Venture Boldly
Venture Boldly
Flathead Electric Cooperative: Powering the Flathead with Katie Pfennigs
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In this episode of Venture Boldly, we sit down with Katie Pfennigs of Flathead Electric Cooperative to break down the forces shaping the future of electricity in Northwest Montana. From rising rates and growing demand to new power generation investments and the impact of AI and data centers, Katie explains what members need to know.
We also unpack the difference between energy use and demand charges and share practical tips that can help you better manage your monthly bill. If you've ever wondered how the grid works—or how to save money without sacrificing comfort—this conversation is for you.
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Hello and welcome to the Venture Boldly Podcast. I'm Brendan Craig and I'm a state president with First Interstate Bank and your guest host for today's conversation. Reliable and affordable electricity is something most of us probably take for granted until the lights go out or the monthly bill arrives. But behind the scenes, the energy industry is navigating some major changes. Demand for electricity is increasing, costs are rising nationwide, and utilities are working to ensure communities like ours continue to have dependable power for decades to come. Today we'll discuss Flathead Electrics, cooperative investment, and new power generation, why electric rates are increasing both locally and across the country, what those demand charges on your bill actually mean, and we'll wrap up by looking ahead at what gives our guest optimism about the future of energy in Northwest Montana. Joining us today is Katie Fennex. She's the community relations manager for Flathead Electric Cooperative. Katie oversees communications, government relations, and energy services for the co-op, which serves more than 60,000 homes and businesses across Northwest Montana. Flathead Electric is the largest electric cooperative and the second largest electric utility in the state. A 2004 graduate of Flathead High School, she earned her bachelor's degree from Montana State University and her MBA from the University of Montana. When she's not at work, like many of us, she enjoys everything Northwest Montana has to offer, including hiking, fishing, skiing, camping with her husband Bobby, and their two children. Well, Katie, welcome to Venture Boldly. We appreciate you taking time to join us today.
SPEAKER_01Well, thank you so much for having me. I'm really um really happy to be here.
SPEAKER_00Excellent. Well, before we jump into business, I'm gonna hit you with a random question. Montana State University graduate, bachelor's degree, MBA from University of Montana. So clearly is the assumption you're a bobcat.
SPEAKER_01Obviously. Okay. Yeah. I'm glad that we started there because it's important to get those big um topics out of the way before we, you know, excellent, before we get into the utility. Yes, very good.
SPEAKER_00Okay. Well, I'm I'm thankful to hear that, and I'm sure everyone listening is I bleed blue and gold for sure. They're yelling in their cars right now as they listen to the podcast. Well, good. Well, we appreciate you being here. We look forward to this conversation. Flathead Electric has been in the news lately, announcing an investment in new natural gas generation facility in northern Idaho, of all places. What does this mean for people here in northwest Montana and why is it important?
SPEAKER_01Yeah, well, um, thank you for that question. Uh, we have had, as you can imagine, a lot of conversations around this announcement recently. Uh, but really, this is a function of years of long-term power supply planning work that Flathead Electrics board and staff have undertaken. And uh, and we have done that in the last several years in partnership with PNGC Power, which is the generation and transmission co-op that we are a member of, um, along with uh many other co-ops in the Pacific Northwest. And so PNGC is a co-op of co-ops, essentially, and they are the partner that has been helping us look at growing loads, how we meet demand into the future, and how we develop resources that we need to do that effectively. So while this uh is certainly a new topic of conversation for all of us to be discussing around uh, you know, building new generation, it's been a long planning process for our board of trustees
New natural gas facility
SPEAKER_01and not a decision that is taken lightly, right? These are big investments and um big long-term decisions to meet the needs of our growing valley into the future.
SPEAKER_00Yeah, absolutely. And I I imagine just a massive amount of due diligence is required in this. Tell me a little bit about a timeline. It's taken a long time to get to this point. Now, what do we have to look forward to before this is online and and contributing power to the grid?
SPEAKER_01Yeah, I'll tell you that's something about um our industry that I have learned in my my 10 years at Flathead Electric. Nothing happens quickly. And so these planning processes take uh several years. Um, you know, we're doing our forecasts out 10 years to try to understand what our needs are going to be. And then um all of the resources that get built are also years-long um large, you know, utility-scale infrastructure resources. And so, yes, you're right, very long timelines, long lead times right now on um all of the equipment that's needed. These uh these investments take a very long time, and uh this project is not slated to come online until um the 2030s.
