Tri-State Generation and Transmission Association announced last week a proposal to close two coal-fired power plants earlier than planned, thanks to the rising cost of energy production and shrinking demand.
The co-op also announced it plans to supplant coal power with green alternatives using an unprecedented amount of federal funding through an Inflation Reduction Act program.
In an electric resource plan filed with the state, the wholesale power provider outlined plans to close Unit 3 of a coal-fired facility in Craig by early 2028 – two years earlier than planned.
The utility would also close a coal-powered unit in Springerville, Arizona by 2031 contingent upon an award of federal funding, Tri-State Spokesman Lee Boughey said.
Tri-State serves over 40 electric associations in the West and is the second-largest utility in Colorado. The announcement constitutes a significant step toward meeting Colorado’s climate-driven carbon emissions goals.
“We’re achieving emissions reductions across our system,” Boughey said. “In Colorado, we will hit that 89% (reduction) mark at the end of the decade from the 2005 baseline, which exceeds the current Colorado goals for 80% reduction.”
The ERA, which must be approved by the Colorado Public Utilities Commission, outlines a plan in which Tri-State would build 1,250 megawatts of renewable energy creation and storage across the four-state region, in which the co-op operates. It will also create a dispatchable natural gas plan to patch any holes in an energy grid increasingly reliant on renewable sources.
Sarah Clark, Colorado field manager for the Sierra Club, called the plan “incredibly good news.”
“If Tri-State's proposal is approved, Colorado communities are going to be healthier, the state's air is going to be cleaner and Tri-State's customers are going to save a lot of money,” she said.
Tri-State CEO Duane Highley estimated the plan to transition to 70% renewable energy by 2030 will save customers over $1.8 billion by 2043, equating to roughly 1 million rural homes.
Although the announcement means yet another acceleration of Tri-State’s plans to shutter its remaining coal plants in Colorado, it is still under a contractual obligation to purchase nearly $136 million worth of coal between 2024 and 2041, according to its annual report.
Responding a question regarding what the co-op will do with that coal, Boughey followed up with an email stating, “Many aspects of our operations are dynamic.”
The co-op recognizes that following through with its preferred plan is contingent upon federal grant awards. The Empowering Rural America program, part of the IRA, allocated $9.7 billion to help co-ops reduce greenhouse gas emissions.
Boughey also highlighted that Tri-State intends to take advantage of direct pay tax credits for co-ops investing in renewable energy, which were also created in the IRA. Previously, nonprofit entities without a tax burden could not benefit from green energy tax credits.
The announcement drew a barb or two from La Plata Electric Association, one of Tri-State’s member cooperatives. The two have been locked in a disharmonious contractual marriage, which LPEA has fought to partially escape.
LPEA’s desire to seek electricity elsewhere has been driven by a strong emphasis on retaining local control and an interest in providing more green energy to its members. Ironically, it was the partial defection of LPEA and two other member co-ops that led to reduced demand for power, resulting in the closure of the Craig coal unit.
“LPEA wants its members to decide their own energy futures, not have those futures decided for them on the front range,” the co-op’s CEO, Jessica Matlock, said in an email to The Durango Herald. “And while we welcome efforts to allow for more opportunities in ‘green energy’ in Colorado and hope for success, Tri-State hasn’t shown that it has the financial wherewithal to accomplish any of the plan’s objectives. Their ERP also ignores how local cooperatives can contribute to meeting (Tri-State’s) goals in a more efficient and cooperative manner.”
In response, Boughey said the resource plan was “thoroughly modeled.” The co-op has submitted a letter of interest to the U.S. Department of Agriculture, which is administering the IRA funding. It expects to receive an invitation to apply for funding in the coming months.
“Our plan will optimize any federal funds received, take full advantage of the renewable energy tax benefits that cooperatives can now receive, and leverage our strong financial position to make significant clean energy investments,” he said.
The power supplier would “reoptimize” its approach to best utilize available funding if the USDA does not grant the full amount requested.
Tri-State expects to hear a decision on whether the resource plan is approved by mid-2024. Phase II of the plan will include more specific plans on where the green energy sources will be built. Approval of Phase II would come in mid-2025.
This story has been updated to address a mistake made in editing that led to an incomplete characterization of Tri-State Spokesman Lee Boughey’s response to La Plata Electric Association comments. A statement from Boughey has been added. The story previously misspelled LPEA CEO Jessica Matlock’s last name.