Starting Wednesday, the electric cooperative United Power will officially cut the cord from Tri-State Generation and Transmission, the multi-state utility that has kept the electrons flowing to the Brighton-based company for about 70 years.
The departure follows years of conflicts between the cooperative and Tri-State over the power supplier’s rates, what critics considered an over-reliance on coal and restrictions on how much power members like United Power could generate on their own.
United Power, Tri-State’s largest member, sued Tri-State over the addition of new members it believed were being used to stack the deck for Tri-State leaders. Tri-State sought and won approval to be federally regulated after some of its Colorado members took their disputes to the Colorado Public Utilities Commission.
It was the Federal Energy Regulatory Commission that came up with a formula for calculating the exit fees of Tri-State members who want to break their contracts. United Power must make a net payment of $627 million to end its contract early.
“That’s a far cry from $1.6 billion,” United Power CEO Mark Gabriel said in an interview.
Tri-State said it arrived at the larger figure after looking at what it would take to ensure remaining members weren’t harmed. But a federal judge said Tri-State overestimated the money needed to make the other members whole and federal regulators ordered revision of the formula.
“When I took this job three years ago, I told the board that my goal was to settle this across the table, not across the courtroom,” Gabriel said.
However, Tri-State decided to go a different way, he added. A major sore spot for United Power and the La Plata Electric Association in Durango is a cap of 5% on the amount of energy that cooperatives can generate on their own. Gabriel called the limit “a choke collar” that blocks the flexibility needed as homeowners and businesses want more renewable energy.
The Durango association’s board voted in March to end its contract with Tri-State, saying it wants greater autonomy over its future. The association’s departure date is April 1, 2026.
In 2020, the Delta-Montrose Electric Association agreed to pay $62.5 million to exit early. The contracts with Tri-State run through 2050. A New Mexico member cooperative left in 2016.
Energy analysts have said the disputes between Tri-State and some of its members is a microcosm of changes happening as the transition from mostly fossil fuels to other forms of energy continues.
As a wholesale power supplier, Tri-State, based in Westminster, provides electricity to a total of 41 cooperatives in Colorado, New Mexico, Wyoming and Nebraska. The not-for-profit business was started by rural electric associations, including United Power, in 1952.
Gabriel acknowledged that Tri-State has made such changes as reducing its use of coal to produce power and increasing the amount of electricity generated from renewable energy sources. But he doesn’t think the utility has moved quickly enough.
“We have industrial and commercial members who want a different fuel mix in a quicker time frame,” Gabriel said.
Tri-State has been working with its member cooperatives on a contract change that would allow them to get more of their electricity from other sources, spokesman Lee Boughey said. He said United Power objected to an earlier proposal that would have boosted the 5% provision to 50%.
Tri-State has closed coal plants and moved up the retirement dates for others. Approximately a third of the utility’s power comes from clean energy, Boughey said.
Plans filed with state regulators call for Tri-State to get 50% of its power from clean-energy sources in 2025 and 70% by 2030. In addition, the company expects to cut its greenhouse gas emissions in Colorado by 2030 by 89% from 2005 levels, Boughey said.
At the same time, Tri-State’s rates have been stable or decreased, remaining competitive with other utilities, Boughey added. The two-year waiting period that FERC requires from cooperatives ending their contracts early has given Tri-State time to adjust and make sure remaining members don’t end up paying more as a result, he said.
After all the back and forth and final parting of the ways, United Power will still be paying to use Tri-State transmission lines and will buy roughly 30% of its power from the utility. Gabriel said United Power has signed four contracts with Tri-State, one of which will run for 20 years.
The electric cooperative has also signed a contract with Denver-based Guzman Energy, a wholesale energy provider. United Power is adding solar power and battery storage sites across its territory, which ranges from the foothills along the Front Range, to the Interstate 25 corridor and farmlands around Brighton, Hudson and Keenesburg.
United Power provides electricity to about 300,000 people. Gabriel said the cooperative is growing from 8% to 9% a year. “We’re one of the fastest-growing utilities in America.”
Gabriel said the growth is across all sectors: residential, commercial and industrial. The cooperative’s service area includes several quickly expanding communities, oil and gas sites and renewable energy companies.
Another objection Gabriel had to Tri-State’s business model was that as United Power was growing, it was shouldering about 20% of the utility’s overhead. His goal come Wednesday is “that we will be a free and independent cooperative.”