Colorado electric cooperatives United Power and La Plata Electric Association are weighing all options to change their existing energy procurement contract with Tri-State Generation and Transmission Association (“Tri-State”). In dual November filings with the Colorado Public Utilities Commission (“CPUC”), both cooperatives asked the state’s regulating body to exercise its authority to provide a just exit charge from its existing contract with Tri-State. Currently, both entities are required to purchase a minimum of 95% of their power from Tri-State under existing contracts that run through 2050. In addition, a recent S&P report downgraded Tri-State’s credit rating, with one of the reasons being that its Members’ retail energy rates were at least 20% higher than the statewide average.

“As the largest member in the Tri-State cooperative, we have a responsibility to our 92,000 residential and commercial customers to provide them with the cleanest and most affordable energy possible,” said John Parker, Chief Executive Officer of United Power. “Our current contract with Tri-State forces us to purchase some of the dirtiest energy in Colorado, while our customers pay 20% more than what is the state average. We’ve spent 18 months trying to change this contract, and all that we have gotten from Tri-State is delays, evasions and excuses. On behalf of our customers, we will no longer accept this.”

Tri-State relies heavily upon fossil fuels to provide power to its 43 cooperative members across four states, with 56% of its energy generation coming from coal, which is a significantly higher reliance on coal than other energy providers in Colorado. With the passage of HB19-1261, energy companies in Colorado must start work to reduce greenhouse gas emissions, and Tri-State is not well-positioned to meet these new standards.  As renewable energy production continues to drive down the price of energy, Tri-State’s continued reliance on fossil fuels is also hitting its members in the pocketbooks as well as putting the cooperatives at risk of not meeting the new clean energy standards.

 “Our community should have a choice,” said Jessica Matlock, Chief Executive Officer of La Plata Electric Association. “We want to be a part of the clean energy future and can achieve this through working in our backyard, with our community. We can bring jobs and economic growth to Colorado, while also supplying carbon-free energy to the region. We are disappointed that Tri-State is not partnering with us to achieve this clean energy future together. We want input into the process and choice when it comes to a cost-effective and clean energy future, not a one size fits all approach developed without input of the affected member cooperatives.” 

In response to United Power’s and La Plata Energy’s filings with the CPUC, Tri-State recently filed a motion to dismiss their complaints because they do not believe that the CPUC has jurisdiction over these matters. Instead, Tri-State claims that the Federal Energy Regulatory Commission has jurisdiction over their rates, even though their initial application was rejected in October for being deficient and incomplete.

“Tri-State is going up against a much larger tide that they spent years refusing to confront,” said Parker. “Tri-State’s lack of urgency in addressing these matters is aimed solely at self-preservation rather than what is best for our customers.”

The CPUC has set a date of January 10th to receive testimony on the matter and is expected to make a decision by early April.

About United Power
United Power is a member-owned, not-for-profit electric cooperative delivering electricity to more than 92,000 meters at homes, businesses and farms in Colorado's north-central front range. For more information about the cooperative, visit www.unitedpower.com or follow them on social media at facebook.com/unitedpower or twitter.com/unitedpowercoop.

About La Plata Electric Association
La Plata Electric Association, Inc. (LPEA) is a member-owned, not-for-profit, electric distribution cooperative serving La Plata and Archuleta, with segments of Hinsdale, Mineral and San Juan counties. There are 22 cooperatives in Colorado, LPEA is the fifth largest cooperative in the state, providing safe, reliable electricity at the lowest reasonable cost to approximately 34,000 members.

When it comes to greening up Colorado’s power supply, seismic shifts aren’t just coming out of the state Capitol.

They’re also shaking out of rural Colorado, places like Coal Creek Canyon where utility customer Stephen Whiteside lives. 

Whiteside is a conservative Republican. He’s also pro-renewable energy. It’s not a combination you’d expect, but a recent poll by Pew Research suggests many Republicans favor wind and solar. 

But Whiteside doesn’t support renewables by building a big solar array in his backyard. He does it by cheering on his rural electric cooperative, United Power. In November, United Power said it’s considering parting ways with fossil fuel-heavy power provider Tri-State Generation and Transmission in pursuit of cheaper electricity bills and more renewable energy.

“I think that’s fairly recent that renewables may be more cost-effective than other types of energy,” Whiteside said. “To me that makes a lot of sense to pursue that kind of avenue.”

