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La Plata Electric candidates weigh renewables, costs

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Wednesday, April 18, 2018 2:44 PM
David Holub/Durango Herald illustration

Candidates competing for the La Plata Electric Association board are divided on how aggressively to pursue renewable energy, and some argue it's time for a fresh vision.

LPEA is limited on how much renewable power it can purchase by its energy supplier, Tri-State Generation and Transmission. Some candidates say not exploring a buyout from Tri-State would be neglecting their duties as board members.

LPEA must purchase 95 percent of its electricity from Tri-State, and it is close to reaching the cap on the amount of outside power it can buy. LPEA's contract with Tri-State does not expire until 2050.

Some candidates are enthusiastic about exploring greater energy independence from Tri-State and the economic development opportunities that could offer. They see a small New Mexico cooperative as a potential model. Kit Carson Electrical Cooperative left Tri-State in 2016, and it is developing solar arrays across three counties.

Other candidates are cautious about leaving Tri-State and committing to pay an exit fee, although they are open to learning more about it.

District 3 (Durango)In Durango, District 3, Gene Fisher, a former engineer who helped build power plants, is challenging Britt Bassett, a former nuclear engineer and founder of CalCom Solar, a company that installs agricultural solar arrays in California.

Fisher

Bassett said LPEA should try to pursue greater independence from Tri-State, so it can purchase more renewable power from local projects, which would encourage economic development and help keep rates lower.

Bassett

He also supports researching a buyout from Tri-State because he said it could potentially save members $20 million to $30 million per year.

"It is in our fiduciary duty to investigate anything that might save our members that kind of money," he said.

Large wind and solar projects, he said, are helping to drive down the price of wholesale electricity rates, and that would make the large-scale savings possible. Transmission rates are also declining, he said.

"The risk of the wholesale marketplace prices drastically increasing is low, and if they did, it would affect everybody, including Tri-State," he said.

If LPEA left Tri-State, he would support finding a wholesale supplier, so rates could be locked in and LPEA wouldn't have to buy on the open market.

He also said LPEA should strive to be more agile and take advantage of opportunities as they present themselves.

Fisher also sees wind and solar as the future of electricity generation, but he is concerned about the potential cost of trying to transition too quickly and unintended consequences.

"The next five to 10 years are going to be complicated, difficult times to make good decisions," he said.

For example, it is unclear how the cost of solar might change when tax credits that have subsidized the cost of installing solar panels end, he said.

He is also concerned about a few enthusiasts in the community driving the decisions for everyone, especially those who might not be able to afford it.

"If we try to push too hard, it's going to cost a lot of money," he said.

He also wants to make sure that any changes to the grid preserve reliability.

However, he does see the value in studying Kit Carson and understanding what a buyout from Tri-State would entail. He would also like to see LPEA pursue alternatives to a buyout that would allow the co-op to purchase more local renewable power. For example, LPEA could lobby Tri-State from within.

District 2 (southern and western La Plata County)Incumbent Kohler McInnis, an entrepreneur and business investment adviser, is competing with Jeff Mannix, a writer and rancher.

McInnis

Mannix said he is concerned about LPEA's relationship with Tri-State, but he is optimistic about local renewable generation.

Mannix

"Our relationship with Tri-State is not a healthy relationship in the long term," he said.

LPEA has "no say" on the rates Tri-State will charge over the next 32 years, and the co-op can't keep its own rates down as a "serf" of Tri-State, he said.

The LPEA board also needs to undergo a culture change and embrace the future, he said.

"I think La Plata Electric needs to shake off some old traditions and embrace some new ones," he said during a recent forum.

If LPEA could purchase more renewable energy, landowners in La Plata and Archuleta counties could be positioned to become solar producers by turning unusable land into solar gardens, he said.

He is also particularly concerned by his opponent's voting record because as LPEA's representative to Tri-State, McInnis voted against increasing how much local renewable energy co-ops could purchase.

"Kohler let us down with his representation," he said.

For McInnis, the No. 1 issue is keeping rates low for members, and increasing the cap on renewables could raise rates, he said.

Allowing co-ops to purchase more outside renewable energy would have increased what Tri-State was spending on fixed-costs, such as power generators, as a percentage of its overall costs, and it would have needed to increase its rates, he said.

When it comes to weighing a buyout, he has not seen an alternative that can compete with Tri-State on safety, reliability and cost.

"If it's not better, why do it?"

He is also not sure if it makes financial sense for LPEA to buy out its Tri-State contract.

The $78 million in equity that LPEA owns in Tri-State is its biggest asset. If LPEA left Tri-State, some equity could be applied to the cost of buying out of the contract, but not at the full value of the equity, he said.

"When you buy out of this contract, you are purchasing nothing," he said.

