200

$2,890.14

$0.068

$3,840.75

($950.61)

-25%

$0.091

CLASS

TRANSFER TO THE CITY’S GENERAL FUND CMU made transfer payments, donated services, provided no-cost street lighting and funded special projects for the city that averaged about $377,000 each year from 2021-2024.

These transfer payments totaled over $1.5 million, which amounts to nearly 29% of the annual electric operating revenue for the same period.

The cost of replacing all or a portion of the transfer payments would likely result in higher sales and property taxes collected by the city, or result in higher city service fees.

PAYMENT & DONATED SERVICES TO THE CITY AVERAGED PER YEAR

$377,000

2021-2024

CITY OF CAVALIER’S TRANSFERS AND DONATIONS 2021

2022

2023

2024

AVERAGE 2021-2024

CASH TRANSFER TO GENERAL FUND

$303,958

$307,707

$314,407

$291,344

$304,354

DONATED SERVICES – CITY METERS

$37,003

$37,003

$37,003

$37,003

$37,003

FREE STREET LIGHTING

$15,580

$15,580

$15,580

$15,580

$15,580

-

$83,055

-

-

$20,764

TOTAL TRANSFERS AND DONATIONS

$356,541

$443,345

$366,990

$343,927

$377,700

OPERATING REVENUES

$1,353,817

$1,383,174

$1,285,209

$1,223,487

$1,311,422

26.3%

32.1%

28.6%

28.1%

28.8%

OTHER DONATION

TOTAL TRANSFERS/DONATIONS (% OF REVENUES)

ACCESS TO TAX-EXEMPT FINANCING The city can access tax-exempt financing, which typically carries lower interest rates that lead to reduced borrowing costs. Utilities often issue tax-exempt bonds to finance large infrastructure or generation projects — investments that improve local reliability, safety and other community benefits.

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RELIABILITY In the unlikely event of an outage, the city is prepared to communicate with its customers through:

Public power is reliable power, and the city has a strong record of maintaining an electric system that operates continuously and efficiently.

In fact, public power utilities are among the most reliable in the industry, providing their customers with shorter power outages compared to those served by RECs and IOUs. Simply stated, local crews mean faster response times and shorter outages, and city crews are committed to high safety standards for themselves and their family, friends and neighbors.

Plus, city crews regularly maintain the distribution system to improve efficiency, enhance safety and increase the lifespan of equipment. Some of the annual maintenance tasks include:

WEBSITE

cavaliernd.gov

X Proactive replacement of aging distribution system X Conversion of vulnerable overhead circuits to underground X Annual tree trimming X Inspection and upkeep of redundant critical infrastructure and equipment

Choose City of Cavalier via Info Grove Municipalities App

The city invests in advanced technology solutions that offer many benefits to the utility and its customers. These technologies help Cavalier reduce risk, protect revenue and increase reliability and security in the rapidly changing electric industry.

CMU manages a customer information/billing system (CIS) that is supported

by MRES and includes: X Preferred pricing for enterprise resource planning software with beneficial implementation X Operational and system support

FACEBOOK

Cavalier Area Chamber of Commerce

FACEBOOK

Cavalier Recreation

CMU also manages a Coordinated Demand Response (CDR) program.

Program benefits include: X Reduced demand charges, which helps keep rates low X Managed load control as a cost-effective alternative to building new generation resources

Customers of public power utilities like Cavalier experience the fewest minutes of outage time and fewer outages than customers of IOUs and RECs.

Data source: https://www.publicpower.org/reliability-data

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LOCAL CONTROL AND SERVICE

Cavalier’s public power electric utility is committed to serving the local community. When citizens have concerns, they can communicate directly with city council members or staff who live in the community and have Cavalier’s best interests in mind. Citizens are also welcomed and encouraged to attend public meetings, and the city offers local customer service with a payment office in Cavalier.

The utility employs local people who are part of the community and listen to the customers. They take pride in their work and know customers as family, friends and neighbors.

EFFICIENT OPERATIONS AND MUTUAL AID CMU’s headquarters and operations are located in the community. The city’s employees are familiar with the utility’s service territory and can quickly identify and correct problems. In the event an outage occurs, the city’s local crews can arrive at the outage site faster because they do not have to drive long distances to start restoring power.

More than 1,100 utilities, including CMU, are linked through a national mutual-aid agreement. Mutual aid means utilities help each other in the event of a major storm or disaster. Utilities offering mutual aid may be reimbursed through the Federal Emergency Management Agency, or FEMA. Knowing that Cavalier has access to a network of aid in the event of a major incident is one more benefit to the community.

LOCAL SERVICE TERRITORY

MUTUAL AID

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ECONOMIC AND COMMUNITY IMPACT ECONOMIC IMPACT

The city welcomes new customers to the community and supports the growth and expansion of existing businesses. The city also works hard to contribute to vital community amenities and services that make Cavalier a great place to live, work and own a business.