SPEAKER_00Yep, so it's a little ways out there. It is which in a regulated industry with a project of this size, it that's just the way it is, uh unfortunately. Uh, and that's in a society that expects things to move quickly, instant gratification. So you're right. The good news is is I can tell you that Flathead Electric Co-op is incredible at communication uh through your newsletters, all the events where you guys are speaking here uh through the chamber, for instance. And I'm appreciative of all the updates that you guys give. It sets us up for success in the long run.
SPEAKER_01Good. Well, well, um, and that is definitely part of our mission is to be you know transparent and provide as much education as we can uh for the members that we serve. That's one of uh my favorite parts about working at a cooperative, is that really we are rooted in those cooperative values, and one of those is education for our community. And so um, in that spirit, um, you know, being owned by the members that we serve, it's very important that we are open and do keep this education going. These are complex topics, and we are really fortunate to have a membership uh here within the Greater Flathead Valley that cares an awful lot about the decisions that are being made on their behalf at the co-op by the trustees that they have elected to serve and to run the utility, and uh and we do not take any of that responsibility lightly.
SPEAKER_00Yeah, well, excellent. Well, we appreciate that, and we and we appreciate that that good communication. I think we all know electric rates are going up across the country, and it sounds like they're increasing locally as well. Flathead Electric announced an overall 5.5% increase that took effect June 1st. Can you explain why rates are increasing here and across the nation?
SPEAKER_01Yes. Uh, well, we are um not unlike any other industry or business right now, we are seeing our prices um increase. And that's not just our wholesale power costs. We are seeing the prices of all of the goods and services that we need to keep power reliable and affordable increase as well. We have experienced doubling of costs on some of our equipment, like the line trucks that we need to um to supply to our line crews. I mean, even just the wires that that we need to run in the poles uh to keep the infrastructure sound is increasing rapidly. So we are no stranger to increasing costs. Uh that said, we're also very sensitive to the impacts that rate increases have on our membership. We've been um, I think very fortunate to have come through a period here where rate increases were kept um very low, below the cost of inflation for many, many years. And so we have seen that at this time we we have to increase rates in order to keep providing the level of service and that we need to. So uh certainly part of that is power
Electric rate increases
SPEAKER_01costs. Um, yes, we are seeing increases in our wholesale power costs. We're really fortunate to be served by primarily by uh hydropower from the federal hydropower system across the Pacific Northwest. And that is uh fortunately for us one of the most cost-effective uh power generation sources really in the whole country. Um, but um, those costs are are rising too. And so as a member-owned cooperative, our mission is to serve power at cost. We uh we are a not-for-profit. Um, we don't take a profit on top of the costs that we incur. So our members are really truly getting this service at cost. And as our costs increase, um, those increases are passed along to our membership. So um, for example, wholesale power costs this year from Bonneville Power Administration increased something like eight, eight or nine percent. And then on the transmission side, what we pay for transmission services, we saw increases of uh more like 18%. So, yes, those are costs that we're incurring um as all of our members use power and use that system, and we do our best to ensure that we fairly allocate those costs back to our membership. Um, and you know, unfortunately, sometimes that does result in uh rate increases.
SPEAKER_00Yeah. Well, you got to, I mean, a number of things at work here, supply and demand. Yeah, we touched on that on our first talking point about just adding additional supply, diversifying where the supply is coming from. And with additional supply, hopefully that helps bring costs down or slow them from going up. And then I just think I look around at gas prices, for instance. Well, I think a flathead electric co-ops cruise with those trucks you guys have, those big diesel pushes that are going out to service lines, for instance, after a storm. Those prices are going up when the diesel goes up, for instance. And so it's understandable. It's a bummer, obviously, for folks that have to pay because and that uh that's across the board. If you go have lunch somewhere at a local cafe, you'll see that prices have gone up. And so it's uh unfortunately that's just the environment that we are in.
SPEAKER_01Uh we're all we're all feeling that crunch, aren't we?
