The move by a Montrose-based electric cooperative to buy out its contract with wholesale energy provider Tri-State Generation and Transmission Association is the latest effort by Colorado utilities to cut reliance on fossil fuels and boost the use of renewable energy.
The Delta-Montrose Electric Association said it intends to end its contract with wholesale power provider Tri-State Generation and Transmission to take better advantage of the falling costs of renewable sources. Delta-Montrose filed a complaint with state regulators that the fee Tri-State wants for letting the cooperative out of its contract is unreasonable and discriminatory.
Brighton-based United Power, the largest member cooperative in Tri-States’ four-state service territory, is taking a different route to resolve its issues with rates and the demand for more renewable energy. United Power, whose service area includes southern Weld County and Denver’s northeast suburbs, has proposed a change in the bylaws that would allow the cooperatives to buy an undetermined percentage of their power from other sources.
“Many of our members are asking for more of a mix of renewables,” United Power spokesman Troy Whitmore said Friday. “The purpose is to get a more active conversation going with Tri-State.”
The hope is to discuss a possible change in the bylaws during Tri-State’s annual meeting in April, Whitmore added.
Tri-State, based in Westminster, generates and transmits power to 43 member cooperatives in four states: Colorado, Wyoming, New Mexico and Nebraska. The cooperatives, which include United Power and Delta Montrose Electric Association, in turn provide electricity to their members, including businesses and households.
Tri-State has been criticized by some cooperatives it serves and renewable-energy advocates for relying too heavily on coal at a time when the costs of wind and solar energy are falling and concerns about climate-changing emissions from fossil fuels are increasing.
“We believe this is in the best interest of our membership. That’s our bottom line,” Virginia Harman, the Delta-Montrose cooperative’s chief operating officer said of the complaint filed with the Colorado Public Utilities Commission.
Delta-Montrose has been talking to Tri-State for more than a decade about ways to stabilize its rates, which have jumped 56 percent since 2005, Harman said.
The cooperative’s complaint says Delta-Montrose wants to develop more local, cost-effective renewable energy resources but Tri-State hasn’t been receptive. It has objected to a 5-percent limit on the amount of energy that Tri-State members can generate on their own.
Tri-State will have 20 days to respond to the formal complaint by Delta-Montrose, and the Public Utilities Commission will decide how to proceed, spokesman Terry Bote said.
“We are disappointed that (Delta-Montrose) has decided to attempt to litigate this matter rather than negotiate their withdrawal. Tri-State continues to believe that negotiations on withdrawal are far preferable to litigating this matter,” Tri-State spokesman Lee Boughey said in a statement.
Regarding the proposal by United Power, Boughey said in an email that engagement between Tri-State’s members on their contract is not surprising and the board of directors “regularly considers the contract to ensure the association meets the needs of its members. These discussions continue.”
Tri-State’s wholesale rates have remained stable four of the last five years, won’t increase next year and are forecast to remain stable in the years to come, Boughey added. In addition, 30 percent of Tri-State’s comes from renewable energy sources and the association is currently negotiating to add more renewable sources.
“We acknowledge that Tri-State has added renewables,” Whitmore said.
The problem, added Whitmore, is that United Power pays roughly 28.5 percent more than adjacent customers of Xcel Energy-Colorado and the fear is the gap will continue to grow. That’s a big disadvantage when communities served by United Power are trying to attract businesses to the area, he said.
United Power members also want to increase the amount of renewable energy sources used and reduce carbon dioxide emissions, Whitmore added.
Xcel Energy, Colorado’s largest electric utility, Tuesday unveiled a new goal of eliminating all carbon emissions across its eight-state territory by 2050. Its energy plan approved by regulators in August includes boosting its use of renewable energy to 55 percent of its mix by 2026 and the early retirement of two coal plants.
Harman with Delta-Montrose also expressed concerns about the cooperative’s electric rates being a drag on economic development.
“If we have rate stabilization we can really encourage businesses to relocate to our area,” Harman said. “We have had organizations reach out to us looking at building in the area and they do ask us about electric rates. Our rates have not been competitive.”
The cooperative is working with Guzman Energy, the same energy wholesaler and energy-trading company that financed the $37 million buyout of New Mexico-based Kit Carson Electric Cooperative’s contract with Tr-State in 2016. Chris Riley, Guzman’s president, said plummeting costs of wind and solar have drastically changed the energy landscape and created opportunities for utilities that want to decrease rates while switching to cleaner energy sources.
The cost of coal-powered electricity can vary depending on a plant’s efficiency, Riley said, but generally wind power is in the range of 2 cents per kilowatt hour and large-scale solar power is in the range of 2.5 cents to 3 cents. In contrast, coal can range from 3 cents to 4 cents per kilowatt hour, he said.
When Xcel Energy sought bids from energy companies in 2016 as it was developing its electric resource plan. it received more than 400 bids, many of those at historically low prices for wind and solar energy. Colorado regulators called the number of bids and prices unprecedented.
The Kit Carson cooperative based in Taos, N.M., is scheduled to pay off the $37 million contract buyout fee in the sixth year of the 10-year agreement it signed with Guzman Energy, said Luis Reyes, the cooperative’s CEO. Until then, the rates might be about the same or slightly higher than under Tri-State, but will drop 40 percent, as stipulated in the contract, once the loan is repaid.
Kit Carson expects to save $50 million to $70 million altogether under the contract with Guzman, Reyes added. Rising rates and members’ desire to expand the use of renewable energy contributed to leaving Tri-State, he said.
“We joined Tri-State in 2000 and between then and 2014, our rates had doubled,” Reyes said.
Now, the cooperative has certainty and expects to get 100 percent of its daytime power from solar energy by 2022, he said.
