BACKGROUND
In August of 2019, the LPEA board passed Resolution 2019-10, requesting that LPEA pursue multiple contract options with Tri-State, which currently supplies LPEA with 95% of the electricity we deliver to our members, under a contract that runs through 2050. These options included:
Amendments to our current contract to allow more flexibility.
A partial exit from the contract.
A full exit from the contract.
There are two main reasons the board elected to explore an exit from Tri-State: high rates and lack of local control. According to Standard and Poor’s, Tri-State’s rates are 20% higher than average. LPEA’s initial conservative calculations for pursuing other energy options estimate hundreds of millions of dollars in cost savings over the life of the existing contract. Pursuing more local control of our energy portfolio would also bring LPEA closer to the cooperative principles on which we were founded, including autonomy and independence, and concern for our local community.
Since then, LPEA has been actively exploring these options. I want to stress that no decisions have been made and no option will be chosen that will increase rates or decrease reliability.
CURRENT STATUS
Option #1 – Amendments to our current contract:
This option was a big focus in 2019 and 2020 when LPEA participated in regular contract and rate committee meetings and unilateral negotiations with Tri-State. Out of these discussions with Tri-State and other co-ops, Tri-State developed the partial contract option which LPEA is now pursuing.
Option #2 – Partial contract:
There has been some recent momentum with this option, which would enable LPEA to buy a portion of our power from Tri-State and self-supply the rest. Though that self-supply could take the form of building and owning our own generation facilities, it would most likely involve third-party developers or aggregators who would build a diversified generation portfolio for us.
With this option, we would still be buying power from the Western Interconnection grid, the largest and most dependable electric grid in the United States; the same grid Tri-State pulls its power from. This means that the reliability of LPEA’s power supply would stay the same. The benefit is that our new power supply contracts would guarantee a fixed price for the power we purchase that would not be impacted by market fluctuations. We don’t have any such price guarantees within our Tri-State contract.
In May, Tri-State offered 300 MW of capacity to their members interested in pursuing partial contracts. LPEA applied for, and was eventually allocated, the full 71 MW requested, which is roughly half of what we need to power our members. Following that allocation, we released a Request for Proposal in June to 50 different power supply developers and aggregators. Their proposals were due to LPEA on June 25th.
These proposals will be evaluated and analyzed to determine if they make financial sense to LPEA and our members. There are numerous financial elements that must be included in this analysis, including the cost of securing transmission capacity from Tri-State, and the final buy-down payment to Tri-State. The buy-down payment (which is the amount Tri-State will charge us for partially exiting our contract) is not yet final. Once we have all the figures, it will take several months to complete the analysis.
Option #3 – Full exit:
LPEA and at least six other Tri-State member co-ops are meeting frequently with Tri-State, during Federal Energy Regulatory Commission (FERC) proceedings, to negotiate the terms of a fair and equitable exit charge (also called the Contract Termination Payment). If we cannot reach a settlement with Tri-State, the case will go to trial at FERC, which could be a long process. In May, FERC rejected Tri-State’s initial buyout process finding that it “imposes excessive and unjustified barriers to utility members seeking information to assess whether to terminate their wholesale electric service contracts with Tri-State.”
LPEA continues to pursue this option because if we can get a fair and equitable exit charge, there could be significant savings for our members. We are pursuing cost savings for our business just like you would for your home or business. If LPEA opts for a partial contract now, that does not prevent us from fully exiting in the future. But again, we cannot know if this is a financially viable option until we secure the final buyout figure.
IT should also be noted that, thanks to our continuous engagement with Tri-State, they have committed to decreasing their wholesale power rates by 2% in 2021 and a further 2% in 2021. This would not have occurred without intervention and pressure from LPEA and other Tri-State member co-ops. Good things are coming out of this focus.
NEXT STEPS
Once LPEA has all the figures related to a partial contract, this option will be put to the board for a vote. The same will happen when we have all the figures related to a full contract exit.