LPEA already has $125 million in debt, and if it left Tri-State, LPEA would have to pay a large exit fee.

"It doesn't take much of a buyout number" before the co-op's liabilities would exceed its assets, he said.

Other candidates who support exploring a buyout point to Kit Carson, which does not have its exit fee on its books. It signed a contract with an energy-services provider, which agreed to pay off Tri-State upfront and allowed Kit Carson to pay the fee back over time.

Even if LPEA stays with Tri-State, McInnis thinks there is opportunity for local renewable generation to grow, but the energy would have to be purchased by Tri-State, and it would not receive the subsidized rates that other projects have in the past.

District 4 (northern and eastern La Plata County)In District 4, incumbent Karen Barger, owner of Seasons Rotisserie Grill, is running against Tim Wheeler, a former engineer and manager in the high-tech industry and a former owner of Durango Coffee Co.

Barger

Wheeler said he would like LPEA to fully explore a buyout from Tri-State, perhaps even requesting bids from wholesale power providers, so that a decision can be made based on facts.

Wheeler

LPEA's contract with Tri-State is intended to last another 32 years, and LPEA is already close to reaching the 5 percent cap on purchasing outside renewable energy.

"That's not what our community wants," he said.

Many concerns voiced by others have already been addressed by Kit Carson, and leaving Tri-State is estimated to save Kit Carson members $50 million over 10 years, he said.

"We need to move forward instead of looking in the rearview mirror and trying to drive," he said.

LPEA could also set up a systematic approach to involve members in comprehensive planning, he said.

"I don't think the current board necessarily reflects the majority wishes of the community," he said during a recent forum.

Barger said she is not in favor of pursuing a buyout option right now, in part, because there are too many unknowns, such as LPEA's cost of transmission, if it left Tri-State. But she is not against planning for the future.

"I want to make sure that we think the entire plot through before we do anything," she said.

Staying with Tri-State and the reliable energy supply it provides, she said, is likely less risky right now than leaving.

"They are trying their best to be a forward-thinking company," she said.

About 30 percent of the energy purchased from Tri-State comes from solar, wind or hydro projects. She said it is likely the company will continue to grow its renewable energy generation.

The recent LPEA election has been marked with some of the same divisions playing out nationally, and some major issues are not getting enough attention, she said. There should be a greater focus on finding other ways to increase renewable generation aside from leaving Tri-State.

The co-op also should be preparing for an increase in electric vehicles and assisting with greater access to broadband by ensuring that fiber-optic cables can be attached to LPEA poles, she said.

She would also like to see LPEA fund some pilot projects, such as community battery storage.

District 1 (Archuleta County)In District 1, Kirsten Skeehan, co-owner of Pagosa Baking Co., is running against incumbent Bob Formwalt, a rancher and water commissioner.

Skeehan

Skeehan, a former officer in the Navy with a degree in resource management, said she wants to help bring LPEA into the 21st century.

Formwalt

Skeehan is particularly concerned by some of Tri-State's decisions and its draconian policies that keep LPEA's representative on the Tri-State board from representing local interests.

For example, the LPEA representative to Tri-State couldn't get a proposed biomass plant near Pagosa Springs on the Tri-State board agenda, she said.

"Tri-State has kind of forgotten that they are us," she said.

She also doesn't think that Tri-State's purchase of the Colowyo Mine in 2011 was in the best interest of membership.

"I don't think they are concerned enough about where coal is headed," she said.

Skeehan would like to see LPEA try to work strategically with Tri-State, but she is open to understanding a buyout.

"I don't think research is ever bad," she said.

Formwalt, a former banker, could not be reached for comment for this story.

In his candidate statement, he said, "LPEA needs to be receptive to positive opportunities, but not at the risk of membership services or costs."

mshinn@durangoherald.com

LPEA may require candidates to disclose campaign finances

Besides selecting La Plata Electric Association board members, voters will also decide whether candidates should be required to disclose campaign contributions in future elections.

LPEA board members have never been required to disclose campaign-finance donations, said Ron Meier, manager of engineering and member relations.

The details of how the rule would be implemented will be set by the LPEA board after the election.

Former LPEA board member Pam Patton recommended campaign-finance rule changes a few months ago.

Other bylaw changes on the LPEA ballot include:

Extending the notice of an LPEA election from 60 days to 75 days before the day of the election.Changing the deadline for filing a petition to run for the board from 45 days to 60 days before an election. LPEA staff recommended the change in deadlines.Clarification about how members of LPEA can request changes to bylaws.Minor changes to make bylaws more gender-neutral.

To vote

La Plata Electric Association ballots were mailed Tuesday. The deadline to return ballots by mail is 4 p.m. May 11. LPEA members can also vote in person at the annual meeting on May 12 at the Sky Ute Casino Resort.

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