BIG PIVOTS: LPEA Will Continue to Get Power from Tri-State After 2026 Exit

This article appeared on BigPivots.com on November 17, 2024.

Durango-based La Plata Electric Association will be on its own in April 2026, but it will still get some of its electricity from Tri-State Generation and Transmission Association.

Some LPEA members would like to see their electrical cooperative remain a member of Tri-State. Directors in March voted to serve their two-year notice. LPEA will be required to pay Tri-State and its remaining members $209 million to cover debts.

The Durango Herald reported on a meeting of the La Plata County Farm Bureau in late October at which nearly universal opposition was expressed to the local cooperative’s exit from Tri-State. Worries about higher rates seemed to be the dominant concern. The example cited was of Kit Carson Electric in Taos, N.M.

Kit Carson left Tri-State in 2016 and completed payments of its $37 million exit fee in 2022. Has that caused Kit Carson to raise its rates? The Herald story cited local LPEA members who said Kit Carson’s rates increased 22.5%, from 2015 to 2019. No comparison for rate increases by LPEA during the same period were cited.

Big Pivots sought an apples-to-apples comparison from Kit Carson and LPEA, but without success.

A majority of LPEA’s board appears to have had no reservations about leaving Tri-State. The cooperative has entered into two power-purchase agreements with Tri-State that together will account for 30% of the electricity LPEA expects to get. One of them is for up to 40 megawatts of firm capacity, meaning it could come from gas plants or even coal, while 40 megawatts will be provided as available from the Tri-State-owned Dolores Canyon Solar Project. Both agreements will last through 2033.

Until April 2026, LPEA will continue to be a member of Tri-State with which it has a contract that specifies that at least 95% of its power must come from Tri-State.

The agreements were part of a broader understanding. Other elements include transmission commitments and the sale of utility assets from Tri-State to LPEA. It also establishes a framework for a mutual release of claims. When a settlement agreement is completed, the two cooperatives will jointly file for dismissal of the pending lawsuit in the La Plata County District Court.

In an announcement by LPEA, Ted Compton, the president of the board of directors, called the agreement a “step toward adapting to changing needs.” Duane Highley, the chief executive of Tri-State, said the agreement will allow focus on the work necessary to “complete a successful and amicable separation and advance our plans for the future.”

LPEA in September announced an agreement with Mercuria Energy America, a power wholesaler based in Houston, which is to be the cooperative’s major supplier of electricity.

At the Farm Bureau meeting, all of the attendees said they favored staying with Tri-State, according to the Herald report. “I already pay $4,000 a month for electricity,” said J. Paul Brown, a rancher from Ignacio. “This is only going to make it worse”.

Another attendee likened the decision to Texas attempting to secede from the United States. “It’s all well and good, until a hurricane hits and you need FEMA,” said Henry Bruckner.

Tri-State’s Highley had spoken at the meeting but steered clear of comments critical of LPEA when the exit came up in the Q&A.

“Tri-State was indifferent financially,” Highley said. “If they pay their share of the debt, we’re fine. We’d rather they stay. But if the entity decides that’s in their best interest [to leave], that’s fair.”