Delta Montrose Electric members vote for new financing options, supporting a potential buyout of Tri-State contract
Delta-Montrose Electric Association members voted to approve changes to the electric cooperative's articles of incorporation this week, creating new financing options that will help the co-op end its contract with its power supplier, Tri-State Generation and Transmission Association. Under the new articles of incorporation, Delta-Montrose Electric Association (DMEA) will be able raise money by issuing capital stock, “which could be used to to fund DMEA’s potential Tri-State buyout,” according to a press release.
“We believe addressing our power supply costs is essential for long-term rate stabilization for our members. This was the primary driver behind our recommendation to amend and restate the Articles of Incorporation,” said Delta-Montrose Electric CEO Jasen Bronec in a statement.
The DMEA board urged members to vote yes, including with a video that focused on how the changes would help DMEA finance a buyout of its contract with Tri-State. The co-op also hosted community meetings about the proposed changes. DMEA members voted by mail and at a special meeting on October 16, with 2,677 members voting yes (68%), and 1,248 voting no (32%).
The Poudre Valley Rural Electric Association board of directors is urging Tri-State Generation and Transmission Association to develop new policies to respond to a changing utility industry, and to study if adjusting its fuel mix could lower costs. In a resolution passed unanimously on September 19, the electric cooperative requested that Tri-State “work expeditiously in a transparent process to determine if significant cost savings are achievable by adjusting Tri-State’s fuel mix and provide the findings to Tri-State’s members by the end of calendar year 2018.”
Poudre Valley Rural Electric Association (PVREA) provides electricity to nearly 40,000 members in Larimer, Weld, and Boulder Counties, and this June was recognized as “Electric Cooperative Utility of the Year” by the Smart Electric Power Association for a community solar project that helped expand solar power opportunities for low and moderate income members.
PVREA is also Tri-State’s second largest member cooperative by electricity sales, and the resolution emphasizes PVREA’s partnership with Tri-State, noting that it helped form Tri-State and “has a vested interest in Tri-State to be successful."
A new report from the Rocky Mountain Institute (RMI) finds that Tri-State Generation and Transmission Association could save its member co-ops over $600 million through 2030, by taking advantage of low cost renewable energy resources and shifting away from its reliance on coal fired power plants. Moreover, the report shows that if Tri-State fails to cut costs and continues to rely on its higher cost coal plants, the generation and transmission association will face increased risks, including losing electricity sales because of defection by its member co-ops, as well as by those co-ops’ members.
The RMI report compares the costs of each of Tri-State’s coal fired power plants – broken down by the costs of fuel, fixed operations and maintenance costs, and variable operations and maintenance costs – to the range of bid prices for new wind and solar energy in Colorado that Xcel Energy received this year in response to it Colorado Energy Plan proposal. Even after adding costs for expanding transmission and other integration costs to bring those new renewable energy resources online, it costs more to keep running Tri-State’s coal plants than it would to add new renewable energy.
The Delta Montrose Electric Association (DMEA) board of directors is urging members to support a proposal that would change the electric cooperative’s articles of incorporation, to support DMEA’s efforts to end its contract with Tri-State Generation and Transmission Association.
DMEA posted a video and background information on its website to explain the proposed changes, and the reasons the board of directors is recommending that members vote yes this October to support the proposal. According to DMEA:
The revisions do three general things. First, they modernize and streamline language (which in some cases been in place since 1938). Second, they allow DMEA to take advantage of being governed by a newer Colorado cooperative law (called the Colorado Cooperative Act). Third, they give DMEA more financial flexibility by allowing it to issue capital stock to non-members.
Those new financing options could be a first for electric cooperatives. DMEA says, “While we are not aware of any electric cooperatives that have issued capital stock to non-members, many other types of co-ops have,” including major agricultural cooperatives like Sunkist, Oceanspray, and Land O Lakes.
DMEA will host a series of town halls next month about the proposed changes, and members will receive ballots the last week of September. DMEA members can cast their vote by mail, or in person at an October 16 meeting.
