Rural Colo. electric co-op in a battle to generate local power; could have national implications

Delta Montrose Electric Association
serves Montrose, Delta and environs.

A Colorado rural electric cooperative is in a battle with its power supplier that "could remove a major barrier to small-scale renewable energy in rural areas," Cally Carswell reports for Inside Energy. The Delta-Montrose Electric Association is one of 43 rural utilities in four states that buy power from the Tri-State Generation and Transmission Association, which co-ops created "because none of them could afford to build big power plants on their own."

DMEA's contract with Tri-State, which runs through 2040, commits it to buy 95 percent of its power from Tri-State, Carswell writes. "Much of that power comes from large, centralized power plants, often fired with coal. The co-ops are allowed to generate the other 5 percent of their own. The contracts ensure that each co-op pays its fair share of fixed costs—for maintaining transmission lines, or paying off power plants. If one co-op buys less from Tri-State, thereby reducing its revenues, other members will have to make up the difference. Their costs could rise."

DMEA members, who "believe local power generation is key to keeping rates low in the long-run," last year went to the Federal Energy Regulatory Commission "to ask if they could buy more than 5 percent of their power from local sources, despite their contract. FERC said they could. In fact, a federal law called the Public Utilities Regulatory Policies Act of 1978 required it to. The law, passed during the 1970s' energy crisis, was intended to promote small-scale renewable energy development." Co-ops are generally more dependent on coal than other electric utilities.

Tri-State wasn’t happy about the decision and attempted "to recoup costs by charging co-ops like DMEA for buying more local power," Carswell. "In June, FERC rejected the request. Tri-State is appealing, with support from a number of the other co-ops it serves, which worry about rising costs." Kevin Brehm of the Rocky Mountain Institute "said the ruling could effectively lift local generation caps for rural co-ops."

On a side note, Tri-State announced on Thursday that two coal-fired plants that serve four co-ops in southern and western Colorado will close to reduce carbon-dioxide emissions by up to four million tons a year, Matt Hildner reports for The Pueblo Chieftain. It will lead to the shutdown of 527 megawatts of coal-fired power generation on the Western Slope of the Rocky Mountains, with one mine expected to shutter by 2022 and the other by 2025.