The times, they are a-changin’, goes the 1963 Bob Dylan tune, and the phrase rings especially true in the quickly changing business of how we get our energy. Last month, Tri-State Generation and Transmission Association announced it was moving toward greater flexibility for member co-ops, increasing the ability to source local renewable energy.
Tri-State, a wholesale power supply cooperative that provides power to over 40 local electric co-ops across four states, including Colorado, counts the San Miguel Power Association (SMPA) among its co-op members. SMPA, as the local power supplier for all or part of seven counties, including San Miguel, Ouray and the West End of Montrose counties, then distributes that power to its own members; that is, anyone who pays a power bill within SMPA’s service area.
Currently, Tri-State’s member co-ops such as SMPA are bound by 50-year contracts stipulating that 95 percent of the co-op’s power supply is purchased from Tri-State, allowing the remaining 5 percent to be sourced from locally generated renewable energy sources such as wind or solar.
“Our membership has had a strong desire for more renewable energy,” said Alex Shelley, SMPA’s communications executive, explaining that at present the 5 percent of locally generated renewable energy allowed under the contract is being fully met by three local and regional solar gardens and several small hydropower projects such as the Ouray Hydroelectric Power Plant.
The other 95 percent comes from Tri-State, whose energy portfolio at present remains majority coal-fired power generation. In January, Tri-State announced its new Responsible Energy Plan, in which it committed to achieving 50 percent renewable energy by 2024, and to closing its remaining Colorado coal facilities by 2030, among other steps towards meeting new state laws and emissions-reduction goals. However, a number of member co-ops wanted more flexibility to increase their power supply from local renewable sources beyond the 5 percent cap, or to seek alternatives outside of Tri-State entirely. In a few cases, years-long struggles of negotiations between Tri-State and member co-ops ended in expensive break-ups, such as when the Delta-Montrose Electric Association agreed in 2019 to a $135.5 million exit fee to break its contract with Tri-State.
In April, Tri-State took steps to increase flexibility for its member co-ops, announcing plans to implement partial requirement contract options. Partial requirement options would allow member co-ops to buy out part of their current full requirement contracts in order to source up to 50 percent of their service area’s demand from local sources.
Also new was a provision allowing co-ops to source an additional 2 percent from local community solar projects, and a formal methodology for setting exit fees in the event that member co-ops wish to exit their contracts entirely. These proposals, adopted by the Tri-State board of directors, will be submitted to the Federal Energy Regulatory Commission for approval.
“Both the partial requirements contract option and the contract termination payment methodology approved by the board protect the interests of all Tri-State utility members by ensuring that one member’s action does not unfairly shift costs to the other members,” said Duane Highley, Tri-State’s CEO, in an April 9 press release.
As Tri-State is itself a co-op, it relies on the fees and power consumption of all of its member co-ops to determine its wholesale power prices, and the exit of member co-ops can cause the remaining members to shoulder more of the costs, also a concern for some members seeking to exit who alleged that Tri-State was attempting to block a fair exit because it needed its business.
Lexi Tuddenham, executive director of the local environmental group Sheep Mountain Alliance, expressed hope that Tri-State’s recent actions and proposals are moving in a positive direction, but also expressed concerns.
“Tri-State states clear goals, but is not as clear about how to reach those ambitious goals and throughout their territory are still heavily invested in coal,” she said. “Co-op members and consumers need assurances about how Tri-State will meet the state requirements and the goals of its energy plan, and see it making policy decisions that benefit its member coops and ratepayers like us.”
Tuddenham emphasized that as the local member co-op, SMPA has shown an active responsiveness to its members’ comments and concerns, and “has made great strides in meeting members’ demands for cleaner, greener energy.” However, even with Tri-State’s new provisions allowing for member co-ops to self-generate more of their energy demands through local renewables, she expressed concern over Tri-State’s high rates and lack of transparency.
“I do believe that Tri-State has made some initial moves in the right direction,” she acknowledged. “However, I think we are still far behind the curve in terms of transitioning to cleaner, more affordable energy versus other energy utilities throughout the West, and there needs to be more transparency in decision-making and more clarity in terms of how Tri-State implements changes.”
Shelley, of SMPA, affirmed that the energy industry as a whole has experienced rapid changes in the last decade and that SMPA is committed to providing reliable, cost-effective power to its wide base of consumers.
“The industry is moving towards renewables and away from fossil fuels,” Shelley said, explaining that while those who simply want reliable power don’t need to do anything differently. Those members who want to see an increase in renewable energy, he said, have options through SMPA not only for ensuring their power is coming from non-fossil fuel sources but also helping to move the industry in that direction.