Most residents of rural Colorado and New Mexico buy electricity from electric cooperatives, and most of the electric cooperatives in each state buy electricity from Tri-State Generation and Transmission Association. As part of their power supply contracts with Tri-State, each of those co-ops are currently limited to providing just 5% of their electricity needs from local renewable energy projects, and must purchase the rest from Tri-State.
Tri-State’s limits on local energy development are a growing problem for co-op members in both states, as more co-ops seek the cost savings and other advantages of renewable energy. Surveys of the 18 co-ops in Colorado and 11 co-ops in New Mexico that buy power from Tri-State show an increasing number of co-ops that are approaching the 5% limit. The survey results show that at least five co-ops have reached the 5% limit on local energy development, including United Power, La Plata Electric, Delta-Montrose Electric, San Miguel Power, and Mora-San Miguel Electric.
Moreover, another eight co-ops are approaching the 5% limit, including Poudre Valley Electric, Otero County Electric, Central New Mexico Electric, San Luis Valley Electric, Sangre de Cristo Electric, Highline Electric, Southeast Colorado Power, and Sierra Electric.
Fraser, CO - The town of Breckenridge passed a resolution last week establishing a goal to power the community with 100% renewable electricity by 2035. Breckenridge joins other Colorado towns and cities that are pursuing 100% renewable energy, including Pueblo, Boulder, and Nederland. Aspen achieved its 100% renewable energy goal in 2015, while other towns and cities including Denver and Durango are also considering renewable energy goals.
The responses from the utilities that serve those Colorado towns and cities show that these 100% renewable energy goals are helping push the region toward a cleaner electricity grid, achieving a broader impact than sustainability goals that remain within the boundaries of a municipality. That’s consistent with a new report by global management consulting firm McKinsey & Company, which argues that cities should focus their sustainability efforts on four strategic areas for maximum impact. First among those four strategic areas is using their position as major electricity consumers to help decarbonize the electricity grid:
While cities may believe they have little influence over the grid mix, in fact, they often represent a major portion of any local electric utility’s customers, potentially giving them significant leverage to shape the emissions profile of the electricity consumed within their metropolitan area. Still, capturing this opportunity will not be easy, and cities cannot do it alone. Utilities and regulators must play a central role in ensuring the overall mix of renewables is appropriately balanced at a system level and that critical components such as energy storage are in place to ensure grid reliability. Nevertheless, cities have an essential role to play by setting clear decarbonization goals, aggregating demand for renewables, promoting energy efficiency, and shifting more urban energy consumption to electricity (especially in transportation and heating).
Lowering the emissions intensity of the electricity grid is an especially impactful way that municipalities in the Rocky Mountain region can advance their sustainability goals, because the region’s grid is more dependent on coal, and therefore more carbon intensive, than other parts of the US. But as these Colorado towns and cities seek to accelerate the transition to renewable energy, they face varying challenges in working with the different utilities and electric cooperatives that sell electricity in Colorado. Colorado towns and cities are served by two investor owned utilities, 29 municipal utilities, and 22 rural electric cooperatives, according to the Colorado Energy Office
Let’s look at four Colorado municipalities pursuing renewable energy goals, each with a different electricity provider: Breckenridge, Pueblo, Aspen, and Durango.
Plans move forward for a floating solar array in Jackson County, while Mountain Parks Electric considers its own solar projects.
Walden, CO - In Jackson County, the town of Walden’s Board of Trustees voted unanimously this week to build a solar array that will help power the town’s water treatment plant. Jim Dustin, the Mayor of Walden, said at the Mountain Parks Electric August board meeting that the project “will be unique in Colorado – it will be a floating array.” Dustin said the cost of the 50 kilowatt solar array will be covered by lower electricity bills over the next decade or two.
At the electric cooperative’s August 10 board meeting, Mountain Parks Electric board members and staff also discussed their own solar energy efforts. Among the solar projects that Mountain Parks Electric is considering is a collaborative effort with other electric cooperatives in the region and the Rocky Mountain Institute. According to the Rocky Mountain Institute, solar developers have responded with offers that would deliver solar energy at a price of about 4.5 cents/kilowatt hour, less than the cost of electricity and transmission from coal fired power plants that participating electric cooperatives currently pay.
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