SPEAKER_00We're all yeah, we're all feeling a little bit of pinch, but I'm appreciative of how you're explaining that nonprofit setup and how you know the due diligence is there uh to make sure and not pass additional costs on that don't need to be passed on, and we appreciate that.
SPEAKER_01Well, we'll keep doing our best. You know, um I always like to remind people that we are all co-op members too, and we all pay the very same rates that all of you do. I sometimes get asked if I get a discount for working at Flathead Electric. No, I do not. I too am I.
SPEAKER_00If that's the case, I'm gonna have to withdraw my pending application with you.
SPEAKER_01Oh well. Well, you know, I'll I will say it's still a pretty good place to work, even without that discount.
SPEAKER_00I'll tell you, and talking to various employees that work at Flathead Electric Co-op, what an incredible culture you guys have there. It sounds like just a wonderful work environment.
SPEAKER_01We do, we do. Um we work awfully hard and we all really feel like we are able to serve the community from these roles and these seats. And um, and yes, but no, we don't like those rate increases either.
SPEAKER_00So before we move on to the next uh question, Katie, how about data centers? I'm reading a lot about the just the rollout of artificial intelligence, the amount of computing power that is needed to facilitate the AI. Is that taking place up in our part of the footprint? And does that is that part of the reason we're seeing costs go up as well?
SPEAKER_01Good question. Um that that's a question that we are increasingly hearing from our members concerns about these very, very large loads. Um, I think to some degree that data centers have become sort of a convenient shorthand for um for really what's a much larger issue. Data centers are large, they are very energy intensive. Um, so they they are easy to point to in some cases. I would say they're not really the root problem that we're facing right now. The root problem really is that the Northwest's power systems is really a regional problem, um, is entering a period where we have seen demand is it's growing rapidly. We've seen that in the flathead as well, but that's really been across the entire Pacific Northwest. And we're all part of an interconnected grid, right? And so that growth that's happening across the Northwest US impacts the entire region. And that demand is growing faster than dependable infrastructure has been built and really, you know, can be built. And so that's where this concern is coming in the future. But I I wouldn't frame it entirely as a data center problem. I would frame it as more of a problem around planning and infrastructure
Data centers
SPEAKER_01development and trying to keep power reliable. And we've seen a lot of impacts or a lot of pressures there, right? So um the electrification of everything, um, you know, if you look around probably your own home, I would say you've probably increased the amount of electric devices in your home. You know, I look at my own house, uh, you know, you got bikes, you didn't have to use to have to plug in your bike, your car, of course. That's a large load if you drive an electric vehicle. Um, but I mean, I even sometimes point out like my my ice fishing auger has a battery on it now, right? So it's just everything, the tools and the um, and I mean, full electrification on the West Coast, we're seeing a lot of switching from natural gas to electric heating, for example. And so all of that electrification and all of those pressures at the same time as we've been decreasing the amount of power that can be produced reliably, exactly when the grid needs it. Right. So we're reducing the amount of um coal-fire generation and restricting the amount of natural gas that can be built in some places. Those two things happening at the same time is really what's um, I would say, caused the concerning reliability challenges that, you know, now we're reading about in the news and um and really what's, you know, a lot of what's driven the decisions for Flathead Electric to invest in new resources to ensure that we can continue to have a reliable power supply well into the future.
SPEAKER_00Excellent. You know, you bring up a good point. I've noticed more people are using electric mowers and snowblowers, for instance. And when you think about that, the more of those that are in everyone's garage, there is a charging pack that's plugged into the wall. After someone cuts their lawn, they're plugging in batteries. Exactly.
SPEAKER_01Exactly. Yeah, and to answer your question, though, around data centers, there are times when I think that uh the data center's load because it is so constant, can be beneficial to some grids, right? It's just about how we plan for them, how we build infrastructure, and then how we assign costs. Um, you know, a data center, just like from the co-ops perspective, like anyone, any member should not get a free ride. We don't want the rest of our members to have to shoulder the cost of a data center. And so, um, and so we we build our policies and set our rates to ensure that all of our members who are the cost causers are also the cost payers. It's that cost causation model. Okay. And so that's really important as we think about adding large new loads. And also here locally, um, really, we haven't seen a lot of these large new loads come onto our system. Um, I think for a number of reasons. You know, property costs are very high here in the flyhead, we all know that. Um, and you know, we also have um at this point, uh, the transmission system coming into the Bar Valley is getting more and more constrained. And so to think about bringing on a very, very large new load, probably just really not feasible at this time. Um, but we do, we're getting more and more questions about that. And I just think it's important that we look at the broader picture and not uh, you know, really not point to any one particular class of member.
