Tri-State responds to United Power filing with Colorado Public Utilities Commission
- Members are currently evaluating their wholesale power contracts to increase flexibility, including a proposal from United Power.
- Members will also review the methodology for valuing their wholesale power contracts.
- Contract Committee leadership addresses United Power’s actions.
(Nov. 7, 2019 – Westminster, Colo.) Tri-State Generation and Transmission Association’s membership is actively considering changes to its wholesale power contracts, including a partial requirements proposal from United Power. As part of the review of contracts, the not-for-profit cooperative’s board of directors has asked its members to review the methodology for calculating the value of their wholesale power contracts before the board provides figures to requesting members.
“Wholesale power contract changes and the valuation of member contracts affect our entire cooperative and require significant review, analysis and negotiation among all of Tri-State’s members,” said Tri-State Board Chairman Rick Gordon (Mountain View Electric Association, Limon, Colorado). “As our members currently consider contract options for more flexibility, including additional local renewable energy development, and as Tri-State actively transitions to cleaner resources, we must approach all contract issues in a coordinated, informed and thoughtful manner.”
Members, including United Power, actively involved in Contract Committee process
Tri-State’s board has established a Contract Committee of all members, including United Power, that is actively reviewing several members’ proposals, as well as a member-requested Tri-State proposal, for partial requirements contracts that will increase member flexibility and their ability to develop additional local renewable resources.
“As part of our efforts, Tri-State’s members have been quickly advancing several contract proposals, including one from United Power," said Gordon. “Tri-State’s members are diligently working with United Power to understand and address their concerns, including changing the association’s bylaws in April 2019 to allow alternative contract options and continuing their in-depth review of United Power’s partial requirements contract proposal.”
Contract valuation methodology informed by contract and resource transition decisions
With new contract types in development, Tri-State’s board has directed the Contract Committee to also review how the cooperative calculates the value of a member’s wholesale power contract. The wholesale power contract valuation methodology informs a member of its financial requirement to make other cooperative members whole should that member request the Tri-State board consider its withdrawal from the cooperative. As the Contract Committee recommends changes to their wholesale power contract to the board of directors, and as Tri-State makes significant transitions in its resources, it is prudent to also have the committee review the methodology to value their contracts.
“The board asked the Contract Committee to make a recommendation on the methodology for valuing the members’ wholesale contracts,” said Gordon. “As the committee develops a recommendation, it is important to note that United Power has not asked Tri-State for the value of their contract.”
The Contract Committee will make a recommendation to the Tri-State Board of Directors in early 2020.
Contract Committee leadership addresses United Power’s actions
Scott Wolfe, Contract Committee chairman, Tri-State Board of Directors vice-chairman and director at San Luis Valley REC, Monte Vista, Colorado, and Jack Johnston, Contract Committee vice-chairman and CEO of Southeast Colorado Power Association, commented on the committee’s work.
“As a cooperative, our members guide decisions on their contracts,” said Wolfe. “It is immensely disappointing that United Power is thwarting an ongoing process that they are actively involved in. In fact, United Power’s CEO is scheduled to present their partial requirements contract option to our committee next week.”
“The transitions at Tri-State have SLVREC’s support, and we continue to work at building consensus and making recommendations to the board that serve the needs of all the members,” said Wolfe.
“United Power’s filing is not in the spirit or practice of the work of our membership’s Contract Committee, the cooperative business model or the demonstrable progress occurring at Tri-State,” said Johnston. “When United Power freely signed its contract with Tri-State, they made a commitment to all of the association’s members, and their attempt to shortcut defined and established processes is very disingenuous to our cooperative and our consumer-members across southeast Colorado.”
“SECPA supports the changes at Tri-State that will result in greater flexibility for its members, a significantly cleaner generation portfolio and stable, competitive wholesale power costs,” Johnston said.
Tri-State continues to transition its resources. In July, Tri-State announced the development of its Responsible Energy Plan, which will coordinate how the cooperative transitions to a cleaner energy portfolio that complies with state and federal regulations, ensures reliability, increases member flexibility, and sets a goal of lower wholesale energy prices. Tri-State is currently reviewing responses to a renewable energy request for proposals issued in June 2019.
Currently, nearly a third of the energy consumed within the association comes from renewable resources. Earlier this year, Tri-State announced two new renewable energy projects that will increase its wind and solar resources by 45%.