New energy economies
Public Utilities Commission puts heat on Tri-State

A transformer station is seen from behind a chainlink fence near Durango. The way Coloradans view energy is changing, with more demand for cleaner and renewable sources. However, one of the state’s main suppliers, Tri-State Generation and Transmission, an association of 44 electrical co-ops including La Plata Electrical Association, has been slow to change, continuing to invest heavily in coal-fired power./Photo by Stephen Eginoire

by Allen Best

For windy weather, no place in Colorado beats the benchlands just south of the Wyoming and Nebraska borders. Scenery aside, it’s not a place for paper-plate picnics.

But it’s a good place for generating electricity. Wind turbines capable of generating more than 800 megawatts – about as much as a good-sized coal-fired power plant – have been erected along that border during the last decade, representing well more than $1 billion in investment.

Ironically, the rural electrical cooperatives that service the area have not reaped the benefits. Quicker to see opportunity were private developers, including Xcel Energy, the investor-owned utility that services Denver and other urbanized areas.

Instead, Tri-State Generation and Transmission, the association of 44 electrical co-ops including the La Plata Electrical Association, has invested heavily in the potential for a coal-fired power plant along the Arkansas River, either in Kansas or Colorado. Original plans called for more than 600 megawatts of new generation. Nuclear power remains an alternative.

Now, the Colorado Public Utilities Commission is considering whether it can, and should, exert regulatory purview over Tri-State and its member co-ops. At issue are both the accountability and carbon footprint of Tri-State.

The PUC does not seek to regulate rates, as it does for Xcel. Xcel has a monopoly in its service area, which includes Denver and several other cities. Co-ops, in contrast, are directed by boards elected by customers, who are also shareholders.

“We are already sufficiently regulated,” said Chris Morgan, a director of the Gunnison Country Electric Association and a former mayor of Mt. Crested Butte.

But the accountability gets fuzzy somewhere between those local co-op elections, where typically 10 percent of shareholders/customers vote, and at Tri-State headquarters in suburban Denver, where decisions are made about how electricity is produced.

At issue in this case are law, public policy and politics. The co-ops traditionally prided themselves on delivering electricity reliably and at low rates. Burning coal enabled them to do so. But a third leg has been added to that stool of accountability: greenhouse gases. Burning coal is a major, although not the only, cause.

Colorado Gov. Bill Ritter rode into office in 2006 championing a new tilt to the state’s energy platform, a new energy economy. He hasn’t been publicly involved in the Tri-State case, but his appointees are. In an interview last year, Ron Binz, the PUC chairman, explained that the state needs oversight of Tri-State to help execute the aims of the Governor’s Climate Action Plan.

That plan calls for Colorado to reduce greenhouse gas emissions 80 percent by 2050. Whether Colorado achieves this mid-century goal depends upon decisions made now. Coal-fired power plants are costly, $900 million in the case of a new 750-megawatt power plant being completed near Pueblo, and expected to be around for 35 to 40 years. If Tri-State builds a coal plant in Kansas, that takes Colorado in the wrong direction.

Tri-State, still flat on its feet two or three years ago, when it committed $25 million to the Kansas plant, has clearly shifted its stance in the last year. As a “family,” the co-ops are starting to pay attention, says Dan McClendon, general manager of Delta-Montrose Electric Association. “While it may be slower than some would like, I am pleased to see some movement,” he says.

Delta-Montrose refused to participate financially in Tri-State’s plans to build new coal plants in Kansas. Instead, it has invested in energy efficiency. One example is its geoexchange program, which dampens peak summer use of air conditioners. It is also investigating renewable energy sources, including how to harness the power of irrigation canals. If executed successfully, said McClendon, these ideas could yield 10 to 20 percent of Delta-Montrose’s peak energy demand

Cortez-based Empire Electric points to $250,000 budgeted annually for energy efficiency and other noncarbon steps. For example, says Neal Stephens, the co-op’s general manger, Empire has partnered with photovoltaic panels on the visitors center at Mesa Verde National Park.

Tri-State has taken even larger steps, with plans for both a 31-megawatt solar farm in New Mexico and a 51-megawatt wind farm in Colorado. It is also building 220 megawatts of additional generation by burning natural gas, which has half the carbon emissions of burning coal.

Yet, all these gains could be dwarfed by construction of another coal-fired power plant. Already, 75 percent of the electricity delivered by Tri-State in Colorado comes from coal-fired generation. For Xcel, its 54 percent.

But a secondary dispute is how well Tri-State plays with others. Nicholas G. Muller, executive director of the Colorado Independent Energy Association, charges Tri-State with having a go-it-alone attitude that has resulted in less development of renewable resources than should be the case.

“We haven’t seen the diversification yet,” concurs Ron Lehr, a former PUC commissioner and now a regional representative of the American Wind Energy Association. Tri-State has done some small things, with a lot of noise, he added, “but the process hasn’t really worked that well yet.”

The state, says Lehr, needs to firmly guide Tri-State to work with other electrical providers, to create projects yielding economies of scale.

A compromise remains possible. Jim Tarpley, Ritter’s Republican appointee on the PUC and a lawyer long involved in utility regulation, suggested as much when he asked a Tri-State lawyer: “Where on the spectrum does significant heartburn occur?” Tri-State answered, predictably, something about a middle-of-the-night full-bottle of Tums. But even Delta-Montrose opposes PUC oversight. McClendon said he sees the greatest gains in conversations unstructured by formal regulations. Informal negotiations, he suggested, can be much more productive. Mt. Crested Butte’s Morgan concurs.

But can there be a compromise about a major coal plant? While Gunnison County Electric last year agreed to a contract extension that would help enable new coal-fired plants, “We are very aware in our current environment that coal might not be the most prudent resource into the future,” says Morgan.

Michael Bowman, a member of the steering committee for 25 X 25, a national group that seeks to revitalize rural areas by promoting renewable energy, sees a more complicated chess match. Tri-State, he says, is trying to buy time while lobbying for a Republican governor who will back off on the climate agenda.

And if the PUC backs off on its own, says Bowman, a former wheat farmer from Wray, Tri-State will stall while continuing plans for either a coal or nuclear plant. “That’s just the way these boards think,” he says. •