By Pat Frazier, COO
Cloverland manages its monthly system peak demand, which is significantly influenced by the power supplied by Wisconsin Energy Corporation (WEC). The cost charged by WEC is largely based on the peak demand, or megawatts (MW), required during WEC’s system peak, which includes Michigan and Wisconsin. To reduce this peak demand, Cloverland maximizes the output of its generation assets and interrupts power to industrial customers when necessary, based on their rates. The success of this strategy hinges on accurate forecasting of peak demand by day and hour. Cloverland’s power supply team uses various tools to forecast daily demand, comparing it with historical data and weather forecasts to determine whether additional generation or load interruptions are needed. Since forming this team, Cloverland has successfully forecasted peak demand for 23 out of the past 24 months, saving nearly $3 million in 2024 alone.
Looking ahead to 2029, when Cloverland’s contract with WEC ends, the power supply team is planning for the future. They are assessing potential replacements for the current power supply through risk management and strategic planning. Power supply costs fluctuate due to factors like fuel prices, material costs and geopolitical events. For example, the Russian invasion of Ukraine caused a spike in natural gas prices in 2022, affecting electricity prices globally. Currently, with natural gas prices low and renewable energy funding strong, now is a good time to secure future power supplies.
Cloverland has issued a Request for Information (RFI) to explore options for power supply from 2029 to 2034. We received responses from various suppliers, including renewable energy sources and potential new generation projects in the Upper Peninsula. Cloverland aims to finalize a negotiated agreement by early 2025, with the understanding that this process may take multiple rounds to find the best terms and conditions.
Additionally, Cloverland’s power supply strategy must comply with PA 235, a mandate that starts in 2029, renewable energy requirements must be met with actual renewable generation, such as solar, wind or hydro. However, municipality-based utilities can continue using Renewable Energy Certificates (RECs) through 2035, which presents an opportunity for Cloverland to sell excess RECs to municipal utilities. In 2024, REC sales generated $1.2 million in revenue.
Cloverland’s power supply team actively manages generation and load on a daily and long term basis, seeking opportunities to generate savings. The team’s focus is keeping rates for our members competitive, stabile, reliable, resilient and environmentally focused.