A recent move by a Montrosebased electric cooperative to buy out its contract with wholesale power provider Tri-State Generation and Transmission Association indicates a growing trend. Utilities across the West are adding renewable energy to their mix and ending reliance on fossil fuels.
Delta-Montrose Electric Association (DMEA) is among the latest to announce plans to end its contract Tri-State, citing lower costs and greater availability of renewables. DMEA is the second co-op to announce its intentions to buy-out of Tri-State, with several other co-ops eyeing similar moves. DMEA has also asked the Colorado Public Utilities Commission (PUC) to adjudicate a just, reasonable and nondiscriminatory exit charge from Tri-State.
Yet, DMEA isn’t alone. Other co-ops also have moved to sever ties with Tri-State — begging the question: Is it feasible for Gunnison County Electric Association (GCEA) — which serves parts of Gunnison, Hinsdale and Saguache counties — to follow suit? Leaders of the local co-op say the possibility has been considered.
“We have raised the question in the boardroom and said, ‘Is this something we should look at,’ said GCEA CEO Mike McBride. “Our initial conclusion is that it would be more costly for our members.”
Tri-State provides wholesale power to 43 electric co-ops and public power districts that collectively serve more than a million consumers across nearly 200,000 square miles in Colorado, Nebraska, New Mexico and Wyoming.
However, Tri-State currently caps local renewable energy production at 5 percent for its member co-ops, requiring them to obtain 95 percent of their electricity from the association. DMEA reached that cap two years ago.
Still, according to the National Rural Electric Cooperative Association, Tri-State is currently the largest solar generation and transmission cooperative in the nation with nearly a third of the energy consumed by Tri-State’s members derived from renewable energy.
And this past week, Tri-State announced plans to more than double its emissions-free renewable energy with a new utility-scale solar project north of Trinidad, Colo. Construction of the Spanish Peaks Solar Project is expected to begin in 2022. The project is anticipated to be completed in 2023.
Despite those efforts, DMEA indicated more drastic measures were needed to address its needs.
“DMEA’s wholesale power costs from Tri-State have been escalating at an unsustainable rate,” said DMEA CEO Jasen Bronec. “Tri-State's annual reports show that average member rates have increased 56 percent since 2005, which is more than double the increase in the Consumer Price Index over the same time period. … This stands in stark contrast to the overall energy market in which prices have decreased significantly over the same period.”
In 2017, Taos, N.M.-based Kit Carson Electric Cooperative also parted ways with Tri-State, paying the supplier $37 million to exit a long-term contract. Like Kit Carson, DMEA will partner with Guzman Energy, a Colorado wholesale power provider, upon withdrawing from Tri-State.
Room to increase renewables
While the push for alternative energy is apparent, many factors come into play for GCEA, leaders say. For one, the GCEA board has long sought to maintain a diverse energy portfolio.
“We’re really working toward finding and building local resources to use the 5 percent, and we advocate for responsibly increasing that percentage with Tri-State,” said CEO McBride.
GCEA is currently under the 5 percent cap — actually, totaling less than 1 percent. However, three projects are in the works which aim to add more local renewables. The projects — which would bring GCEA to 3.5 percent — include two 0.5-megawatt solar arrays and an expansion of a community solar garden.
On top of local projects, McBride advocated for members to participate in GCEA’s Green Power Club — a program that uses renewable energy certificates representing current year production from specific projects. In this case, the renewable is Colorado wind power.
McBride noted that while members of the community have voice support for transitioning to renewables, participation in the Green Power Club program is still under 10 percent.
“It’s a step toward and a way for members to tell the GCEA board that they’re serious about having renewables by participating in that program,” added McBride.
McBride also pointed to the range of services benefitting GCEA that currently fall under Tri-State’s purview — including maintenance of power lines, substations and transformers.
Keeping rates reasonable
GCEA board member Mark Daily agrees that while working toward a cleaner future is a top priority, it’s also important to keep rates reasonable.
“My sense is that nobody likes rate increases,” he said. “I think it’s dangerous to look at any one individual solution to the complex problem of how we keep the lights on.”
GCEA analyzed Kit Carson’s annual filings with the New Mexico Public Regulation Commission.
“We believe that their costs have increased substantially since buying out of Tri-State. Both their wholesale power costs and their operation and maintenance costs are up,” explained McBride.
Daily also cautioned against comparing DMEA to the local electric co-op — noting that load complexities and size of the two associations are much different. For instance, DMEA serves 28,000 members while GCEA serves 10,000.
“The popular press seems to think that Delta-Montrose is doing the right thing,” said Daily. “But nobody is going to know if that’s true or not for probably another 20 to 30 years.”
“Right now, we see this as a large risk,” McBride added.
(Kate Gienapp can be reached at 970.641.1414 or firstname.lastname@example.org.)