Tri-State statement on Guzman Energy proposal

• Proposal from Guzman lacks specifics and detail, appeared to ask for exclusive negotiations
• Signing exclusive agreement with for-profit entity prior to development of state rules is not in the best interests of Tri-State, members
• Not-for-profit cooperative business model likely to meet association’s goals at lower cost

Duane Highley, chief executive officer of Tri-State Generation and Transmission Association, the not-for-profit cooperative power supplier to 43 member electric cooperatives and public power districts, made the following comments on Guzman Energy’s statements to the media.

“Guzman Energy brought us an imaginative and creative high-level verbal proposal, which lacked any specific or meaningful detail or terms. Tri-State requested a written proposal but Guzman refused to provide one, instead deciding to go the press.  

Further, based on their presentation, it appeared that Guzman Energy proposed that Tri-State enter into exclusive negotiations and an exclusive agreement, and that Tri-State immediately begin providing confidential information to Guzman so that they could make a more specific proposal.

It is not in the best interests of Tri-State, its members or its other stakeholders to enter into an exclusive arrangement with a single company like Guzman Energy before other options are also explored.

With new energy legislation in both Colorado and New Mexico, state rulemakings still to come and a dynamic energy market, there is much work to be done within our association to evaluate options and set a path forward. Tri-State has a wide range of options to consider as we transition to our vision of a 21st century G&T.

Tri-State operates on a not-for-profit basis, and our cooperative business model and sound financials place Tri-State in a strong position with many options to lead our industry forward. Rather than entering into an exclusive agreement with a for-profit energy trader like Guzman Energy that drives financial returns for their hedge fund investors, we can likely accomplish our goals at a lower cost to our members by working within our not-for-profit cooperative business model.

Tri-State has a demonstrated record in successfully adding low-cost renewable resources and planning for the orderly retirement of coal units. Nearly a third of the energy consumed within our association comes from renewable energy, and in the past decade, Tri-State has contracted for energy from five wind farms, four solar projects and numerous hydropower resources. We have retired our share in one coal unit and will retire two additional coal units by 2025.

We may well want to discuss these issues with Guzman Energy and others, but at this point, it is not in our best interests to be locked into a single option. We have signed a non-disclosure agreement with Guzman Energy should we have those discussions, and we would evaluate any proposal on its merits.  We welcome Guzman to provide us with a more detailed written explanation of their proposal.

Innovative technologies and evolving markets create disruptive opportunities for Tri-State and our members to deliver cleaner energy, new services and greater flexibility to the communities we serve. As we further increase renewables, reduce emissions and preserve reliability and affordability, we are also focused on our employees and their communities that will be affected by these transitions. Policymakers and stakeholders must work collaboratively to support impacted energy-producing communities.

Working collaboratively is at the heart of our co-op, and we welcome all who could contribute to our mission of delivering reliable, affordable and responsible power to bring their best ideas forward."