As the DMEA and Tri-State contract saga plays out, an election for three DMEA board seats waits in the wings. DMEA elections can be as contentious as any other election. This year’s race could play out as one of the most important for years to come.
Brad Harding is running unopposed in District 3. David White is challenging incumbent Ken Watson for District 4 and Jock Fleming and Ken Otto are vying for the South District.
When speaking with DMEA CEO Jasen Bronec back in April, it became clear the current contract with Tri-State restricts any flexibility to receive energy from more affordable partners or sources.
“Tri-State is predominantly coal. They do have some gas peaker units, but they are buying more solar and wind resources. I think everybody recognizes that there is a new energy market. Those types of resources are getting more and more competitive,” Bronec said.
Coal plants that were the base for supplying energy have become less competitive.
Natural gas prices are much more affordable. Hydro, wind and solar are becoming more abundant. And new technologies involving energy storage are changing the game.
DMEA is 20 years into a 40-year contract and is seeking a reasonable buyout number to move toward more flexible options.
“Our issue is that has driven Tri-State to not be in a competitive position, and for a decade DMEA has tried to convince Tri-State that they need to make some sort of a transition in those resources. They just haven’t. We want competitiveness and flexibility,” Bronec explained.
Bronec touts the opportunity locally for generation.
“Over the years and even since I’ve been here Tri-State has time and time again changed policies and done things that stifled our ability to expand the south canal projects or talk about United Power installing a battery technology, or demand response type programs we would like to run. Just any new technology that comes up it seems like all of their policies and they way they approach it are very protectionary and reactionary.” Bronec said.
Currently DMEA is contractually obligated to purchase 95% of it’s power through Tri-State and only 5% through locally controlled resources. DMEA is seeking to buy out its contractual obligation from Tri-State. For DMEA the decision is either stay with Tri-State for the entirety of the contract or reach a fair and equitable buyout like Kit Carson Electric Co-op (KCEC) did and buy energy from somebody else.
“It’s a struggle in Western Slope Colorado for businesses, business development, economic development and when your power costs are 20-30% higher than Excel Energy and some of the other power suppliers it’s difficult to get businesses to relocate to our area. It boils down to purely economics,” Bronec explained.
According to an Institute for Energy Economics and Financial Analysis report KCEC has seen great benefits from ending its relationship with Tri-State.
In ending its longstanding relationship three years ago with Tri-State Generation and Transmission Association, Kit Carson Electric Cooperative in northern New Mexico struck a path that has simultaneously created greater local control of how electricity is generated and saved the small co-op millions of dollars. - IEEFA Report
The report says that KCEC had the same issues with its contract with Tri-State that DMEA does.
Exorbitant price increases, 5% cap on local control and lack of transparency when and how much prices will increase.
In October 2015 Tri-State members voted to allow KCEC to exit their contract at a $37 million cash buyout. It was a 44-0 vote.
Precedent is set, right? Not so fast.
“We know we can exit. We know their bylaws say we can exit. Tri-State board has the authority to set the exit terms. It says the exit terms need to be fair but when you cut a deal with another co-op and you allow them to exit for $37 million and you ask for the same and you’re told that your buyout number is 10 times more. You ask yourself why,” Bronec said.
According to Bronec, the buyout has to make economic sense for DMEA members. He feels that PUC is the best agency to determine what is fair for both parties. It may be that the number is too high and both parties walk away business as usual.
Any business in this day and age is looking for flexibility and a 20-30% increase in electrical power costs over our neighbors that we compete with as businesses is a significant number.
According to electricitylocal.com, Montrose commercial electricity rates average is 11.4 cents kWh. That is 21.41% higher than the average rate in Colorado. Grand Junction’s kWh rate is 9.39 cents. That’s 28% less than Montrose. That’s significant.
KCEC signed a 10-year contract with Guzman Energy and according to the IEEFA report. This has allowed KCEC to home grow renewable energy which allows flexibility and create jobs in the process. Local energy jobs sound appealing.
The energy world has changed significantly in the past 20 years. What will it look like in the next twenty years? Will DMEA be forced to sit on the sidelines and watch as exciting new and more efficient technologies present themselves?
We’ll just have to wait and see.
Dennis Anderson is group publisher for Wick Communications, Alaska and Colorado. He can be reached via email at firstname.lastname@example.org.