United Power says Tri-State policies are turning away large customers

More corporate customers want renewable energy options. What happens when an electric utility can’t offer that?

By Joe Smyth | joe@cleancooperative.com | @joesmyth

United Power has been meeting with other electric cooperatives this month, in an effort to build support for its proposal to change the bylaws of its power supplier, Tri-State Generation and Transmission Association. Those meetings follow United Power’s invitations to discuss its “grave concerns about key elements of Tri-State’s key generation products and services” directly with the 42 other co-ops that buy power from Tri-State.
​
At a presentation to Mountain Parks Electric on January 3, United Power New Business Director Jerry Marizza explained that United Power was not proposing to simply raise the 5% limit that Tri-State imposes on local renewable energy development to a higher level. Instead, the proposal for a partial requirements contract option would assure that Tri-State continues to provide a portion of United Power’s energy purchases, while allowing United Power to meet its electricity load growth by pursuing its own local renewable energy projects, or buying wholesale power from other providers.

United Power staff said the proposal would also give the co-op the ability to provide its major customers with lower rates and renewable energy options that aren’t possible with the current Tri-State contract. One example Marizza noted were commercial customers that now expect to be able to build larger on-site solar arrays to help power their operations:

“All this stuff is happening at the distribution level. Ikea - they will not build a facility unless they get to put a megawatt of solar on their roof. That’s just a fact, okay? If you want an Ikea, you’re going to have to deal with that fact. And you can’t come to them and say ‘I’d love to accommodate you, but Tri-State’s contract won’t allow me to.’ That’s not an answer, it really isn’t.”

The Ikea store in Centennial, Colorado has a 1.1 megawatt rooftop solar array.

One Mountain Parks Electric board director noted that the smaller co-op, which provides electric service to members in Grand and Jackson Counties, was unlikely to expect a customer like Ikea in the region, but that other commercial customers could expect similar renewable energy options:

“With an outdoor recreation based economy, would a certain brand want to locate here, or the ski resort want to do something? So that economic impact can reach us as well, and flexibility would be important.”

Mountain Parks Electric staff, directors, and members asked United Power staff a variety of questions about their proposal, as well as the additional steps that would need to be pursued if the bylaw changes are approved at the Tri-State annual meeting in April.

United Power’s Jerry Marizza also highlighted the importance of “member to member” conversations:

“We have an obligation to our communities and our members, and most of the activity that we’re seeing is happening on our lines. We’re the ones that are being asked to respond to this stuff - not Tri-State, we are. So we need that flexibility to be able to deal with our members and our communities."


United Power lost out on a data center customer because of Tri-State's policies and higher costs

United Power CEO John Parker said at the January 3 meeting that “Partial requirements contracts have been around for at least 20 years,” and cited other generation and transmission associations that had made changes that allow their member co-ops more flexibility in their power supply:

“There are lots of other G&Ts around the country that have started using partial requirements contracts. There’s one in Arizona, there’s one in North Carolina, there’s one in Minnesota. Old Dominion did it as well, and Seminole in Florida did it. To me, it’s just an evolution in the process of what Tri-State looks like.”

Parker also pointed to Oglethorpe Power Corporation in Georgia as another example of a generation and transmission association that provides its member co-ops with contract options. Oglethorpe Power’s member co-ops include Walton Electric Membership Corporation, which last month announced contracts for 200 megawatts of new solar projects to help power a Facebook data center in Southwest Georgia.

Facebook is among the major data center operators that have committed to powering their operations with 100% renewable energy, along with Apple, Google, Microsoft, Salesforce, and more.

Tracy Warren, a spokesperson for the National Rural Electric Cooperative Association, discussed the Georgia co-op's solar plans with Greentech Media:
​
“It is unusual because of its size, but we’re seeing more and more projects like this with our co-ops. We’re seeing a lot of innovation in terms of how these programs get structured. But the cooperatives, because they are member-owned, are working collaboratively with their large [commercial and industrial] members to help meet their corporate sustainability goals.”

But United Power’s Jerry Marizza said that the co-op had already missed out on attracting a data center operator as a new customer, because of restrictions imposed by Tri-State’s contract and its more expensive wholesale power. United Power's letters to other co-ops noted that Tri-State’s wholesale power costs were 28.5% higher than Xcel Energy’s.

While United Power met certain criteria that the data center operator needed for the project, such as proximity to a major airport and interstate highways, there were two criteria the co-op couldn’t meet:

“They said they wanted flexibility in their power mix. They wanted to dictate to the distribution co-op - us - how much renewables is part of that power mix. And they wanted, they needed, low cost power. So we needed to have a way to be flexible with the pricing structure. And with the current Tri-State contract, we did not have the flexibility to meet either of those things.”

Further reading:

United Power seeks solutions to "increasingly outmoded G&T business models"

Greentech Media: Facebook Closes Record 200MW Solar Deal With Georgia Co-Op

Electric cooperative officials discuss cheap renewable energy and an “eroding monopoly”

What do corporate renewable energy commitments mean for electric utilities?

​Companies 100% renewable energy goals are getting results in Colorado

Clean Energy Means Business Summit highlights renewable energy opportunities and challenges in rural Colorado 

Tri-State’s limits on local energy development are a growing problem for co-op members