SPEAKER_00Absolutely. Well, when we think about just the again, supply and demand, uh that's gonna bring up something I believe you guys probably get a lot of calls on. That's demand charge.
SPEAKER_01And so I could have guessed that would be that question.
SPEAKER_00Right, right. And so I I kind of want to first of all, I want to uh maybe for the benefit of everyone and and for you to tell your team is uh we find ourselves calling customer service maybe once or twice a year, if that. And every single time we hang up the phone, I think that was an incredible experience talking to a flathead electric co-op employee. And so I think it would be beneficial. Maybe we should do a little bit of a role play here. I actually brought my flathead electric cooperative bill. I have it right here in front of me. I love this. Yes. And so what I'm going to do is I'm gonna call Katie and ask her a couple questions regarding my bill. And I just know it's gonna be a pleasant experience, and I think it will be educational for the listeners of the podcast today.
SPEAKER_01You have no idea how often this happens at a dinner party.
SPEAKER_00Excellent. And so I'm thinking that this podcast is gonna be posted on your website, and you can say, for questions regarding the demand charge, please reference the podcast. So let's just say the phone's ringing. How are you answering?
SPEAKER_01Well, hello. Thank you for calling Flat Electric Co-op. This is Katie.
SPEAKER_00Katie, hello, my name's uh Brendan Craig. Uh I'm calling
Demand charges
SPEAKER_00about a question on my bill, and I would like to get a breakdown of what I'm seeing here. I see where I am paying what appears to be a tiered rate, starting with zero to six hundred KWH. Is that kilowatt hours?
SPEAKER_01That is kilowatt hours, yes. You got it.
SPEAKER_00So I see I see I paid $32.94. Then I see I went from $601 to $3,500. I paid $34.48. Uh not I'm not a scientist by any means, so I'm I'm not questioning that. I probably used a little more power, maybe, so I got charged a little bit more. But specifically, what I'm looking at here is a demand charge. And it says on May 14th at 5 to 6, I got charged $23.27. Could you tell me what that is?
SPEAKER_01Absolutely. Glad that you asked. Um, so the way that our rates are structured is really similar to the way that we pay for power and to the costs that we incur as a co-op. And uh a lot of the costs that we incur on our power is related to demand, which is really a function of when we have our highest energy usage. And so as a co-op, we try to pass along those costs as fairly as possible to the members. And so our members who ex who have a higher demand, uh, which essentially is how much energy that you're requiring at any one given time, you know, that's where you're seeing that demand charge. And so I think it's important to think about the difference between energy and capacity. And we have several, uh, several different ways that we can can kind of talk about this, but I think of your energy charges, which are those kilowatt hour charges as how much you used over the entirety of your month-long billing cycle. Okay. Okay, so how many kilowatt hours that you consumed to electrify your home or your business. The demand charge is a capacity charge. So how much did you need at any one given time? And the reason that that's important is so for one, um, because we're charged a higher charge when our system hits its peak, we get a essentially demand charge. And then we also have infrastructure charges that are higher if you have a higher demand. So if you think about uh like the poles and wires and the transformers that are serving your home, we have to build that equipment to to be able to meet your highest demand at any given time. And so costs that the co-op is incurring on your behalf to have those larger poles and wires are reflected in that demand charge.
SPEAKER_00Okay. And so it's broken down. Now, is there certain time periods where where those demand charges take place?
SPEAKER_01There are for our residential members. So we've got demand hours in the morning and demand hours in the evening. Um, they're in three-hour blocks, and it is um really reflective of when, again, when our system also is peaking and we're typically incurring our demand charges, right? And so we've done our best to try to reflect that fairly and accurately in the way that we bill our members. And it's also important to know it's only on the weekdays. Okay, so we never charge for demand on weekends.