Before either of these decisions is made by the board, LPEA will host a series of town hall meetings to present the findings directly to our membership and answer any questions or concerns. The board will not pursue any option that raises rates, or that jeopardizes the reliability of the electric service on which you rely.
– Jessica Matlock, CEO
For more information, visit our power supply page.
2021 director election & bylaw amendment results announced
Results of the 2021 La Plata Electric Association (LPEA) director election were announced today at the cooperative’s partial virtual annual meeting. This meeting was held solely for the purpose of electing and seating new directors. The remainder of the meeting is postponed until later this year.
In accordance with LPEA Bylaws, one seat in each of LPEA’s four districts comes up for election annually. This year, members also voted on two bylaw amendments which aim to modernize LPEA Bylaws to conform with Colorado law on virtual meetings.
Detailed election results are as follows:
District 1 (Archuleta County): Incumbent candidate Kirsten Skeehan won the race with 1,281 votes. Challenger Veronica Medina received 434 votes.
District 2 (South & West La Plata County): Incumbent candidate Kohler McInnis won the race with 1,333 votes. Challenger Mark Walser received 792 votes.
District 3 (City of Durango): Two new candidates vied to fill the seat of retiring Director Britt Bassett. Ted Compton emerged as the winner with 1,646 votes. Bill Waters received 722 votes.
District 4 (North & East La Plata County): Incumbent candidate Tim Wheeler won the race with 1,282 votes. Challenger John Purser received 799 votes.
As for the proposed bylaw amendments, the Article II Section 1 amendment allowing LPEA’s annual meeting to be held virtually passed with 6,546 in favor and 1,403 opposed. The Article IV Section 6 amendment allowing LPEA directors to participate virtually in regular or special meetings also passed with 6,496 in favor and 1,575 opposed.
Out of 35,089 ballots mailed in all districts, a total of 8,473 LPEA members cast votes for an approximate 24% return rate. This is a decrease from the 29.7% return rate in the 2020 election. Return rates in 2019, 2018, 2017, and 2016 were 26%, 26%, 28%, and 22% respectively.
“We want to thank our members for taking the time and energy to vote for their LPEA director,” said LPEA CEO Jessica Matlock. “As a cooperative, we are owned by our members and depend on their involvement to ensure we serve our community effectively. I hope in future years we can convince more of our membership to vote as Board of Director decisions impact everyone in our community.”
The next meeting of the LPEA Board of Directors is scheduled for Wednesday, July 21st, beginning at 9 a.m. at the LPEA office in Bodo Park. Access details HERE.
Special Capital Credit retirement heading to members in July
*June Update: Capital Credit checks and bill credits will be disbursed to LPEA members during the month of July 2021.
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The La Plata Electric Association (LPEA) Board of Directors today approved the special retirement of $1.5 million in capital credits to LPEA members. This retirement passes the benefit of Tri-State’s proposed 2% rate reduction directly to LPEA members as quickly as possible. LPEA’s power costs are budgeted at roughly $70 million annually, so the $1.5 million represents more than 2% of that total.
Thanks to legal efforts led by LPEA, the Tri-State Board of Directors approved a rate settlement to reduce wholesale power rates to its members by 2% immediately with an additional 2% reduction in March of 2022. The decision is now with the Federal Energy Regulatory Commission for final approval. Pending this approval, LPEA members should expect to see a credit on their bill in June or July. This special retirement will be in addition to LPEA’s standard annual capital credit retirement which will take place this November.
“In evaluating options to pass on the potential Tri-State rate decrease, our first priority was to find the quickest and most effective way to get this money into our members pockets now,” said LPEA CEO Jessica Matlock. “It’s been a difficult year plus for our community, and we want to continue to do what we can to ease that strain.”
“Working with Tri-State to achieve the rate decreases they promised has been a long and involved process,” added LPEA Board President Britt Bassett. “In the end, we won on this front, and we want to pass the fruits of that labor directly back to our membership. This $1.5 million refund is just the first example of that. Looking at Tri-State’s additional 2% decrease next year, we are evaluating more options to pass this through to our members in the future.”
