2 minute read | August.01.2023
A federal appeals court has sided with our client Basin Electric Power Cooperative after it intervened in a lawsuit to stop an electric cooperative from terminating a long-term wholesale power contract decades before the contract’s termination. The decision affirms a framework that provides cooperatives the long-term stability and predictability they need to obtain financing to build, maintain and repair generation and transmission facilities.
A not-for-profit generation and transmission cooperative headquartered in Bismarck, North Dakota, Basin Electric Power Cooperative is owned by 141 member cooperative systems serving three million consumers in Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota and Wyoming.
Basin Electric supplies electricity to organizations that include East River Electric Power Cooperative, a South Dakota generation and transmission cooperative. East River resells power to organizations such as Dakota Energy Cooperative according to decades-long wholesale power contracts.
Dakota Energy Cooperative of Huron, South Dakota decided that, despite years remaining on its contract to purchase all its power from East River, it wanted to buy power from a source other than East River, a court ruling says. It sued after East River would not allow it to terminate its contract decades before the contract was set to end.
Basin intervened in the lawsuit on East River’s side. After a federal judge ruled in favor of East River and Basin, Dakota appealed.
The U.S. Court of Appeals for the Eighth Circuit ruled unanimously on July 28 that the wholesale power contract “unambiguously requires Dakota Energy to purchase all of its electricity from East River until December 31, 2075.”
Energy cooperatives have provided reliable and affordable electricity to hard-to-reach rural communities since the New Deal. Wholesale power contracts ensure cooperatives can obtain the financing to build and maintain generation and transmission infrastructure. The contracts often last for decades, until the end of the loan repayment term.
A victory by Dakota could have jeopardized dozens of electric power cooperatives that provide power to a broad swath of the United States. Cooperatives depend on the stability and predictability of members purchasing power over the lengthy term of the wholesale power contracts.
Andrew Silverman led an Orrick appellate team representing Basin Electric Power Cooperative. The team included Carl Lyon, Lisa Simpson, Jon Direnfeld, Matt LaBrie, Benjamin Chagnon, Monica Svetoslavov, Joseph Kolker, Zachary Hennessee, and Ayala Magder with support from Michael Abrams, Elizabeth Walker and Patrick Kunkler.