State’s largest electric cooperative picks up with Invenergy. What does that say about Colorado’s energy transition?
by Allen Best
The sharp pivot in Colorado’s energy politics comes during the last 15 to 20 years comes into sharp relief when examining the recent announcement by CORE Electric Cooperative of its new wholesale supplier.
CORE, the state’s largest electrical cooperative, has 170,000 members strung out from the outskirts of Buena Vista and Clear Creek to the wheat fields north of Bennet. Its largest numbers are in Douglas County, including Castle Rock and Parker. See image above.
This new contract with Chicago-based Invenergy calls for 400 megawatts of new solar and wind, 100 megawatts of storage, and 300 megawatts of natural gas. This is not new gas generation in Colorado. Instead, CORE will take over generation capacity of an existing plant whose production is now contracted to another utility.
Until the new contract takes force in 2026, CORE will continue to be supplied by its long-time partner, Xcel Energy.
Going back to 2003, CORE—then called Intermountain Rural Electric Association—was happy with Xcel’s pathway. Xcel wanted to build a new coal-fired power plant, called Comanche 3, and CORE agreed to become a 25% owner.
In the politics of that time, renewable advocates along the Front Range loathed the cooperative and its general manager because of their loyalty to coal.
This is from Big Pivots 67, a reader-supported e-journal covering climate change and the resulting energy and water transitions in Colorado.
The electrical cooperative has sharply changed course, reflecting the way that renewable energy has become inexpensive and hence bipartisan. Douglas County represents one of the most reliable large bloc of Republican votes in Colorado. If the margins narrowed during the Trump years, it remains a Republican County—and one that, in this announcement, supports renewables.
In its announcement, the utility said the agreement paves “the way for CORE’s future as the cleanest, most reliable, most affordable electric company in Colorado.”
That’s a bold statement, especially when you consider the goals of both Holy Cross Energy and Platte River Power Authority to achieve 100% renewable generation by 2030.
CORE also said the new agreement with Invenergy will stabilize retail electricity prices while shifting the generation portfolio to conform with Colorado’s goals for emissions reductions. That goal calls for an 80% decline by 2030 as compared to 2005 levels.
Of CORE’s electricity in 2021, coal was responsible for 60%, renewables 29%, and natural gas 11%.
Later, I talked with Jeff Baudier, the chief executive of CORE. He pointed out that decarbonizing the electrical supply is not an option for his cooperative. Colorado law requires it and also Xcel and Black Hills Energy to do so.
Baudier said he expected that his coop will file the required clean heat plan to the Colorado Air Pollution Control Division “well in advance” of the December deadline.
I asked him about Douglas County.
“The people in Douglas County are very smart and know which way the world is going,” he said. “The life of coal plants is not the future. They (CORE members) have actually been very supportive of us moving in this direction.”
CORE retains 25% ownership in Comanche 3, although last year it filed suit against Xcel. Clearly, it wants out. Likely so does Xcel, although that $1 billion plant completed in 2010, still a youngster in the famously long-lived lives of coal plants, is weighed down by giant debts.
Baudier said other technologies may emerge. He cited small nuclear and carbon capture, but also things like pumped-storage hydrogen.
“But really, the two things that the industry is focused on are replacing natural gas with hydrogen and increasing the capacity of and duration of storage.”
He also sees the need for a regional transmission organization and an organized market. In service of other customers, CORE’s future wholesale provider has partnered with the state of New Mexico in building a 400-mile transmission line there.
“We just need to be sure that there is fair access to all parties to that transmission, so that there is not discrimination in access.”
As for natural gas, he described the power-purchase agreement that CORE will have as one that is necessary, until new technology firms up. “We don’t expect this gas plant to be used that much, but we need the reliability of gas to provide back-up reliability.” And in this, CORE will chart its own course—perhaps a nod at Xcel’s failure to hedge its natural gas supplies ahead of Winter Storm Uri in 2021.
CORE’s break-up with Xcel is part of a broad tendency as all smaller utilities examine their options in view of the rapidly changing economic landscape of electricity.
Xcel, if gaining new customers in its service territories, has lost the contract to provide Fountain, the municipality south of Colorado Springs, which is to be supplied by Guzman Energy. Xcel also delivers electricity to three other electrical coops—Yampa Valley, Grand Valley, and Holy Cross and has franchise agreements with many municipalities, from Alamosa to Boulder to Sterling.
Tri-State Generation & Transmission has more conspicuously been shedding customers. Mountain Parks Electric in January announced it was leaving Tri-State within two years, while United Power – alone responsible for more than 20% of demand satisfied by Tri-State – still plans to be gone by May 2024. Delta-Montrose left in 2020 and is being supplied by Guzman. Other coops plan to be only partially supplied by Tri-State.
Baudier, who came to Colorado from Louisiana to lead CORE, said utilities shopping for suppliers is more frequent in other jurisdictions. “In Colorado, I think people are just getting to the point that they are looking for alternatives,” he said. This is partly because of the timing of the contract end dates.
In its shopping that began two years ago, CORE received 20 to 30 proposals. “It ran the whole gamut of potential suitors,” he says.
Credit frown for Tri-State by two credit-rating agencies
Tri-State Generation & Transmission received two more frowns from credit-rating agencies in late January.
S&P issued a BBB+ with a negative outlook on two types of debt and A-2 for short-term debt.
On Jan. 31, Moody’s Investor Service revised its rating outlook for two types of debt totaling $3.1 billion to negative. It cited concerns about Tri-State’s operating cash flows but also the difficulty Tri-State faces as two members seek to leave and others are looking at partial requirements.
“The negative outlook reflects the likely need for Tri-State to incur additional indebtedness as a result of the under-collection of costs in the near-term and recognizes the challenges the G&T faces in implementing more timely rate increases while addressing member concerns.”
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