SPEAKER_00Okay, so it's Monday through Friday.
SPEAKER_01Monday through Friday.
SPEAKER_00In the morning and in the evening. Exactly. You happen to know the hours specifically, is it?
SPEAKER_01Yes, 7 to 10 a.m. and 5 to 8 p.m.
SPEAKER_00Okay, so I'm gonna drill in here because I kind of nerd out on power here. So five to eight and seven to ten. So seven to ten in the morning, which makes sense because that's probably when a lot of families are getting up and getting ready. And so the grids, they're starting to turn on a lot of different items in their house. And then also from five to eight, that's when folks are getting home. Again, stuff gets turned on in the house, dinner's being cooked, et cetera. And so those are the periods of time if you're seeing a demand charge on your bill, that's where you can get you can be cognizant of what what appliances, for instance, you're using.
SPEAKER_01Yes, and that's exactly right. And this actually, interestingly, um, people are noticing this demand charge now, probably because it's higher than it used to be. But we've had a demand charge on our residential members' bills since 2019. So, um, so we are getting more questions about it. I think a lot of people assume it's new, but it's it's not new. It has been there for quite some time. We've just uh we we've increased it over the years, right, to be more reflective and to try to give our members an opportunity to better understand the demand charge, better understand what demand is, because it is a departure from the way that you know that historically that we've charged for energy and that people are used to being charged for their electricity consumption. They're very accustomed to how much did I use, you know, times a rate.
SPEAKER_00Sure.
SPEAKER_01End of story, right? You talked about those tiered energy rates, and we do give you a bit of a break if you're using less energy, you know, for the all the same reasons, really.
SPEAKER_00Absolutely.
SPEAKER_01But as we've seen the way that that that we pay for wholesale power change, and as we've seen our our system costs really change to to need to serve our members for these really high peaks, um, we really have needed to make a change to the way that we bill as well to make sure that it's it's fair. Yeah. And we s we actually interestingly have have seen our some of our members who have a lower demand have had uh have have seen their energy bills go down, which is an indication that they were subsidizing all the rest of us, essentially, right? Which we want to make sure that we're not not doing. Yeah. And so uh really it it truly is a more fair and accurate way to bill you based on what you on the costs that you know that we incur on your behalf on this system, and to make sure that that you know you're not overpaying when you do control your demand and you know that somebody else isn't shouldering your burden also. Yeah. So it's it's much more fair on both sides.
SPEAKER_00Excellent. And so maybe a takeaway or two uh from this conversation, which I really appreciate, uh the explanation of the demand charge is if you're thinking about all the thermostats, for instance, smart thermostats, maybe you uh if it's winter, you heat your house up and then have it take a break during those dem demand hours. Um uh or air conditioning, for instance. Uh if you're doing a washing machine, uh your dryer, for instance, uh Uh you might focus on doing your laundry on the weekends, maybe. Or during the if if you're home doing it during the day outside of those demand hours and that that in that case you're spreading out uh your energy usage for capacity purposes.
SPEAKER_01Right, exactly. And so yeah, so I mean, what the demand charge is based on is the single highest hour of kilowatt hour usage, right? So it's it if you think about how you can control your demand, it's actually much more controllable than your energy charges are, right? You need the it you need to use the electricity in your home that you need to use, but you have more control over when you use that energy. And not everyone, and I understand that. I probably fall into that category where I I have two young kids and we're on the go and I just need it when I need it, and I there's very little I can do to shift my usage. And so I pay a high demand charge. I don't love it, but I know that those that I, you know, those are costs that I am causing. And I don't want you, Brendan, having to pay for my high demand and say, you know, that that just is a function of of fair, you know, fair rate setting. But it does give you the ability to um to try to shift some of it. So things that even I have done is, you know, set the delay on my dishwasher. That's easy. Get it outside of those demand hours. Why would I not do that? Home heating and water heating are the two highest consumption activities, energy consumption activities in a home. And so if you are heating with electricity instead of natural gas, then looking at ways to shift that, you're right. Um you know, can you cool your home a little bit outside of those demand hours and then, you know, let your AC take a break during the demand hours, um, or vice versa on the heating. You know, lots of little ways that you can can look at trying to reduce your demand. There are lots of great timers out there on the market. Flathead Electric has a couple programs. We've got a water heating demand response program, it's called. Um, it's a responding to that high demand where we actually will install a unit on your water heater and then turn it off during all the peak hours, which saves about four KW. Yeah. And when you multiply that by, you know, the demand charge of $4, you can see some significant savings if you just shut that water heater off during all of those peaks. And because you have a 50 gallon, 50 gallons typically of hot water stored in your tank, yep, you use that during that time and most people never even notice that it's there. Right. Right. That the that we've shut it off.
