Tri-State

Tri-State Generation & Transmission was formed in 1952 to sell electricity to rural cooperatives in Colorado and neighboring states. Based in the Denver metro area, it is now one the largest of the 64 Generation and Transmission (G&T) cooperatives operating in the United States and the second biggest utility in Colorado. Currently, Tri-State has 42 member-owned local distribution cooperatives, or Rural Electric Associations (REAs), that serve more than 1.5 million customers in Colorado, New Mexico, Wyoming, and parts of Nebraska. Seventeen of its member co-ops are in Colorado.

Tri-State is governed by a board of directors comprising one voting board member from each of its 42 member co-ops, regardless of their size. This means that even though Colorado’s 17 members are responsible for more than two-thirds of Tri-State’s business, they have no more say in Tri-State decisions than the other 25.

By 2024, Tri-State projects that 50% of the electricity it provides for its member co-ops will come from renewable resources (See Tri-State’s “renewables page”). Yet, even with the recently announced addition of new wind and solar projects, Tri-State’s future remains over-reliant on coal generation that already is more expensive to operate than the renewable resources it is bringing online. This has to change.

 

Tri-State Quick Facts

  • Tri-State Debt Load

    Tri-State finances its business with $1.1 billion in equity capital (supplied by the 43 member cooperatives) and $3.3 billion in debt (see 10Q filing), most of which is publicly traded bonds.  Annual interest expense is approximately $150 million.

  • Increasing Energy Rates

    Tri-State’s wholesale rates to its members have increased 56% since 2005, and are now 28% higher than Colorado’s other major power provider Xcel Energy's wholesale rates.

  • Over-reliance on Coal

    By 2007, coal was on the decline, but Tri-State proposed an 895 MW expansion of its Holcomb coal plant in Kansas. Tri-State is still paying for Holcomb, a more than $93 million loss, according to its August 2017 SEC filing.

    Because of Tri-State’s reliance on coal, and because of its heavy debt load, citizens of rural Colorado are paying higher electricity bills. Price forecasts from a wide variety of sources indicate continued cost declines for solar, wind, and storage in coming years, while costs for coal-fired power are expected to rise. This is true even without an existing price on carbon emissions, which we may see in the near future, and the potential cleanup costs associated with coal ash and other pollutants associated with the mining and burning of coal.

  • Obstacles to Local Clean Energy

    Taking advantage of Colorado’s abundant renewable energy resources would attract new businesses and economic development to rural areas of the state. Reducing electricity costs to farmers and ranchers would help the viability of Colorado’s ranching culture. Local governments are losing business, and tax revenue, as industries decide to locate elsewhere, seeking cheaper electricity rates with fewer restrictions on renewable energy development, that allow them to brand themselves as green energy procurers.

    In 2010 Tri-State proposed that all its members extend their 40-year contracts with Tri-State to 50 years so that it could pursue the best rates on coal. All but two co-ops, (Kit Carson in NM and DMEA in Montrose) agreed to extend their contracts because of the limitation on local renewables and doubts on the Holcomb investment. Both have since negotiated exit agreements with Tri-State. 

    In 2013, Tri-State opposed Senate Bill 252 which doubled the Colorado's renewables goal to 20%, saying the bill could cost up to $3 billion, The Denver Post reported.

Issues with Tri-State

Reliance on Coal

Tri-State recently proposed plans to come into compliance with state regulations that require utilities to reduce their emissions by 80% by 2030, but 23% of that energy will still come from the most carbon-intensive and polluting source--coal.


Transparency

Tri-State is a publicly owned utility, yet co-ops and member-owners (AKA utility customers) have limited access to information about Tri-State’s operations, finances, and planning.


High Rates

Tri-State member-owners pay some of the highest electricity rates in Colorado.


Local Generation

Tri-State co-ops are still paying the price for coal-fired electricity to be imported to their community from out-of-state when they could be saving money and investing in Colorado’s rural economies with local, clean energy.


Coal Plants

Tri-State still has two coal plants polluting Western communities, Additionally, Tri-State says Craig Units 2 and 3 will retire by 2028, but a decade is too long for the costliest coal plant in the state to continue operating.


Tri-State’s History with Coal

In the late 80s, Tri-state invested heavily in coal plants and infrastructure.  It now finances its business with $1.1 billion in equity capital and $3.3 billion in debt (see 10Q filing), most of which is made up of publicly traded bonds.  Tri-State’s annual interest expense is approximately $150 million, which is paid by member/customers of Tri-State’s 42 member coops. This high debt we are paying for outdated coal is part of the reason why Tri-State members pay some of the highest rates in the West.

Tri-State’s model has changed over the years. When it started in 1952, Tri-State only purchased power from Western Area Power Administration (WAPA) for distribution to the coops. Tri-State did not own any generation until the 1970s and only got into coal in the 1980s.  When large centrally generated coal-fired plants were some of the cheapest forms of delivering electrical power to remote landscapes of the west, Tri-State’s model made sense but the times have changed and fossil fuel generation is no longer the least-cost alternative in many cases, and the markets are shifting at a rapid pace. Tri-State has shown that it can adapt to changing times and it needs to do so again. Coops want to be able to pursue cheaper, cleaner, reliable, and locally sourced power for their customers. Members of coops need to push Tri-State to evolve with current times.