By Joe Smyth | email@example.com | @joesmyth
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.
Critically, those 13 co-ops that are at or approaching the 5% limit include most of the largest co-ops that buy power from Tri-State, so Tri-State’s limits impact hundreds of thousands of co-op members. Combined, the 13 co-ops serve 302,805 co-op members, just over half of the 603,613 co-op members served by all 43 co-ops that buy power from Tri-State. The chart below shows the relative size of each of those 43 co-ops, along with which co-ops are at or approaching the 5% limit on local energy development.
Limits on local renewable energy development are particularly problematic because they prevent co-ops from pursuing projects that could help stabilize electricity rates for co-op members. Dramatic cost declines for renewable energy technologies over the last few years mean that power produced with locally available resources, like solar and hydroelectric, can be cheaper than what co-ops currently pay for wholesale power. So restricting co-ops from pursuing these resources prevents them from delivering power to their members at the lowest cost - a fundamental goal for electric cooperatives.
Otero County Electric, for example, recently celebrated a 3.5 megawatt solar project that will deliver power at a price below 4.5 cents/kWh, saving their members $250,000 each year.
Delta-Montrose Electric Board President Bill Patterson explained the issue to the Montrose Daily Press:
“The problem with Tri-State is it centers more around their costs of producing and distributing electricity. It’s just too high for the market right now,” Patterson said.
Having renewables in the mix does help reduce costs because these sources cost less than coal generation, he said.
“Our costs from Tri-State right now is roughly 7.8 cents per kilowatt-hour. We can generate power out there (South Canal) for under 5 cents per kilowatt hour and we pass that savings on to our customers,” Patterson said.
DMEA wants the 5-percent cap on self-generation in its contract to be changed; alternately, the cooperative would seek to end the contract, he said.
And increasingly, major electricity customers can get the benefits of cheap renewable energy, with or without the support of their electric utility. So if Tri-State policies continue to restrict co-ops from pursuing renewable energy projects, then co-op members will seek other partners to pursue these projects.
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