Utility may buy out its contract with TriState

A western Colorado utility has voted to change its articles of incorporation in a move board members believe should provide the means to buy out its contract with TriState, an energy supplier under fire for what critics say is too much dependence on fossil fuels.

The DeltaMontrose Electric Association said Wednesday the changes approved by its members will allow it to sell capital stock to nonmembers, helping it raise money if it pursues buying out the contract with West-minster-based TriState Generation and Transmission Association.

In 2016, the Kit Carson Electric Cooperative in northern New Mexico paid $37 million to break its contract with TriState. At the time, the cooperative, which serves the Taos area, said it wanted to use more renewable energy resources locally and in the overall fuel mix.

The main reason the DeltaMontrose board is looking at ending its longterm contract with TriState is concern about costs, but increasing the use of renewable energy sources is another factor, said Virginia Harman, the utili ty’s chief operating officer.

“I think it’s fair to say it’s economics, but also for diversification, a more diverse power supply,” Harman said.

DeltaMontrose sees the changes in the market that have led to declining costs for renewable sources and believes it has a fiduciary responsibility to its members to provide the best rates possible, Harman said.

“We believe addressing our power supply costs is essential for longterm rate stabilization for our members,” DeltaMontrose CEO Jasen Bronec said in a statement.

The utility’s members voted 2,677 to 1,248 to change the articles of incorporation.

DeltaMontrose, which serves Delta and Montrose counties, said it has agreed not to disclose the possible cost of buying out the contract, which runs another 21 years.

Harman said the utility’s wholesale power supply costs from TriState have increased by 36 percent during the past decade. During that time, the Consumer Price Index rose only 17 percent, she added.

TriState did not take an official posi

tion in the DeltaMontrose special election, but it disputes the utility’s assertions about the transmission cooperative’s wholesale rates.

“Our members have made it a priority to stabilize rates, which we have done,” said TriState CEO Mike McInnes. “Our wholesale rates have remained stable four of the last five years, will not increase next year and are forecast to remain stable in the years to come.”

TriState, which supplies electricity to its member associations in Colorado, New Mexico, Nebraska and Wyoming, gets about half its power from coalfired plants. It also obtained 30 percent of its energy from renewable sources in 2017 and expects that to increase to about a third this year, spokesman Lee Boughey said in an email.

“With 85 megawatts of solar power, TriState is the top solar generation and transmission cooperative in the U.S. With current low prices, TriState remains interested in adding to our renewable portfolio” and is reviewing proposals, Boughey added.

DeltaMontrose and other rural cooperatives have voiced objections to a 5 percent limit on the amount of energy that members can generate on their own.

“We’ve already met our 5 percent cap. We have interest in having more local renewable energy, but our contract with TriState prevents that,” Harman said.

United Power, a Brightonbased cooperative whose territory is mostly in the northeast metro area and part of Weld County, is concerned about rising costs and wants to see the 5 percent cap raised, spokesman Troy Whitmore said.

“However, we are very unlikely to take the same approach as (DeltaMontrose) with changes to our articles of incorporation,” Whitmore said in an email. “It is safe to say we are exploring other options with TriState at this time.”

The Rocky Mountain Institute released a report in September arguing that TriState could save more than $600 million through 2030 if it upped its use of renewable energy. The Poudre Valley Rural Electric Association board referred to the report when it recently passed a resolution asking TriState to determine if it could save money by adjusting its mix of fuels.

TriState’s production costs are generally higher than bids for wind at $11 to $18 per megawatt hour, and comparable to solar bids, which are $23 to $27 per megawatt hour, according to the report by the Rocky Mountain Institute, an independent research organization that focuses on making the transition from fossil fuels to renewable energy. The figures factor in transmission expenses, the institute said.

TriState has criticized the report as not having “the detailed inputs, complex models and technical expertise necessary to fore cast the association’s future costs” across 43 member distribution systems in four states.

TriState retired its capacity in the San Juan Generating Station coalpowered plant in New Mexico at the end of 2017, and will retire two coal plants, Nucla Station by the end of 2022 and Craig Station Unit 1 by the end of 2025.

The prices Xcel Energy got for wind and solar projects and battery storage as part of its recently approved Colorado Energy Plan were among some of the lowest seen nationwide, industry officials and regulators have said. Xcel Energy says implementing the plan will cut carbon dioxide emissions by nearly 60 percent, increase renewable energy sources to 55 percent of its mix by 2026 and save customers about $213 million.