Delta-Montrose Electric Association successfully negotiated an exit from Southwest Colorado’s wholesale electricity supplier this month, but it won’t be able to help other co-ops, such as La Plata Electric Association, do the same.
The settlement that Delta-Montrose Electric Association said resulted in a “fair and reasonable” exit fee required to leave Tri-State Generation and Transmission, also prohibits DMEA from assisting other co-ops interested in leaving the wholesale energy supplier, the settlement said.
DMEA was interested in buying out of its contract from Tri-State to stabilize its rates, build more local renewable power generation and create more jobs. LPEA as been exploring an exit from Tri-State for similar reasons.
Tri-State has been heavily reliant on coal, as the price of renewable energy has fallen, causing some co-ops to explore alternative power suppliers. In the last year, Tri-State has committed to developing more renewable energy, but LPEA has continued to investigate a buyout.
The ability for co-ops to call on one another for help is one of the principals of the co-op model, and the requirement goes against that guiding idea, said Ron Meier, LPEA’s manager of engineering and member relations.
“It was unexpected and odd,” he said.
It also eliminates DMEA as a resource to LPEA as the co-op continues to explore a buyout, he said.
LPEA is contracted to buy 95% of its power from Tri-State until 2050.
Consultants told LPEA in April that it could purchase more renewable power at lower prices than Tri-State offers and reliability of power would not suffer.
However, determining whether leaving Tri-State is financially viable depends on how much LPEA would have to pay Tri-State to leave its contract.
LPEA officials were watching the case between Delta-Montrose and Tri-State closely to see if it could set a precedent LPEA could follow.
The settlement DMEA and Tri-State reached stipulates DMEA’s exit fee will not be released until May 2020 when DMEA’s exit is finalized, said Virginia Harman with DMEA.
LPEA requested an estimate this month of how much it will cost to exit its contract with Tri-State. But LPEA has not decided to pursue a buyout and the co-op does not have a timeline to make a decision, Meier said.
So, when DMEA’s exit fee is released in May, it could still help inform LPEA’s decision, he said.
LPEA officials are also involved with a Tri-State committee working to craft the requirements for contracts that could allow co-ops to purchase more than 5% of their power from sources outside of Tri-State, he said.
LPEA staff recently proposed a plan that could allow electrical co-ops to purchase power from local solar arrays and get a discount from Tri-State because the co-ops wouldn’t need as much traditional fuel to be burned to meet their energy needs, Meier said.
A less stringent contract with Tri-State could help LPEA to pursue more renewable energy, if a buyout proves too expensive, he said.
“We feel it’s worth our time to explore all avenues,” he said.