Local utility ownership means that staff compensation supports the city’s economy by driving spending and investment. In addition, the city purchases supplies and equipment from local vendors and uses community service providers for essential business operations and vehicle maintenance. Over $400,000 in combined wages and local spending is recirculated multiple times throughout the community and contributes to its vibrant economy.

Additional economic development efforts of the city include: X Participates in the MRES Economic Development Rate Discount Program X Provides energy-efficiency rebates for homes and businesses X Extends utility services for potential development X Supports local businesses by buying local X Encourages single- and multi-family housing development through grant opportunities X Bolsters local workforce through scholarship and tuition reimbursement incentive programs X Fosters business and community growth through numerous incentive offerings: f Business Growth Grant for local business growth and revitalization f Home-based Business Transition Grant to assist in the relocation of home-based businesses to commercial office or retail space f Storefront Improvement Grant for façade renovations and exterior upgrades f Energy Efficiency Grant to support energy-saving electric upgrades f Demolition Grant to assist with the removal of blighted and substandard structures f New Business Incentive program to support the establishment of new businesses f Renaissance Zone tax-incentive program participation f Bank of North Dakota’s Flex PACE Program participation

COMMUNITY INVOLVEMENT The city is actively involved in sponsoring local events, programs, projects and services that make a positive impact and showcase the value of the local public power utility.

Here are some examples of how the city has engaged the community in recent years: X Cost-shared Smart Energy Squad educational kits to elementary students and teachers, reaching about 281 local students over the last eight years X Donated to Cavalier swimming pool remodel X Sponsored Cavalier’s 150th All-Class Reunion X Provided labor and equipment to place the Christmas tree and hang holiday lights X Participated in the annual Santa parade X Installed radar speed limit signs X Financially supported the Cavalier Area Chamber of Commerce X Donated time, money and electricity annually for Cavalier Motorcycle Ride In, Off the Charts Music Festival and Music & Art in the Park 10

PARTNERING WITH MISSOURI RIVER ENERGY SERVICES BUILDING SOMETHING GOOD TOGETHER Along with 60 other public power utilities, the city can reap the benefits of being an MRES member.

This includes a diverse power supply, transmission planning and many other energy-related services.

Shared costs and mutual support make the effort more manageable and cost-effective for all MRES members. Other MRES member benefits include: X Economies of scale X Aligned values and viewpoints to meet future challenges together X Mutually beneficial programs and opt-in services X Reduced risks

KEY SERVICES OFFERED BY MRES X Power supply and transmission planning X State and federal legislative advocacy and regulatory compliance X Communications and marketing X Customer information/billing system (CIS) support X Load control and advanced metering services support X Energy-efficiency and electrification programs X Cybersecurity assessments X Rate studies X Scholarships and school education programs X Community event sponsorships X Proactive maintenance services X Education and training X Leadership and supervisor development

NORTH DAKOTA

SOUTH DAKOTA

Cavalier

Hillsboro

Beresford

Lakota

Northwood

Brookings

Riverdale

Valley City

Faith

MINNESOTA Adrian

Alexandria

Barnesville Breckenridge

Benson

Elbow Lake

Henning

Hutchinson

Jackson

Lake Park

Lakefield Madison

Luverne Marshall

Detroit Lakes

Melrose

Moorhead

Ortonville

Sauk Centre

St. James

Staples

Wadena

Westbrook Willmar Worthington

Big Stone City Burke

Fort Pierre

Flandreau Pickstown

Pierre

Vermillion

Watertown

Winner

IOWA Alton

Atlantic

Denison Hawarden

Hartley

Lake Park

Manilla

Orange City

Paullina

Pella Remsen Sanborn Sioux Center

Kimballton

Primghar Rock Rapids Shelby Woodbine

X Strategic planning X Workforce development and succession planning

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CONCLUSION This report reinforces the advantages of a municipally owned electric system and outlines the tremendous value of the financial and community benefits provided by the utility. As part of the public power community, CMU customers can count on: X Affordable rates X Reliable electric service X A diverse power supply portfolio X Governance that includes elected local citizens who are also customers X Local decisions that reflect community values X Financial contributions and in-kind benefits that support the city and its residents X Economic development support X Quick emergency response because crews live in the Cavalier area X Municipal utilities working together for shared success From delivering affordable, reliable power to investing in the community in measurable ways, the locally owned, locally controlled utility plays a valuable role in making Cavalier a place where families thrive and businesses grow — a community that people are proud to call home.

101 Industrial Pk Cavalier, ND 58220 701-265-8668 cavaliernd.gov

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3724 West Avera Drive Sioux Falls, SD 57108 605-338-4042 mrenergy.com brightenergysolutions.com MRES 2026