Colorado Law Creates Transparency at Rural Electric Co-ops — Episode 139 of Local Energy Rules

Well, I always like to start out by just kind of asking people what motivated them to get into this issue area of clean energy, renewable energy, climate policy. I know you were formally at Greenpeace, like what was something that sort of triggered you to get into the clean energy space?

So in our case, is Tri-State, and the policies that they act or choose to implement, that has a huge impact on what the electric cooperatives can do in terms of that energy transition. And that is an area that I didn’t see a whole lot of research being done around. So I’ve started this website, cleancooperative.com. It kind of has tracked this process in Colorado where the wholesale power provider has shifted in part from an entity mostly focused on just building and expanding coal infrastructure to one that sees its future more into the renewable energy space.

So the commissions didn’t see that need to regulate the rates and resource plans. But what we’ve seen is that as the utility industry increasingly gets more complex and two way distributed energy resources, and that metering respond. There’s a whole host of issues that are often handled by state regulators, that in many cases, the electric cooperatives are falling behind on because they don’t have that sort of oversight by state regulators. And that’s something that’s changing a little bit and in Colorado, which we’ll talk about, I think to make sure that the, the rate payers, electric cooperative members aren’t left behind as we transition from coal to a more distributed and renewable electricity system.

And then you also have this issue at the local level about participation. So I remember in, in the research that we did for that, you not only have this barrier sometimes in terms of finding out what the leaders of the co-op are doing, but it’s also hard to get on the co-op board potentially because there might be a nominating committee for the board that actually approves people who can be on the ballot and other kinds of restrictions that co-ops have about participation. So maybe that’s already kind of evident that I’m leading in this direction, but Colorado has recently passed another law about transparency for cooperatives. And I’m wondering if you could talk about some of the specific things that were involved in bringing that law forward and getting it passed that folks saw as problematic that needed to be addressed in order to make sure that co-ops could live up to their aim of being democratically governed.

So there was a, an effort really beginning last year was somewhat disrupted by, by the, um, shortened session. So then brought up again this year to expand that those transparency rules to Tri-State. And that’s really pretty simple. It just says ratepayers, the media, the public should be allowed to attend board meetings. And minutes from those board meetings should be published on the website. And again, remember these are monopoly utilities, right? And not for profit, but still technically monopoly utilities. So if you’re a rate payer in the area of electric co-op, you don’t have any choice about who’s your energy supplier and they’re generally unregulated by the state regulators. So that’s all dependent that notion that, you know, this is a monopoly utility, basically unregulated, depends on them being run in a democratic manner. Well, we can’t have a democratically run utility unless there’s transparency and accountability. And so through that process of both the rate payers and some of the co-ops themselves identifying these problems of a lack of transparency at Tri-State. Legislators came together, it was actually on a bipartisan basis. And before this bill that expanded the electric cooperative transparency rules to include Tri-State and it took a couple other measures as well, making it easier for co-ops to implement electronic voting for board director of elections, to hopefully increase participation and also getting into some issues around the fiduciary duty of the directors at the, at the generation & transmission, which we can talk about as well.

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Kit Carson’s case, that’s mostly solar and Delta Montrose, their case is about solar and hydroelectric power that they have there, and Tri-State policies restricted those co-ops from pursuing those projects, because it had these punitive contracts that basically don’t allow the co-ops to build more than a small percentage of their power supplies in their service territory. So they’re sort of required to purchase nearly all their power supplies from Tri-State are these long term contracts. And they saw that they could work with another wholesale power provider that would allow them to help those projects and deliver power at a cheaper price. And then it was a matter of, well then how do they get out of this, the restrictive contract with Tri-State so that in both cases with a multi-year process of negotiations, regulatory decisions, and lawsuits, ultimately won and the ability to, to exit from the contract, and we’ve seen in recent announcements and Delta Montrose they’re partnering with the power provider to build a pretty significant solar array in the community.

So exactly what they wanted to do. And I think at an attractive price, from what they’ve said and something that they would never have been able to do if they’d stayed with Tri-State. Now other co-ops in the state, and I think our region, has seen that and are also interested in, in doing the same thing, but Tri-State, you know, doesn’t want to lose these co-op members and then has fought those efforts to leave really at every step of the way. I think they saw that they could perhaps lose Kit Carson, Delta Montrose electric association, and still manage as a G&T. But if they lost some of these larger members like United Power, which is their largest co-op member or La Plata electric associations across Colorado, but that would portend a pretty troubling future for the G&T. So those challenges are ongoing both in court at the court of public utilities commission. And I think at the Tri-State board room in terms of negotiations there, and, and Tri-State has responded in ways that I think are a little bit more constructive than their past attempts, not just trying to block the co-ops from leaving, but also opening up some ability for those co-ops to build more local projects, buy a portion of their wholesale power from other providers, without fully leaving Tri-State. So trying to come to some sort of arrangement that works for both Tri-State, maybe keeps those co-ops as members, but also allows them the flexibility that they see that they need to navigate the energy transition.

So Tri-State has a case to make that they’ll be able to navigate that transition in a more regionally coordinated and perhaps even lower cost way than could be done without Tri-State, right? They point to, we can get wind and solar bids at utility, for utility scale projects at incredibly low prices here, right? Less than 2 cents a kilowatt hour, concise, close to one cent a kilowatt hour, right? And that’s cheaper than the, than the sort of smaller solar projects or hydroelectric projects that the co-ops can get. But if that just moves to the same kind of top-down decision making without real input from the co-op about how they want the transition to look like in their communities, they might not get that support. I think, from the calls and from policy makers in Colorado, because it just has to work for the communities, has to be done in a way that that makes sense. And that allows for that local economic development opportunities that some of the co-ops are looking for. Or they’ll just, I think, continue to see this pressure from some of the other co-ops to, to exit the contracts. So I think it kind of remains to be seen, but the, the benefit, I think, of the transparency rules extending to Tri-State, at least the whole leadership at every co-op the rate payers, policymakers will have, will not have a better opportunity to understand what Tri-State is doing, why and the timeline for these decisions, right? So it’s not just a, we’re making progress, trust us, we’re going to handle this, but really what decisions are being made this month? What are you looking to next month? How about next year and how does that work with what these co-ops want, what the rate payers need and what the states call.