Message From United Power's President & CEO
There has been much written in recent months about the dynamics between United Power and Tri-State Generation & Transmission. This has resulted in a significant amount of unneeded expense and tension between the two organizations as well as among at least seven other Tri-State members.
It is important to understand United Power’s position in this conversation:
- We need a strong Tri-State G&T, and we need a Tri-State that recognizes the issues faced across our industry and communities.
- We need a powerful transmission organization like Tri-State to assure our place as a Regional Transmission Organization (RTO) comes to the West, and as additional resources are added to our fuel mix and the grid becomes more critical and complex.
- We need our G&T to be responsive in driving down costs to help our rural economies and to support the growing membership demand for a cleaner, carbon-reduced future. And we need to make sure the exit from coal is rapidly executed while supporting the communities that will suffer in the short term from job and revenue loss.
- We need Tri-State to realize the dynamics of a changing industry mean more of our members want to generate electricity locally, to be untethered from fossil-based resources and released from the paradigm of centralized generation that is decades old. This will require a dramatic new business model, deep cost cutting and jettisoning of inefficient generation even in the face of financial hurdles.
To achieve this goal means a radical re-envisioning of the G&T model, one in which utility members can purchase as much – or as little – power as they need to support their communities; one in which Tri-State operates its grid on the basis of formalized tariffs, such as an Open Access Transmission Tariff (OATT), rather than “Hotel California” rules, where you can get in but never leave; one in which the G&T is the hub for renewable aggregation while not crippling the spokes; and one that is focused on the lowest possible costs and the needs of all its members, big and small.
It is important to be clear that the drive to remove coal from the fuel mix is only tangentially connected to regulation and political whim. It is tied 100% to the low cost of natural gas, coupled with the decreasing costs of renewable energy. This is economics, not politics. This disagreement has resulted in significant legal expenditures, tensions and burdens on staff and has not helped move the needle toward a low-cost, flexible, carbon-reduced environment.
United Power does not necessarily want to terminate its contract with Tri-State, although obtaining a reasonable price for termination would be a starting point for any analysis.
- United Power wants to continue to buy a defined amount of generation (capacity and energy) from Tri-State and has offered to do so.
- United Power wants to be an OATT customer and has offered to make this transition.
- United Power wants to buy additional energy from Tri-State at competitive prices when markets come to the West in the next 24 months.
- United Power wants to be able to buy as much energy generated in its service territory as its members want to provide. Our current Tri-State contract limits us to purchasing no more than 5% of our total power from local renewable resources.
It is illogical in a world that is moving to carbon-free resources that our members are not permitted to build and offer such resources. United Power intends to continue to be a leader in storage technology, which helps Tri-State avoid peaks and high demand, allows Tri-State to reduce its carbon footprint and smooths our transmission congestion.
In sum, United Power wants a strong, responsive and low-cost partner in Tri-State and the freedom to support our members with low-cost, clean and reliable power. Tri-State should be leading the change to a new G&T structure to address the energy needs of the future and help its member cooperatives better serve the individuals and families on their lines.
Please feel free to reach out to me if you have any questions or comments.