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Rural Iowa utilities welcome large ethanol plants

Midwest Grain Processors facility, served by Iowa Lakes Electric Cooperative, expanded from a 5-MW load to a 9-MW load to produce 96 million gallons of ethanol annually. (Photo by ILEC)

That loud boom coming from Iowa cornfields is the sound of the ethanol industry turning the state into the No. 1 producer of the corn-based gasoline additive. Listen closely, and the outburst is followed by the buzz of rural utilities recalculating their loads and developing services to meet the needs of their new customers.

Corn Belt Power Cooperative serves three member co-ops with new and expanding ethanol plants in their service territories. Iowa Lakes Electric Cooperative, Glidden Rural Electric Cooperative and Midland Power Cooperative are benefiting from—and facing the challenges of—providing service to these large industrial accounts.

“The plants require anywhere from 5 to 10 MW,” said Jim Vermeer, Corn Belt’s vice president of business development. “It’s had a huge impact on our member cooperatives’ loads.”

Co-ops’ loads grow with industry

ILEC, in Lakota, serves an expanding plant, Midwest Grain Processors. The facility’s expansion will boost its capacity from 50 million gallons per year to 95 million gallons, and grow its electrical load from 5 to 9 MW. “Some older plants, like Midwest, have had to double and triple in size to get the economy of scale,” said ILEC General Manager Terry Bruns.

Midwest is not ILEC’s only industrial account but it is the largest, for now. US BioEnergy’s new 100-million-gallon plant being built near Albert City will be a 10-MW customer when it is operational.

The 40-million-gallon-per-year, 5-MW Tall Corn Ethanol plant in Coon Rapids is Glidden REC’s only large industrial customer. “Tall Corn doubled our load and required a dedicated substation,” recalled CEO Bruce Bailey.

The plant is currently expanding to increase its ethanol production 20 percent and add other by-products. The upgrade will double the facility’s load to 10 MW and require construction of another substation.

In the last four years, Corn Belt has built four dedicated substations for its member co-ops to accommodate ethanol plants, with two more now under construction. “We bring the substations to the load—not all utilities do this,” Vermeer explained. “The substation is paid for by our socialized rate structure and depreciated over 30 years.”

Service builds relationship with key accounts

Midland’s first ethanol plant customer, Iowa Falls Ethanol, began producing early this year. “We’ve had large customer experience, but with its high load factor and continuous usage pattern, the plant is a significant addition to our load,” said General Manager Roger Wieck.

Iowa Falls’ ethanol engineers worked with the co-op during the initial startup of the plant to perform a thermographic inspection of the facilities. “We arrange for Corn Belt staff to conduct thermographic inspections,” Wieck said. “It’s a good way to spot problems before they happen, and create better efficiency from the beginning.”

About four years ago, Corn Belt invested in its own infrared camera like the ones Western customers can borrow through the Equipment Loan program. The power wholesaler’s technical staff performs thermographic analysis for its members’ new key accounts. “Even in new facilities, the electrical systems have weaknesses,” said Vermeer. “This program has turned out to be very popular.”

Thermography inspections are part of Corn Belt ’s key accounts program. The power wholesaler’s member systems provides their key accounts with a single point of contact for improving energy management and resolving electrical service issues. The program also reimburses member utilities for time worked with key accounts and some expenses incurred in servicing them.

“Ultimately, it’s about building relationships,” Vermeer asserted. “We don’t want to wake up some Monday morning and read in the paper that a key account has closed its doors.”

New strategies needed to meet demand

Keeping key accounts happy has been good for Iowa’s electrical co-ops, but success comes with a price. “We are experiencing growing pains,” Vermeer admitted.

Corn Belt became a minority investor in a power plant being built by MidAmerican Energy Company about two years ago to secure 42 MW. Chiefly because of the ethanol plants, Corn Belt’s load has outgrown that allocation. The utility is now evaluating new sources of generation.

Also, at the request of its members, Corn Belt is studying demand side management as part of its integrated resource plan. “There is a definite need for some kind of strategy,” said Vermeer. “It’s not a question of if, but when.”

Still, public power providers agree, what is good for the community is good for the utility that serves the community. “Ethanol plants create jobs and increase corn prices by 10 to 15 cents within a 30-mile radius of the plant,” Vermeer pointed out. “And the real impact is that the plants return dividends on investments within the first year of operation.”

If that means utilities have to do a little extra planning and program creation, Corn Belt Power Cooperative and its member systems are happy to oblige.