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La Plata Electric Association to consider waiver Wednesday

Approval would extend negotiating authority to main power supplier

On Wednesday, the La Plata Electric Association will consider a waiver that would allow the cooperative’s main supplier, Tri-State Generation and Transmission Association, to take the lead on negotiating with outside energy developers.

LPEA staff support the proposed waiver, saying it will streamline the process with developers because Tri-State has negotiating expertise, without precluding LPEA from investing in local, renewable-energy projects.

“Without the waiver, it will take longer to get through the negotiation process,” said Ron Meier, LPEA manager of engineering and member relations. “This doesn’t change the economics of a qualified facility.”

To others, the proposal is a red flag whose origins trace to a situation in Montrose.

With the emergence of renewable power sources in the midst of an energy crisis, Congress passed the Public Utility Regulatory Policies Act in 1978. The law said that a qualifying facility – often a local, small, renewable-energy source – could offer power at special rates to spur competition in the industry.

Last year, a local entity asked the Delta-Montrose Electric Association to purchase hydropower from an irrigation canal – a project that meets the definition of a qualifying facility.

Like LPEA, the Delta-Montrose association is contractually bound to purchase 95 percent of its power and transmission services from Tri-State, and the other 5 percent can come from projects owned or controlled by DMEA. The cooperative argued that investing in an outside source, in this case the hydroelectric project, did not violate or count toward its 5 percent allowance.

The Federal Energy Regulatory Commission ruled that under PURPA, the association was obligated to purchase power from the qualifying facility, and could do so at its so-called avoided cost of power (the cost a utility avoids as a result of the qualified facility). DMEA’s rate is higher than Tri-State’s, which can make a deal with the association more appealing to a qualifying facility.

Tri-State subsequently appealed to its distribution cooperatives to sign a waiver giving it authority to deal directly with qualifying facilities, which is the vote LPEA will consider Wednesday.

Delta-Montrose Electric Association voted unanimously against it.

“Quite simply, we have significant local generation possibilities,” DMEA Board President Bill Patterson said. “If we sign the waiver, we’re basically giving up any chance of developing those. Then Tri-State dictates the terms, and of course they dictate terms that make it impossible to generate power locally without going through them.”

Lacking information on the matter, the LPEA board of directors postponed a vote in May. Board President Davin Montoya could not be reached for comment.

Speaking for himself and not the board, District 3 representative Britt Bassett said he didn’t see how the waiver would advance LPEA, referencing a biomass project proposal in Pagosa Springs. For that project, Tri-State offered the developer less than the amount LPEA would have paid.

“Tri-State’s avoided cost is lower than LPEA’s,” Bassett said. “If a project comes to us, we might pay a little more than the avoided cost that Tri-State would. This is not a complicated issue.”

Others in La Plata County are concerned about the reach of the waiver and transparency of its presentation, and made wary references to Tri-State’s heavy investment in coal plants.

“Why would we give away any negotiating power?” said Phillip Supino, chairman of the Sustainability Alliance of Southwest Colorado. “Whether it takes our negotiating rights or not, what role should Tri-State play in negotiating with other power providers? It doesn’t check out.”

Bruce Baizel, an LPEA member and energy program director for the Oil and Gas Accountability Project, opposed the waiver in a letter to the board. He wrote that energy development should be in the hands of members, not outside entities that do not “have our interests at heart.”

But LPEA CEO Mike Dreyspring said that these are misconceptions. Tri-State is involved in the negotiating process whether the waiver passes or not. Moreover, the waiver is reversible, does not apply to LPEA’s net metered accounts and will not limit LPEA’s freedom with its 5 percent allowance.

“Three parties would be working together,” said Lee Boughey, senior manager for corporate communications at Tri-State. “This is not designed to preclude or dissuade qualifying facilities from working with cooperatives. The purpose is to support our members and be responsive to them.” He added that cooperatives, qualifying facilities and Tri-State can establish a three-way partnership in which it and the member cooperative can pay a qualified facility for its power. DMEA has opposed this proposal in the past because it would still pay a premium to Tri-State.

The LPEA board will meet at 9 a.m. Wednesday at its offices at 45 Stewart St. in Durango. Time will be allotted for public comments.

jpace@durangoherald.com

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