LPEA will analyze the combined benefits of lower power supply expenses with a third-party consultant who will conduct a Cost of Service study this summer. This will ensure that LPEA’s rates are tied accurately to the cost of providing power. Based on the results of that study, the LPEA board will consider how best to continue passing on the benefits of Tri-State’s rate reductions to LPEA members into the future.
LPEA also continues to explore the feasibility of securing at least part of its power supply from vendors other than Tri-State, which has the potential to decrease power costs even more. LPEA has released a request for proposals and will evaluate proposals received in late June.
For more details on LPEA’s future power supply, visit lpea.coop/powersupply.
Save money with LPEA’s Time-of-Use rates
Electricity is like a freeway. The more people use it, the bigger the infrastructure needs to be to support it. And a bigger infrastructure means bigger costs.
LPEA members can save money by spreading out our collective power use and decreasing periods of peak demand. To decrease this peak demand, LPEA’s optional Time-of-Use rate charges members different rates for their power based on the time of use. Higher rates are charged during the “on-peak” hours and lower rates are charged at all other times.
More than 4,000 LPEA members are saving big with Time-of-Use rates. Call us to get a personalized rate analysis and switch to the rate that is best for you (970) 247-5786.
Residential Time-of-Use Program Off-Peak Periods ($0.062 per kilowatt hour)
9 AM ─ 5 PM
10 PM ─ 6 AM
Monday ─ Saturday
All Day Sunday
Thanksgiving and Christmas
Residential Time-of-Use Program On-Peak Periods ($0.2561 per kilowatt hour)
6 AM ─ 9 AM
5 PM ─ 10 PM
Monday ─ Saturday
The Residential Time-of-Use base charge is $20.00 per month.
The LPEA General Service Residential Rate is $0.1256 per kilowatt-hour (kWh), Peak-Power charge $1.50 for the highest kW between 4 PM ─ 9 PM per month, and a base charge of $21.50 per month.
Keys to saving with the Residential Time-of-Use program:
1. Installing timers on your big power users (electric water heaters, electric thermal storage units, etc.) so they run during Off-Peak Periods.
2. Do the following during Off-Peak Periods:
Run your dishwasher.
Wash and dry clothes.
Run self-cleaning oven cycle.
3. Additional steps you can take are:
Install programmable thermostats to automatically control your heat.
Install load control equipment.
Install timers on stock tank heaters and/or engine block heaters.
Install timers on heat tape.
Time Clock Programming Instructions:
Small Commercial (Single Phase) Time-of-Use Program
For commercial and industrial customers, public buildings and authorities whose load requirements are less than 50 kVa of transformer capacity of all uses, subject to the established rules and regulations. LPEA offers an optional tariff applicable to small commercial customers who would otherwise receive service under the General Service Single Phase (Schedule A, Rate 10) or General Service Demand Single Phase (Schedule GSD, Rate 10) tariff of $0.062 per kilowatt-hour used during the hours of 8 PM ─ 2 PM, Monday through Saturday, all kWh used on Sundays and the holidays of Thanksgiving and Christmas (Off-Peak Period) and $0.2561 per kilowatt-hour used during the hours of 2 PM ─ 8 PM, Monday through Saturday (On-Peak Period).
Small Commercial (Single Phase) Time-of-Use Program Off-Peak Period ($0.062 per kilowatt-hour)
8 PM ─ 2 PM
Monday ─ Saturday
All Day Sunday
Thanksgiving and Christmas
Small Commercial (Single Phase) Time-of-Use Program On-Peak Period ($0.2561 per Small Commercial (Single Phase) Time-of-Use Program On-Peak Period ($0.2561 per kilowatt-hour)
2 PM ─ 8 PM
Monday ─ Saturday
Small Commercial (Single Phase) Time-of-Use Program On-Peak Period ($0.2561 per The Commercial Time-of-Use base charge is $20.00 per month.
Contact LPEA at (970) 247-5786 for information on the Large Commercial (Three Phase) Time-of-Use Program.
Post courtesy of LPEA
