Positives and negatives at electric co-op meeting

Much like an alternating current of electricity, there was a mix of news presented at Carbon Power & Light’s 83rd Annual Meeting on June 22 at the Platte Valley Community Center.

Following several rounds of bingo and interspersed with door prizes for electric cooperative member owners, updates were also provided by TriState Electric and the Wyoming Rural Electric Association.

Transitioning to the Future

One of the first pieces of good news was delivered by Clay Thompson, Vice President of the Carbon Power & Light Board of Directors. Thompson told the member owners gathered that Tri-State Generation and Transmission Association (Tri-State), of which Carbon Power & Light is a member, had joined the Southwest Power Pool, a regional transmission organization (RTO), and would “go live” in 2026.

“Once we are in that power pool, we will be in real-time markets, which means cost savings to everyone that is involved,” said Thompson. “It’s well documented that when you join those you do realize savings. So, It’s predicted that we will get good cost savings out of that, and that translates to keeping our rates lower.”

The next bit of good news came from Todd Telesz, Chief Financial Officer for Tri-State, regarding the Empowering Rural America New ERA Program. According to the United States Department of Agriculture website, this program “helps rural Americans transition to clean, affordable and reliable energy.”

“Tri-State was instrumental in getting the New ERA program approved for electric co-ops across the country. There were a number of co-ops, a number of our industry friends, that were not very happy with us, when we went to the White House, went to Congress and pitched this program,” said Telesz. “This $9.7 billion is meant to help cooperatives in rural America transition through our legacy resources into the new resources that we are going to own.”

According to Telesz, Tri-State was invited to apply for the largest application under the program for a total of $679 million. This, combined with grants, 0% loans and 2% loans, would give Tri-State nearly $2.2 billion in capital to help transition to clean energy.

“We are going to have access to very inexpensive, cheap capital. I don’t care how good a job we do at Tri-State, not many people are going to lend us money for free and very few would lend it for 2%,” said Telesz. “You, as the membership, will benefit from that for the next 25 to 30 years. From that low source of very inexpensive capital.”

United We Stand

A combination of good and bad news came from Thompson regarding United Power, a Colorado-based cooperative and one of the largest members of Tri-State. According to Thompson, after attempting to leave Tri-State over the past several years, United Power officially left on May 31. The departure, said Thompson, was “quite a battle” with the Federal Energy Regulatory Commission (FERC).

Ultimately, United Power paid approximately $700 million to leave Tri-State which, according to Thompson, “keeps the rest of the membership whole.” Thompson added there were “several reasons” why United Power wanted to leave Tri-State.

‘They didn’t think that Tri-State had enough renewables, they thought Tri-State’s rates were too high, and they wanted the opportunity to have more say in what they wanted to do,” said Thompson. “One thing United [Power] did after they left Tri-State.. they gave their members a 20% increase in rates. If I was a member of that co-op, I wouldn’t be too happy with their board or their management.”

While United Power cited a lack of renewable energy sources as one of the reasons it wanted to leave Tri-State, Thompson claimed that the organization was a leader—if not the leader—in renewable energy among co-ops.

“We have just seen a tremendous movement to that [renewable energy]. But the Wyoming co-ops have been concerned that we are moving too fast going to renewables,” said Thompson. “So, the Wyoming co-ops got together and came up with these reliability metrics, and now those metrics are being used by Tri-State.”

Those same metrics, said Thompson, were also presented to the Southwest Power Pool.

Wildfire Liability

Along with the information provided by Thompson regarding United Power, he also informed the member owners about changes to liability insurance of co-ops due to the increase in wildfires in the United States.

“One of the big issues, and I’m sure you’ve heard it on the news a lot, these big wildfires that have been started by power companies. The liability insurance we got this year, the cost almost doubled, and the coverage halved,” said Thompson. “That just gives you an idea how difficult it is to get liability insurance for these big wildfires. There are fewer and fewer companies even willing to do it.”

According to Thompson, this increase in rates and decrease in coverage would mean that co-ops were “one fire away from declaring bankruptcy.”

“There’s got to be something done to protect us, or the option is every time it gets windy on a red flag day, we are going to have to turn the power off, and I don’t think anyone wants that,” said Thompson. “These are things we are being faced with all across the industry and there are no easy decisions.”

Shawn Taylor, executive director of the Wyoming Rural Electric Association (WREA), also touched on the liability insurance issue. While Thompson said generation and transmission co-ops were making an effort in Washington D.C. for liability relief, Taylor said there were similar efforts happening on the state level in Wyoming.

“What we’re trying to do at the State level is we’re trying to draft some legislation that would give us liability relief. If Carbon does everything that they say they’re going to do on their wildfire management plan, we won’t be held liable, at least to some degree,” said Taylor. “If we can show that we followed everything that we were going to do and some state agency signed off on it. That will give us some protection.”

Rate Increases

During the annual meeting, there was also discussion of rate increases, though not to the level United Power instituted on its member owners or that Rocky Mountain Power had proposed. According to Telesz, Tri-State had two rate filings in front of FERC with one of them being a formulary rate filing. According to FERC, a formulary rate protocol governs “how the utility discloses information to customers and resolves rate disputes.” This is similar to the formulary rate filing presented to FERC in 2023.

“We went through a large amount of testimony, a bunch of feedback from the membership, a bunch of engagement in Washington D.C. and ultimately our formulary rate filing was rejected in March of this year,” said Telesz.

Telesz said the rejection by FERC of the formulary rate filing resulted in a negative impact with credit rating agencies for Tri-State, downgrading the agencies creditworthiness. In refilling with FERC, said Telesz, Tri-State requested a 6.4% increase effective July 1.

“That is the first rate increase for the Tri-State membership since 2017, and in fact, in 2022 and 2023, we had 2% rate decreases,” said Telesz. “Nothing in the world has gotten less expensive over the course of the last seven years. Our rates are essentially flat, including that six month, 4% rate increase.”

That rate increase would trickle down to Carbon Power & Light members as well. According to Russell Waldner, general manager, the Carbon Power & Light Board of Directors were looking at a four-to-five percent rate increase.