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Tri-State faces rural co-op unrest over high prices, fossil fuel plants

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Tri-State faces rural co-op unrest over high prices, fossil fuel plants

Rural electric distribution cooperatives belonging to Colorado-based Tri-State Generation and Transmission Association Inc. have requested to intervene in a case before state regulators that could result in Tri-State losing one of its 43 members.

The potential departure of the Delta Montrose Electric Association, or DMEA, which purchases wholesale power from Tri-State for roughly 28,000 customers in southwestern Colorado, could result in higher power prices for the remaining 42 member-cooperatives in a four-state service area. Renewable energy advocates are watching the case to see if it portends attempts by other cooperative members to terminate contracts with Tri-State in pursuit of clean energy sources.

"What we're seeing is almost an emergence of a civil war within Tri-State, which is a big deal in terms of its financial future," said Jeremy Nichols, the climate, energy and program director for WildEarth Guardians, which is among the environmental groups pushing Tri-State to reduce its reliance on coal and natural gas.

DMEA has been attempting to terminate its contract with Tri-State for two years, seeking to purchase cheaper, renewable power from other providers. DMEA said in a complaint before the Colorado Public Utilities Commission that Tri-State is attempting to prevent DMEA's departure with a "punitive exit charge that is unjust, unreasonable and discriminatory."

Many of Tri-State's rural electric cooperative members in Colorado, Wyoming, New Mexico and Nebraska are asking to intervene as parties in the proceeding, saying DMEA's exit from Tri-State would result in more expensive power for its members.

"[A]ny decision by the commission to establish an exit fee for DMEA that is less than the amount determined by Tri-State's board will likely be passed on by Tri-State to Tri-State's member systems through increased electrical rates," according to a filing by more than 20 cooperative members.

A Tri-State spokesperson did not respond to a request for comment. Tri-State said Dec. 18, 2018, that it was disappointed by DMEA's move to litigate instead of negotiating its withdrawal.

Tri-State's average price for its wholesale power has increased 56% since 2005, according to DMEA. Tri-State countered that rates have recently remained stable and will not increase in 2019.

Tri-State owns about 3,150 MW of operating nameplate generation capacity, most of which is coal- or gas-fired, according to S&P Global Market Intelligence data. On Jan. 11, Tri-State announced a 15-year contract with Juwi Inc — a Boulder, Colo.-based subsidiary of Juwi GmbH — to purchase the output of a 100-MW solar facility in Colorado.

David White, vice president of member relations for the Poudre Valley Cooperative Association Inc., one of the founding members of Tri-State in the 1950s, said the best way to resolve the dispute is to "work together as a cooperative family." Poudre Valley is one of the parties attempting to intervene in the case.

DMEA said in its complaint that attempts to resolve exit charges through negotiation were futile.