By Mark Stutz
A new wholesale rate design accepted this week by federal regulators ensures not-for-profit wholesale power supply cooperative Tri-State Generation and Transmission Association has the certainty to collect revenues to cover its cost of service and meet all financial goals, while managing costs and maintaining competitive wholesale rates.
The member-developed wholesale rate design was accepted, subject to refund, by the Federal Energy Regulatory Commission (FERC) and referred to the commission’s settlement and hearing procedures. The wholesale rate is effective August 1, 2024.
“Tri-State’s members worked together to develop and support our new wholesale rate,” said Duane Highley, Tri-State CEO. “Importantly, Tri-State can recover the costs necessary to reliably and affordably advance our clean energy transition, even as we manage costs and increase our competitiveness.”
On December 1, Tri-State filed a transformative electric resource plan that leverages potential federal funding, new direct pay clean energy tax credits, and the cooperative’s strong financial position to make its largest ever investment in new resources. Tri-State’s preferred plan adds 1,250 megawatts of renewable resources and energy storage, adds dispatchable resources, significantly reduces greenhouse gas emissions, and preserves reliability and affordability.
Following a seven-year period with stable and then 4% lower wholesale rates for its members, Tri-State’s board of directors, representing its utility members, approved an approximate 6.3% increase in the average Class A wholesale rate. The budgeted 2024 wholesale rate reflects a net increase of 1.4% from the actual average Class A wholesale rate paid by members in 2017, which is approximately 0.2% annualized, significantly below the rate of inflation over the seven-year period.
Uniquely, Tri-State’s Class A wholesale rate includes all of the costs, including energy, capacity (which ensures resource adequacy), transmission and ancillary services to deliver a reliable, affordable and increasingly clean supply of power into members’ electric distribution systems across the rural American West. Tri-State’s wholesale rate also includes a wide range of other value-added products and services.
The new wholesale rate maintains Tri-State’s postage stamp rate, with the same rate components for all members. The new formulary rate can be adjusted annually based on the budget approved by Tri-State’s board, including an annual true-up mechanism. Wholesale rates are set to ensure the financial flexibility to meet member goals, with excess margins allocated as patronage capital and eventually returned to members.
For more information about Tri-State, visit www.tristate.coop.
Mark Stutz is Public Relations Specialist with Tri-State Generation and Transmission Association, Inc.