Local energy co-op leaders are applauding the decision by Tri-State Generation and Transmission Association to close its coal-fired power plants and coal mine in Colorado and New Mexico over the next decade.
Tri-State last Thursday announced it will close its Escalante Station near Prewitt, N.M., by the end of 2020, and retire the Craig Station and Colowyo Mine in Moffat County, Colo., by 2030.
The closures come as part of Tri-State’s new Responsible Energy Plan disclosed last July. The company followed last week’s news with another announcement early Wednesday morning, stating it will pursue renewable energy additions, emissions reductions, increased member flexibility and other actions as a part of the new plan.
The wholesale power supplier has 43 member distribution cooperatives — including Gunnison County Electric Association (GCEA) — that serve more than 1.5 million customers across the West.
GCEA board members, who have long encouraged Tri-State to move toward renewable resources, said the announcement by Tri-State has been long in the making. While they welcomed the news, they acknowledged the change does not come without cost — both to employees and families affected by the closing, and potentially to electric rates as Tri-State revamps its energy generation portfolio.
“The best impact is that we will benefit from cleaner, more sustainable energy into the future,” said GCEA board member Mark Daily. “The worst impact is to the employees, their families and the communities that will surely suffer as a result of this transition. I find it agonizing to make these decisions and they are not made lightly. Yet, I have voted for them and support them for many reasons.”
The cost of cleaner energy
Collectively, the closure of the power plants and mine will impact approximately 600 employees — about 100 in New Mexico and the remainder in Moffat County.
Tri-State is providing Escalante Station employees severance packages, the opportunity to apply for vacancies at other Tri-State facilities, assistance with education and financial planning and supplemental funding for health benefits. The company will also provide $5 million in local community support to address the impacts of the transition, including workforce retraining and other economic development efforts.
A plan currently is being discussed to provide similar assistance to the Colorado communities impacted.
“With ten years until the closure of Craig Station and Colowyo Mine, we have additional time to work with the legislature, our employees and the communities in Moffat and Rio Blanco counties to plan for and support the transition,” said Tri-State Chief Executive Officer Duane Highley. “Our work starts now to ensure we can continue to safely produce power while working with stakeholders to thoughtfully plan for the future.”
Renewable energy has been a point of contention between Tri-State and some of its members.
Tri-State currently caps local renewable energy production at 5 percent for its member coops, requiring them to obtain 95 percent of their electricity from the association. Delta-Montrose Energy Association (DMEA) reached that cap several years ago, but for more than a decade the co-op has fought Tri-State over a desire to stabilize rates and bring more local renewable energy online. Delta-Montrose believes it can provide its members cheaper rates by producing more of its own cleaner energy.
It’s now undergoing the process of ending its contract with Tri-State and said last week it has no plans to do otherwise with the announcement.
“Tri-State’s announcement regarding its planned future retirement of coal generation Colorado and New Mexico does not affect our settlement or our plans to exit later this year,” said DMEA chief operating officer Virginia Harman. “We believe that moving forward with our exit from Tri-State and starting a new power supply relationship with Guzman Energy will best position DMEA to meet our goals of rate stabilization, local generation, and increased flexibility. We wish Tri-State and our fellow distribution cooperatives the best as they move forward with these exciting new plans.”
During the wranglings between Tri-State and Delta-Montrose, GCEA stood by Tri-State, citing the co-ops’ commitments to contractual obligations. Since last week’s news, GCEA board member Michelle Lehmann praised Tri-State, and said it would be much easier for the power provider to pursue cleaner energy than GCEA trying to tackle renewables by itself.
Impact on GCEA and members
Tri-State said the closures will result in 100 percent reduction of coal emissions in Colorado and New Mexico while increasing its competitiveness with a cleaner portfolio and stable rates.
“With our not-for-profit cooperative business model and strong financial position, Tri-State is favorably positioned to successfully transition our resources at the lowest possible cost,” said Highley. “The low costs of renewable energy and operating cost reductions help to counterbalance the cost to retire our coal assets early.”
Yet, GCEA chief executive officer Mike McBride said while he was optimistic about the limited financial impact, he hesitated to make any claim that customers won’t see a rate increase.
“I don’t think there’s any concern from a financial perspective,” McBride said. “We’ve been working on this front for quite a while. Our board has felt like the best opportunity to accomplish these (renewable energy) goals was to work with Tri-State.”
He noted the announcement comes at a great time as community collaboration seeks to develop a regional climate action plan.
McBride noted with the cost for renewable energy production dropping, the timing may be just right for the transition.
“There's a significant cost to closing coal plants. They’re functioning assets that could be used to produce power and the payment obligation on their debt doesn’t go away,” McBride said.
“We’ll have to bear those costs, but we are at a point where it’s possible to absorb those costs.”
“Retiring these coal assets before their normal economic life ends will have some rate impact. It is too early to tell exactly what that impact might be,” said Daily. “Preliminary estimates and calculations show impacts to be small unless additional base load generation is needed when the Craig facilities are closed in 2030. So we have nine or ten years to figure it out.”
(Chris Rourke can be contacted at 970.641.1414 or at firstname.lastname@example.org .)