Have a question? Please give us a call at (605) 256-4555

Your purchase was successful, and you are now logged in.

A receipt was sent to your email.

Your purchase was successful, and you are now logged in.

A receipt was sent to your email.

Less than two weeks after hearing oral arguments in a case involving East River Electric Power Cooperative, U.S. District Judge Lawrence L. Piersol issued a ruling in favor of the wholesale power supplier.

The court granted East River’s claim that “the Wholesale Power Contract (“WPC”) does not allow for early termination and that the bylaws do not permit Dakota Energy to withdraw before fulfilling its obligations under the WPC.” Dakota Energy, one of East River’s member cooperatives, had asked the court to rule in this matter when it was unable to obtain a buyout amount from East River.

In his ruling, Piersol granted a similar claim by Basin Electric Power Cooperative, the generation and transmission cooperative from which East River receives the power distributed to Dakota Energy and other members.

Although surprised that a ruling was issued so quickly, East River was pleased with the outcome – primarily because it secures the members’ energy source.

“This is a major victory for the membership of Dakota Energy who won’t be forced to purchase their energy from an out-of-state, for-profit energy company like Guzman Energy,” said Chris Studer. “It keeps Dakota Energy’s power supply local from a company that they own.”

After the lawsuit was filed, some of Dakota Energy’s members reported being blindsided by the action and have been vocal in their opposition. They attempted to bring a halt to the legal action by filing a petition calling for a special meeting to vote on the issue. The board of directors called a special meeting but did not put the item on the agenda.

Upon hearing about the court ruling on Monday, Pat Doak of Huron, who has been among those writing letters to the editor and organizing resistance, said he was thrilled.

“It confirms our efforts,” he said.

Doak is one of 17 defendants in a case that Dakota Energy filed in state court against members for breach of contract due to their efforts to convene a special meeting to have the issue put to a member vote. He does not know whether that case will be dismissed now that the matter has been decided.

Chase Binger, president of the Dakota Energy board of directors, does not feel the ruling is a win for the cooperative’s members.

“We’re disappointed by this development but will continue to fight for our member-owners,” he said in a prepared statement. “Our co-op wants more flexibility and local control, which means more affordable and reliable power.”

He said the court ignored the argument that East River initially calculated a buyout number and planned to work with the cooperative on a possible withdrawal.

At the hearing on March 29, attorneys for both East River and Basin Electric refuted that argument, citing board minutes and depositions which were part of the discovery phase of the case. Both, they stated, demonstrate East River made it clear at a meeting held with the Dakota Energy board that the wholesale supplier did not believe their WPC allowed a buyout.

“The court also chose to ignore that FERC, which regulates Basin, only a few months ago rejected the very same argument he accepted,” Binger continued. “The decision is flawed from top to bottom and on all sides.”

The court considered what the Federal Energy Regulatory Commission (FERC) said regarding WPCs in an earlier memorandum. Dakota Energy had joined another Class C cooperative in alleging that the absence of early termination and withdrawal rights made Basin’s WPC “unjust and unreasonable.”

According to court documents, FERC disagreed. The federal agency went on to say that it did not have jurisdiction over matters involving Class A cooperatives, like East River, and Class C cooperatives, like Dakota Energy.

Piersol addressed three points in the memorandum which outlined his reasoning for Monday’s ruling. First, he stated, “The contract language is plain and unambiguous.” He indicated that under state law, parties are bound by the terms of their contract, and the courts do not have the authority to rewrite a contract.

Dakota Energy had argued ambiguity existed. The cooperative argued East River’s bylaws indicate members can withdraw after fulfilling “all contractual obligations to the Cooperative” without stating how those obligations were to be fulfilled.

Piersol said that reading of the WPC and bylaws “is untenable.” He said the specific provisions of the bylaws to which Dakota Energy referred did not include an early buy-out, and the WPC was clear regarding contractual obligations, stating that it remained in effect until Dec. 31, 2075.

Second, Piersol determined the Uniform Commercial Code (UCC) did not apply because “the South Dakota Supreme Court’s view of electricity for products liability purposes [in other cases involving electric suppliers] persuades this Court that it would hold electricity is not a ‘good’ for UCC purposes.” Dakota Energy had argued the court could apply the UCC and look beyond the contract language to industry practice and trade usage.

Finally, Piersol concluded by indicating that extrinsic evidence would not be considered even if the UCC applied. He stated, “there is no language in the WPC or the Bylaws that is ambiguous and thus there is no need to rely on trade usage to interpret the agreement.”

We're always interested in hearing about news in our community. Please let us know what's going on!

Success! An email has been sent to with a link to confirm list signup.

Error! There was an error processing your request.

Your account has been registered, and you are now logged in.

Check your email for details.

Invalid password or account does not exist

Submitting this form below will send a message to your email with a link to change your password.

An email message containing instructions on how to reset your password has been sent to the e-mail address listed on your account.

Your purchase was successful, and you are now logged in.

A receipt was sent to your email.