HESPERUS – When Davin Montoya focuses on something, it’s for the long haul – something driven by his passions.
Since the late 1970s, he’s led the family ranching operation, which began in Southwest Colorado with his grandfather, Belarmino Montoya, in the 1920s.
The passion for ranching continues with the operation based on 1,000 acres in Colorado, the main ranch located west of Hesperus Ski Area, with a similar amount of ranchland just across the state line in New Mexico.
His 30 years on the La Plata Electric Association board of directors recently came to an end when he declined to seek another term in the May board of directors election.
Montoya’s focus on providing efficient, economical and affordable electricity to rural areas of La Plata and Archuleta counties has ended less than happily. A battle between the longtime board member and the cooperative – largely focused on the cost to LPEA’s study of leaving Tri-State Generation & Transmission Association – led Montoya, in frustration, to end his tenure on the board.
The separation from Tri-State comes as LPEA pursues obtaining more electricity from renewable sources, now capped at a little over 5.4% of LPEA’s power generation. LPEA also wants Tri-State to lower its reliance on coal-powered plants. LPEA also says Tri-State’s electricity costs are 20% higher than the Colorado average, which harms Tri-State’s credit rating. S&P Global Ratings lowered Tri-State’s bond rating from an A to an A- in November 2019 because some of Tri-State’s larger customers, including LPEA, are threatening to leave.
“I feel (LPEA) was so darn busy looking at getting out of Tri-State, they’re not watching the business at hand. They were glad to see me leave,” he said of his recent departure.
Most of Montoya’s life has been spent on the land upon which his current ranch house sits. A spread west of Hesperus, where U.S. Highway 160 descends into a series of S-curves called Montoya Hill.
As an 8-year-old, he began working summers with sheepherders on the property, helping his grandfather. When school started, he moved back to his father’s house in La Plata, New Mexico, to help with the ranch there and go to school in Farmington.
Montoya’s father, Chano Montoya, (“everyone knew him as ‘Chano’ but his real first name was Fernando Flexino”) told his children that Belarmino’s father, Davin’s great-grandfather, was bedridden and Belarmino had to provide for the family from an early age.
Despite the odds, the Montoyas made sheep ranching work through the 1970s.
It was Davin’s idea to shift the focus from sheep to cattle in the late 1970s.
“It’s just too difficult to raise sheep in this country. There’s so much brush for predators, and they like the taste of lamb. We had a bumper sticker: ‘Eat lamb, 10,000 coyotes can’t be wrong,’” he said.
When Chano Montoya died, the Montoya properties in Colorado and New Mexico were split among Davin, his four brothers and a sister. Davin ended up with the property where he originally worked with sheepherders.
From the late 1970s to about 2010, Davin operated Montoya Trucking Co., which eventually expanded into excavation work. Eventually, with more money in excavation work, it became the focus of the small business. All the while during the Montoya Trucking years, he took profits from excavation work to purchase more land, equipment and cattle for his true “love,” ranching.
Now, the operation is largely run by two people – Davin’s wife, Theresa, whom he married in 1975, and himself. Theresa traces her family lineage back to the Sponsell family, which homesteaded in Cherry Creek in the 1880s.
“We never met until after high school,” Davin said. “She went to school in Mancos, and I went to school in Farmington. I met her brothers first. I didn’t know many people here because I went to school in Farmington, but as you get older you start wandering.”
Occasionally, margins are good enough to hire a part-time ranch hand, but most of the time the work falls to Davin and Theresa.
The Montoyas have four adult sons, Jesse, their second oldest son, remains in ranching in Hay Gulch, west of the Old Fort Lewis campus.
Whether ranching continues to be viable in Southwest Colorado is largely a political question and will largely depend on access to public land, necessary for even ranchers with swaths of property like the Montoyas.
“We lucked out. There was a terrible depression (in the ranching industry) in the late 1970s and early ’80s, and a lot of ranchers went broke. We are able to buy land that the federal land bank had taken over for reasonable prices,” Davin said.
Without historic ownership of land, ranching in Southwest Colorado is impossible with the increased land costs, he said.
“You aren’t going to pay for land now raising cattle,” he said.
Economic battles and political battles are not confined to ranching.
The past three years, as LPEA examines the possibility of separation from Tri-State, which provides the electricity to LPEA and 43 other rural electric cooperatives, red flags continue to go up for the tight-fisted ranch accountant within Davin.
“I won’t say they are lying, Most of it is manipulation of numbers, but they’re not being honest about the situation, and I don’t like it,” he said.
All the costs related to the study of separation from Tri-State are not being accounted for, Davin said. While he was still on the board, Davin said LPEA had reported $675,000 had been spent on attorneys and consultants to examine separating from Tri-State. Since he left, he said the number is up to almost $900,000. But Davin maintains the number is higher.
The costs don’t include employees’ time and travel, including the director’s time and travel studying Tri-State separation, he said.
Ultimately, Davin said Tri-State will be able to buy renewable power at about half the price available to LPEA because it has an economy of scale that a single local cooperative can’t match.
“I get blamed for being against renewable energy, but I’m not against renewable energy. I’m against throwing money around, throwing members’ money around,” he said. “You tell me how LPEA is going to lower rates when they’re buying power for double the price of Tri-State after paying for a buyout. The math just doesn’t work.”
Supporters of a separation from Tri-State often point to Kit Carson Electric Cooperative’s, $37 million agreement to depart from Tri-State as proof separation can be done. But Davin added, “No one tells you Kit Carson has the highest cooperative electric rates in New Mexico and among the highest in the country.”