Grace Hood/CPR News

Right now, Tri-State gets about one-third of its power from renewable energy. Customers like Whiteside want more renewables because they think it will bring cheaper rates. According to a recent estimate by Standard and Poor’s, electricity rates for Whiteside and others under the Tri-State System could be as much as 20 percent above the statewide Colorado average. 

Here’s how the model works now: United Power bands together with 42 other rural electricity providers, called electric cooperatives, to buy power from one entity: Tri-State.

“What that model has not done is kept up with the technological changes in the industry,” United Power CEO John Parker said.

Parker thinks it all adds up to growing pressure on the economic model that rural utilities have followed for decades. In the '80s and '90s, power providers like Tri-State invested heavily in coal-fired plants. Now, they’re trying to green up. 

United Power is not the first or the last utility looking into leave Tri-State. La Plata Electric Association has filed a complaint with Colorado regulators seeking an exit fee from Tri-State.

Grace Hood/CPR News

If those utilities part ways, they’ll follow in the footsteps of two other rural utilities: Colorado-based Delta Montrose Electric Association and New Mexico-based Kit Carson Electric Cooperative. Delta Montrose got the OK to leave its generation and transmission association (known as a G&T) with Tri-State in 2019. Kit Carson left in 2016.

“Just as the industry changes, [generation and transmission cooperatives] have to change,” said Lee Boughey, Tri-State senior manager for communications and public affairs.

Generation and Transmission Cooperatives like Tri-State formed in rural America in the middle of the last century. It was historically expensive for rural electricity providers to provide power because they just served a few customers per mile of the electricity line. That’s unlike urban utilities, which have hundreds of customers per mile. G&Ts helped shoulder the burden by providing power to rural utilities, building expensive coal-fired power plants and setting up contracts that lasted decades to help pay off the plants.

Flashforward to 2019, and power customers like Parker have a keen interest to modernize the grid and experiment with battery storage to keep customers like Whiteside happy. United Power owns the largest battery in the state, but it’s locked into a contract with Tri-State that lasts another 30 years. After power supplier Tri-State quoted United Power a $1.2 billion exit fee to leave its 30-year contract, Parker turned to state regulators for help. 

“That’s the balance we’re trying to find. If it costs us $1.2 billion to get out, we probably can’t save enough money to make that work,” Parker said.

Boughey said 2019 was a big year for Tri-State. It opened up community solar options to its members and brought 104 megawatts of new wind power online. It announced plans to build a 100 megawatt new solar farm. Its Nucla coal-fired power plant was retired early from service, reducing emissions and making operations more efficient.

Tri-State’s member cooperatives are finalizing new contracts that would allow rural utilities like United Power more flexibility to buy renewables. Currently, they’re capped in their contracts at generating just 5 percent of renewable power locally. 

Nate Minor

One of the challenges for Tri-State will be to get even more fossil fuel sources off its financial books as it faces regulatory pressure to do so in Colorado and New Mexico. Legislatures in both states passed carbon-reduction goals for utilities this year. Tri-State will be required to participate in expensive planning. However, there are no financial penalties if Tri-State doesn’t meet the goals.  

“As we move into 2020 and chart our course for the future I think there should be confidence that we’ll be able to meet the challenges ahead,” Boughey said. 

Similar disputes are playing out between rural utilities and their power suppliers across the United States. In Indiana, Tipmont Rural Electric is seeking to part ways from its power supplier over high rates. In Minneapolis, suburban utility Connexus is in the midst of talks with its power provider to get lower rates and more flexibility.

“Today memberships across the country are expecting more from their G&Ts. They’re expecting competitive prices and a greening of the grid,” Connexus CEO Greg Ridderbusch said. 

Like United Power, Connexus is locked into a decades-long contact with its power provider. Ridderbusch said in the future it will be important for his utility and others to form more robust partnerships with their power suppliers. 

“We need the G&T to lower the constraints on things we’re doing in our own backyard for our members,” Ridderbusch said. 

Whiteside said he’s on United Power’s side.

“To have reliable electric service is absolutely critical,” Whiteside said. “If solar power can supplement the other sources that United Power has, it would make sense to do that if it’s available.” 

As relationships start to shift across the country between power suppliers and rural utilities, all eyes will be on Colorado. The Public Utilities Commission could rule on the La Plata and United Power cases in 2020.

Editor’s Note: This story was updated to reflect that Tri-State’s members will ultimately decide how to roll out a partial-requirements contract.