A pause —and now a sharp rise for Tr-State rates

Wholesale provider’s last rate hike was in 2017. Rates actually declined in 2021. They will rise again in 2024.

by Allen Best

Rapidly rising rates were one of the complaints of some of the members of Tri-State Generation and Transmission.

So, after a hike in 2017, rates stayed flat until 2021, when they were actually reduced by 4%.

Directors representing member cooperatives in Colorado and three other adjoining states decided at their June meeting that it’s time to raise them again, this time by 6.36%. Pending approval of the Federal Energy Regulatory Commission, they will go into effect in January.

The vote was 33 to 5 in favor of approving the recommendation of a rate design committee. The committee of member representatives had met 14 times before making its recommendation.

Duane Highley, the chief executive, pointed to record inflation (in recent decades), higher fuel and energy prices, and supply chain pressures.

Cost of copper has increased 50% and that of aluminum 60%, while the cost of transformers has grown 3%, points out Lee Boughey, the vice president for communications.

The new rate, if approved by FERC, will result in an annualized increase of 1.4% from 2017 through 2024.

What might this mean for those Tri-State members looking to leave entirely? United Power appears determined to be gone by May 1, 2024, and awaits only a final determination from FERC about how much it will have to pay Tri-State—almost certainly north of $200 million, but the formula to determine the price amount must be approved.

That same formula will be applied to Granby-based Mountain Parks Electric, which decided in January to also leave. See: “Mountains Parks: We’re out of here.”

Five members are seeking partial requirement contracts that allow them to produce up to 50% of their own power in addition to the 5% of existing so-called all-requirements contracts.

Before any of these can go forward, however, FERC must approve the formula for determining what they must pay Tri-State and its remaining members to leave them whole. In a January 2023 statement, Tri-State blamed United Power for slowing that proceeding by opposing a settlement agreement, leading FERC to reject the settlement.

The statement quoted Jessica Matlock, chief executive of Durango-based La Plata Electric Association, who said the rejection of the settlement “stalled our efforts to deliver local clean energy projects that could provide significant economic development benefits to our communities and emissions reductions to our state and region. The settlement represented a huge step in the evolution of the generation and transmission association business model, and in bringing the direct benefits of the clean energy transition to rural communities.”

To fill its 50% self-generation allocation, La Plata selected the company formerly called Crossover Energy Partners. It was acquired by Strata Clean Energy.

See October 2021 story: “Not a done deal, but La Plata Electric plans a big move.”

Jessica Matlock told Big Pivots in early June that the deal with Strata is off.

“Our exclusivity agreement ended, so we are going back out to the market to see what is there,” she said.

She also said that working a new deal with Tri-State remains an option. “We are still committed to working with Tri-State on another solution. We are constantly trying to find ways to get more flexibility in our contract.”

Also in 2021, Tri-State allotted Poudre Valley Rural Electric Association and San Miguel Power Association the authority to self-supply portions of their existing contracts.

In 2022, High Plains Power in Riverton, Wyo., and Jemez Mountain Electric Cooperative in Espanola, N.M., were allocated self-generation opportunities.

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