A milestone day for La Plata Electric

Electrical cooperative expects to both save money and reduce emissions after it goes independent of Tri-State G&T on April 1

by Allen Best

April 1 will be a milestone for La Plata Electric Association. The Durango-based electrical cooperative will leave the “family” of Tri-State Generation and Transmission Association.

“It’s a very exciting day, a new chapter for our cooperative,” said Chris Hansen, the chief executive since November 2024.

La Plata will get bulk power from two major sources as it leaves Tri-State’s all-requirements contract. Ironically, one of those sources will be Tri-State. La Plata has inked two power-purchase agreements with Tri-State, one for 40 megawatts of production from a solar farm in the Dolores River Valley. The second is for selected diverse resources that Tri-State has, including natural gas and probably storage.

Mercuria will be La Plata’s other key partner. It’s a global integrated energy and commodities trading company, active in 40 countries. Mercuria has a Denver office. The company, which was founded in 2004, deals in everything from crude oil and natural gas to renewables.

Like other electrical cooperatives that have left Tri-State, La Plata intends to develop local sources.

La Plata’s board of directors voted to leave Tri-State in March 2024. The timing was perhaps awkward. The former chief executive, Jessica Matlock, had just left for a job in the Pacific Northwest.

Ted Compton, who was chair of the board of directors in 2024, said La Plata had been weighing its options for several years. At one point, the board had approved the option of a partial exit from Tri-State. That option then fell apart. In other words, the decision was by no means rushed. The vote was 9-3 in favor of leaving.

The cooperative had what Compton describes as an excellent team in place. EIght months later, it had its leader, Hansen, to execute the transition. Then a state senator from Denver, Hansen announced his resignation shortly after being re-elected to a six-year term.

“We landed a great CEO that made us very comfortable about where we were headed in the next couple of years,” said Compton.

Some discontent has been voiced among the more than 37,000 La Plata members in southwest Colorado. Compton said the pushback was spurred by worries about rising energy costs.

Hansen said wholesale power costs will drop by more than 10% on April 1, which he believes delivers “clear and convincing evidence” that this was the right move for La Plata.

Moreover, La Plata will reduce the emissions of its electricity. “We are at about a 30% reduction compared to 2005 levels, and on April 1 it will be 50%.”

Chris Hansen, CEO of La Plata Electric, and Nicole PItcher, the chair of the board of directors, stand along the edge of the San Juan River in Pagosa Springs, one of the communities that is part of La Plata Electric. Photo/La Plata Electric Association.

Several electrical cooperatives in Colorado always were independent of Tri-State. In most cases, though, most relied on relationships with Xcel Energy. That was true of Holy Cross Energy, Grand Valley and Yampa Valley Electric, among others

But most cooperatives in Colorado were members of Tri-State, a wholesale power provider. A decade ago, it had 44 members in Colorado and three adjoining states. Kit Carson Electric, based in Taos, N.M., was the first to leave, followed by Delta-Montrose Electric. Others have followed. All have enjoyed smooth transitions.

“When I first took this job, I knew there would be a lot of work to get us to April 1, and we have worked through a significant list of items and are ready to go,” said Hansen. “I am expecting this to be a very smooth transition.”

A bouquet for La Plata arrived the week before the scheduled exit. Still up in the air was how much La Plata and other departing members would have to pay Tri-State to leave remaining members “whole.” United Power, one of the departing members, and Tri-State had been miles apart in their assessment of how much they should pay.

The staff of the Federal Energy Regulatory Commission had weighed in with a methodology that supported neither position although aligning more closely with that of United Power.

The 10^th Circuit Court in Denver ruled that the FERC staff had gotten it right. Hansen said that this will mean that La Plata will have to pay $100 million less than it would have had Tri-State’s methodology prevailed. Miore on that story here.