Category: Generation And Transmission Associations

Basin Electric faces growing pressure on coal from co-ops, insurers, and banks

11/24/2020

Coal-heavy power supplier won’t let its member cooperatives leave, which one co-op calls a “financial suicide pact”

By Joe Smyth | [email protected] | @joesmyth

The generation and transmission association that provides electricity to large swaths of the rural West and Upper Midwest is facing increasing pressure from its member cooperatives and lenders about its reliance on coal, challenges to its rates in proceedings at the Federal Energy Regulatory Commission, and efforts by some member cooperatives to end their contracts in order to purchase wholesale power from other providers.

Those challenges facing Basin Electric reflect the growing tension between some of the electric cooperatives that provide electricity to much of rural America, and the generation and transmission associations that sell wholesale power to those co-ops largely generated with increasingly uneconomic coal plants.

As one co-op director put it, “Across America, the generation and transmission model is being challenged by the distribution cooperatives who own them. We want more flexibility and local control to help us manage and even reduce costs.

United Power and La Plata Electric ask Colorado Public Utilities Commission to determine Tri-State exit fee

11/7/2019

By Joe Smyth | @joesmyth

Two electric cooperatives filed formal complaints with the Colorado Public Utilities Commission this week, requesting that the Commission determine the price for them to buy out of their contracts with Tri-State Generation and Transmission Association. The disputes could have major implications for the coal-heavy power supplier, and reveal problems with the governance system of Tri-State and other generation and transmission associations, which sell wholesale power to hundreds of electric cooperatives across the United States.

The United Power and La Plata Electric Association requests’ to the Colorado PUC follow Delta-Montrose Electric Association’s successful effort to end its membership with Tri-State; all three member cooperatives have said that they want to build more local renewable energy than Tri-State allows and purchase cheaper wholesale power. Tri-State settled with Delta-Montrose Electric in July, after the Colorado PUC determined that it had jurisdiction to determine a fair exit fee, and Commissioner Frances Koncilja raised the possibility of public hearings to question Tri-State’s executives about the company’s conduct.

If United Power and La Plata Electric stop purchasing wholesale power from Tri-State, it would have a much larger impact on Tri-State than the departure of Delta-Montrose Electric. While Delta-Montrose accounts for 5% of Tri-State’s electricity sales to member co-ops, La Plata Electric accounts for 6% and United Power accounts for 15% – Tri-State’s largest member by far.

Colorado PUC ordered Tri-State to respond to the complaints, and set hearings for January 21 and 22, 2020.

Rural America could power a renewable economy - but first we need to solve coal debt

7/2/2019

By Joe Smyth | [email protected] | @joesmyth

Note: this article was updated on October 9 to include Elizabeth Warren's plan to address co-op coal debt

As prices for new wind and solar projects continue to drop, renewable energy is booming across the United States, surpassing coal earlier this year for the first time ever. And most renewable energy projects are built in rural areas, harnessing abundant wind and solar resources. Yet the electric cooperatives that power most of rural America remain particularly reliant on coal - in part because of billions of dollars in debt on increasingly uneconomic coal plants.

Solving this coal debt problem in rural America is the focus of a new report by the Center for Rural Affairs, We Own It, and CURE (Clean Up the River Environment). Rural Electrification 2.0: The Transition to a Clean Energy Economy explores strategies that policymakers and electric cooperatives could pursue to restructure or eliminate debt that is currently tied up with uneconomic coal plants.

“Rural communities will be better positioned to realize energy independence once current debt on existing coal plant infrastructure is eliminated,” said Erik Hatlestad, energy democracy program director at CURE, and one of the authors of the report. “This, in addition to investments in clean energy and energy efficiency, would help electric cooperatives plan for the future and serve their members more effectively.”

Freeing electric cooperatives from coal debt has also been raised in the presidential primary race; Beto O'Rourke's climate plan includes increased financing through the Rural Utilities Service, while Jay Inslee has proposed debt relief for co-ops' stranded coal plants as part of a "Next-Generation Rural Electrification" plan.

Tri-State explores FERC rate regulation to limit state oversight

6/14/2019

By Joe Smyth | [email protected] | @joesmyth

Tri-State Generation and Transmission Association is considering becoming rate regulated by the Federal Energy Regulatory Commission (FERC), in order to limit the oversight of state regulators.

According to an issue brief that Tri-State circulated to member co-ops last week, "FERC regulation would pre-empt individual state rate regulation for generation rates, transmission rates, rate design, buyout disputes and all other rate related matters."

The issue brief shows that Tri-State believes it can choose its preferred regulator - and even claims that Tri-State could also simply remove itself from FERC regulation in the future if it wants to.

Moody’s report: “High quality renewable resources” could help Tri-State and Basin Electric navigate rising carbon transition risks

5/25/2018

Moody’s Investors Service warns that some generation and transmission associations are heavily dependent on coal, and so face higher carbon transition risks. But Tri-State and Basin Electric are better positioned to navigate those risks, according to the investors report, because they benefit from “abundant wind resources” which “may enable these utilities to reduce rates for their customers where the price of new renewables undercuts that of existing coal.”

By Joe Smyth | [email protected] | @joesmyth

A report published last week by Moody’s Investors Service detailed several factors that generation and transmission associations and municipal utilities must consider as they navigate the transition from coal to clean energy. This latest report, "Public Power and Electric Cooperatives -- US: Prudent self-regulation is key to managing carbon transition risks," follows an earlier Moody’s report in April, which showed that many of the coal plants owned by generation and transmission associations and municipal utilities are more expensive than new renewable energy - including each of the coal plants owned by Tri-State Generation and Transmission Association.

This latest report provides more details about the risks and opportunities that these types of utilities face in the "carbon transition," and how those differ from investor-owned utilities because of differences in business model, governance, and rate-setting. But at a broad level, the Moody’s report notes, municipal utilities and generation and transmission associations “face the same growing imperatives to reduce emissions as their larger investor-owned utility (IOU) peers, driven by a combination of public policy at the state and local level as well as customer demands.”

Basin Electric faces growing pressure on coal from co-ops, insurers, and banks

United Power and La Plata Electric ask Colorado Public Utilities Commission to determine Tri-State exit fee

Rural America could power a renewable economy - but first we need to solve coal debt

Tri-State explores FERC rate regulation to limit state oversight

Moody’s report: “High quality renewable resources” could help Tri-State and Basin Electric navigate rising carbon transition risks

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