The umbrella organization of several rural electric cooperatives in Wyoming has reached a major milestone in a complex energy transition plan that it hopes will keep wholesale electricity prices stable, supported by increasing supplies of green energy.
The Colorado-based Tri-State Generation and Transmission Association, a power supplier to cooperatives in the western U.S. founded more than 75 years ago, has launched a new power purchasing program to keep prices low. It comes after its largest member in Colorado paid $627 million to leave Tri-State in hopes of finding cheaper power elsewhere.
Following this move, a major credit rating agency upgraded the association’s billion-dollar debt on July 31. This move will improve the organization’s future borrowing costs, which it needs to implement a future green energy spending plan.
Tri-State focuses on purchasing wholesale electricity from suppliers either for its own use or as a supplier to residential or industrial customers.
Tri-State is optimistic that its new power purchasing program, which relies on green energy delivered over hundreds of miles of high-voltage power lines in Wyoming and other neighboring states, will keep wholesale prices in check.
The new power purchasing option for electric cooperatives in rural Wyoming is the result of a decision made by federal regulators earlier this month.
The agency, called the Federal Regulatory Energy Commission (FERC), regulates high-voltage power lines in the United States, including transmission fees.
This month, FERC approved a plan by Tri-State, the parent company of Wyoming’s electric cooperatives, that effectively gives them the flexibility to meet up to 40 percent of their electricity needs through a new program called Bring Your Own Resource (BYOR), which aims to transport green energy over the high-voltage grid.
There are eight rural electric cooperatives in Wyoming that are members of Tri-State.
More renewable energy
The BYOR program is the result of extensive consultation and participation by Tri-State member cooperatives and public utilities, which now have greater flexibility in owning or contracting for their own energy projects.
The electricity will largely come from renewable energy projects such as wind turbines or solar systems.
Tri-State is a nonprofit cooperative with 44 members, including 41 electric distribution cooperatives and public power districts in four states, providing electricity to more than one million customers across nearly 200,000 square miles in Colorado, Nebraska, New Mexico and Wyoming.
Tri-State’s distribution cooperatives in Wyoming include Big Horn Rural Electric Co. in Basin; Carbon Power & Light Inc. in Saratoga; Garland Light & Power Co. in Powell; High Plains Power Inc. of Riverton; High West Energy Inc. of Pine Bluffs; Niobrara Electric Association Inc. in Lusk; Wheatland Rural Electric Association in Wheatland; and Wyrulec Co. in Torrington.
The managers of seven of the cooperatives in Wyoming were not immediately available for comment on the benefits of the new option to purchase green electricity.
Jeff Umphlett, general manager of Big Horn Rural Electric, declined to comment on the BYOB program until “the issues are resolved.”
Improved creditworthiness
The BYOB comes on the heels of a significant credit upgrade from S&P Global Ratings, a New York City-based ratings agency that influences the interest rates companies like Tri-State pay on loans.
Due to Tri-State’s multi-billion dollar debt, S&P has revised its outlook to stable from negative.
The change in forecast reflects the withdrawal of United Power Inc., Tri-State’s largest member, from the association on May 1.
The exit was seen as removing an obstacle to Tri-State’s energy transition plans.
According to S&P, Tri-State received a $627 million contract settlement from Brighton, Colorado-based United Power, which was used to pay off debt.
“We view the contract severance payments introduced by the Federal Energy Regulatory Commission as a potential incentive for additional member cooperatives to sever their ties with Tri-State,” S&P credit analyst David Bodek said in a July 31 statement.
Tri-State management has said it will use the proceeds from the exit fee to offset portions of its $2.6 billion five-year capital improvement plan and reduce its existing $3.4 billion debt by about 13 percent, Bodek said.
A Tri-State spokesman was not immediately available for comment.
“Our resource plans remain on track, and by the end of next year, 50% of the energy our members use will come from clean energy, rising to 70% by 2030, and significantly reducing greenhouse gas emissions,” Tri-State CEO Duane Highley said in a statement in May after United withdrew from its association.
“Our resource planning sets a high standard for reliability, even during extreme weather events, and our wholesale prices remain competitive for our members,” Highley said.
Good luck
“We wish United Power and its consumer members all the best on their own journey,” he said.
Mark Gabriel, president and CEO of United Power, was not immediately available for comment.
United Power, now Colorado’s third-largest utility, told Tri-State in 2022 that it would leave the cooperative because of Tri-State’s failure to control electricity costs and invest in more “local power generation.”
Tri-State’s 5,800-mile transmission grid relies on more than 30 power generation resources, and by 2031, members will share more than 50 resources, including more than 2,200 megawatts of wind and solar resources.
Looking to the future, Tri-State plans to increasingly rely on alternative sources of electricity generation.
In 2024 and 2025, Tri-State will add 595 megawatts of new solar energy, the company said in a statement.
This additional power generation will support iTri-State’s Power Resource Plan filed with regulators. This plan calls for Tri-State in Colorado to achieve an 89% greenhouse gas emissions reduction goal by 2030, retire four coal-fired power plants between 2025 and 2031, and add an additional 1,250 megawatts of renewable energy sources and energy storage between 2026 and 2031.
Tri-State managed to keep its rates stable for seven years through 2023 before increasing them by about 6.3% to $77.91 per megawatt hour of electricity delivered for 2024.
United’s Gabriel had previously stated that he could buy electricity on the open market at a price of $60 to $65.
The main complaints that cooperatives have raised about Tri-State are that the association’s rates are high, its 50-year contracts are too long, and require that the
The cooperatives have to buy 95 percent of their electricity from the association, which undermines efforts to develop local projects.
Pat Maio can be reached at [email protected].