SPEAKER_00So well, it's good that we have the technology at our fingertips to to leverage, to try to use, you know, have things turn on and off outside of the demand hours. Yeah. So excellent. Okay.
SPEAKER_01Did that help?
SPEAKER_00I it did absolutely help. I appreciate the excellent customer service in explaining that all to me.
SPEAKER_01Yes, absolutely. Happy to anytime. And if you need another explanation, call us again.
SPEAKER_00Call us again. And yep, and that it's we'll walk you through it. It's basic supply and demand, so it makes sense. And I think that for those that pay attention, there's ways that you can try to mitigate it just through being intentional of when you're using your power. Yeah. Okay. Well, I think we all know there's certainly challenges facing the the energy industry, as we've highlighted through this conversation. I'd like to end on a positive note. What are some of the best things happening at Flathead Electric? And what gives you hope and confidence about our energy future?
SPEAKER_01Great question. Um, yeah, there are a lot of challenges in this industry right now. You know, I have I have a lot of optimism just in the fact that we are still locally served by an electric co-op. I think that we're very fortunate in this area to uh to have cooperative service. Um, it's a very different business model than other utility models. And Flathead Electric is extremely conscientious about the way that we that we provide electric service. I had mentioned those cooperative principles, um, concern for community and providing benefit to our community are things that we uh that we focus a lot on. You know, we have 160 employees at the co-op, and so many of them are out there serving the community in other ways than just through their work at the co-op. I see, I just see a lot of positives. Our Roundup for Safety program is a big highlight. You know, one of the the highlights that I get to work with all of you round up your the that round up your electric bills each month. Um it's only a couple of pennies to you, but we've been able to uh through a volunteer board to distribute five million dollars in community safety projects. That's
Optimism for the future
SPEAKER_01going very, very well. You know, the community education uh grants and scholarships we're able to provide. I've, you know, it's been fun to see how those have have benefited students for years to come. And then I mean, just on our base business model too, I will say that I'm really optimistic about the way that we are planning for the long term. I think uh the fact that Flathead Electric, you know, did make that natural that announcement about the natural gas facility, very, very big deal for uh the future reliability and affordability of the electricity serving the area. You know, ensuring that we've got access to that generation when we need it at a cost that is, you know, known and will provide some long-term cost stability brings me a lot of hope for the future. And I'm really proud of the co-op, frankly, for making that decision. And then, you know, there are other investments that uh that we're looking and I'm at and making as well. You know, we've I feel a lot of questions about concerns around natural gas in general from a carbon emissions standpoint. And I would say that uh that there are other excellent investments that the co-op is making in new renewable projects as well. And hopefully we'll be able to announce some of those. But we've also seen some great investments in local generation through our community solar projects and and some of those too. So I think there's a lot that's going really well, even in the face of uh a lot of good energy. I like that. A lot of good energy, that's right.
SPEAKER_00You see that.
SPEAKER_01Even in the face of reliability challenges and concerns, we're, you know, working really hard on on all of your behalf.
SPEAKER_00So we're future focused, and we appreciate that. Well, Katie, thank you for joining us and helping us break down some of these important issues. Energy affects every home, every business, and every industry in our region. And it's helpful to better understand both the challenges and the opportunities ahead. And thanks to all of you for listening to Venture Boldly, the podcast of the Discover Kalispell Chamber. If you enjoyed today's conversation, be sure to subscribe and share the podcast with a friend or colleague. You can find previous episodes and learn more about the chamber's work to strengthen our local economy at calispelchamber.com. Again, that's calispellchamber.com. And until next time, venture boldly, everyone.