Tri-State recently distributed to LPEA its share of Tri-State profits for the most recent fiscal year, called patronage capital, that amounted to almost $2.9 million. Davin said this money has historically been given back to LPEA’s members as credits, but this year LPEA is not going to distribute Tri-State’s patronage capital.
The board of directors’ budget has gone up 20% in the past five years, he said.
“I raised so much hell about this they said it wouldn’t go up this year, and I think it won’t only because with COVID-19, there aren’t any conferences to go to,” he said.
“Where LPEA is concerned, they are going in the wrong direction. They don’t follow a budget. They just spend down. Eventually, they are going to get in trouble, and I didn’t want to be a part of that,” he said.
“They’re betting on the come, that one day we’ll see lower rates, but like I said before, the math just doesn’t add up.”
parmijo@durangoherald.com
LPEA full response to Montoya (PDF)
LPEA responds to Montoya’s concerns about co-op’s study of Tri-State separation
Here is an abbreviated response from La Plata Electric Association, provided by LPEA Vice President of Communications Hillary Knox, to claims by former cooperative board member Davin Montoya that a study of separation from Tri-State Generation & Transmission is more expensive than reported and ultimately financially unfeasible. LPEA’s full response is available online at www.durangoherald.com:
“As there are many assertions here about LPEA’s contract with Tri-State, we want to clarify up front that LPEA has not yet decided to exit our contract with Tri-State.
“In August of 2019, the LPEA board passed
Resolution 2019-10
, requesting LPEA employees to pursue multiple options with Tri-State – including a full exit, a partial exit, or amendments to our current contract to allow more flexibility – to better meet the needs of our membership.
“The full exit option has received the most attention however, because Tri-State has yet to supply us with an exit charge – even after a year of trying. Until we have that, we cannot decide what is the best option of LPEA’s membership.”
Here are LPEA’s responses to a several of Montoya’s concerns with the study of a separation from Tri-State:
1. The accounting for costs to investigate the Tri-State buyout are underestimated:
Employees’ time is not an additional expense – the employees involved are salaried and do not get paid overtime. Researching alternative and cheaper power supply options is part of their job and responsibility to LPEA members. Our legal costs to pursue a potential exit from Tri-State are as follows:
2018: $18,327
2019: $378,141
2020 (as of May 26): $892,942
2. Tri-State can buy cheaper renewable electricity because of its economy of scale compared with LPEA:
While this is undoubtedly true, Tri-State would not sell that energy to its members at cost. If LPEA could buy renewable energy directly, it would be for much less than LPEA has to pay Tri-State for energy.
3. Backers of a Tri-State buyout cite Kit Carson Electric Cooperative in Taos, New Mexico, as an example of the ability of an electric cooperative to buyout its contract from Tri-State, but its rates are high:
There are numerous factors that apply to Kit Carson’s exit from Tri-State that do not apply to LPEA’s. First, at roughly the same time they exited Tri-State, they lost their largest customer representing 20% of their load. This alone required them to raise rates 14% – a move that had nothing to do with their exit from Tri-State. Second, Kit Carson decided to pay off its exit fee to Tri-State quickly (over a six-year period) to maximize long-term savings.
4. Tri-State has essentially met LPEA’s demands:
Two of the board’s initial concerns with Tri-State, which led them to want to explore other options, were their coal-heavy energy portfolio and the limitation that only allowed LPEA to generate 5% of our power from local renewable sources. To their credit, they are working to fix these issues, but their solutions are still not ideal.
LPEA can achieve our emission reduction goal an estimated 10 times faster than Tri-State if we pursue a partial or full exit from our contract.
5. LPEA has $75 million invested in Tri-State:
LPEA may receive these capital credits over the next 30 years, if Tri-State does not require cooperative contracts to be extended past 2050. If LPEA were to leave Tri-State, this $75 million would be applied to the exit charge that would be paid to Tri-State, so it would not be stranded. In both the recent exits by Delta-Montrose Electric Association and Kit Carson Electric Cooperative, the full amount of patronage capital owed to these cooperatives was used to offset the exit payment.
6. Tri-State recently refunded almost $2.9 million in patronage capital to LPEA. That money has historically been given back to members as rebates. This year, LPEA has decided to keep it:
Each year, the board decides whether to retire capital credits and put the money in the hands of members and ex-members. There are two “buckets” of funding for capital credits – the first is “Coop” capital and the second is “Generation and Transmission” capital. The G&T capital is the amount allocated to LPEA as a member of Tri-State. The Coop capital is everything else.
In 2019, LPEA retired $3 million in capital credits, all from the Coop bucket. LPEA also had $2.9 million in capital credits from the G&T bucket, but the board opted not to retire those funds. The funds would have principally benefited those who were members in 1998, of which 70% were not current members.
The board voted in October 2019 to use those funds to establish a Rate Stabilization Fund (i.e. savings account) that would benefit all active members in case of an emergency. Little did board members know that COVID-19 would hit so soon after that decision. This fund is what allowed LPEA to defer the scheduled 2020 rate increase from April 1 to July 1 during the COVID-19 pandemic.
7. The board budget has gone up 20% in the past five years:
Montoya may have “loudly objected to this,” but he didn’t do anything about it when he was board president in 2016, when board expenses rose by 21% compared with 2015. The board and new CEO sought to address this by cutting the directors’ budgeted expenses in the 2020 budget. Each director was allocated a specific amount of funds for conferences, training and travel. The total budget represented a 14% decrease from 2019 expenditures. As a result of the COVID-19 pandemic, there has been very little travel and training, so this budget, which was already a significant reduction, will not be fully utilized.
