Growing Away from Big Coal

Rural electric co-ops make a slow push back toward community energy

 

Last month, a new type of farm sprouted in Brighton, Colo. United Power, the rural electric cooperative that serves the town and a large swath of communities and agricultural lands on the state's northern Front Range, unveiled what's been touted as the nation's first cooperative solar farm. Customers can "rent" one or more of the 48 panels in the 10-kilowatt array for $1,050 apiece, for a 25-year period. In return, United Power credits their monthly utility bills for the power their panels generate. Other electric co-ops see this project as a possible prototype: a way to distribute local renewable energy without forcing customers to pay for the equipment or its installation. "People can even come visit their solar panels," says Troy Whitmore, United Power's director of external affairs. "And the sky's the limit as to how many modules we can have, depending on demand."

Until recently, co-ops like United Power were unlikely to dream up projects like this. Co-op culture has a long history of conservatism. And United Power and 43 other co-ops in Colorado, New Mexico, Wyoming and Nebraska are locked into long-term power purchase contracts with the electricity wholesaler Tri-State Generation and Transmission. The utility has a reputation for being pro-coal and dismissive of renewable energy projects, which it has generally considered too costly and unreliable. And Tri-State's purchase contracts limit the amount of electricity member co-ops can own and control to 5 percent of their energy load. In effect, this has prevented co-ops from investing much in local and renewable power on their own.

But over the last couple years, the wholesaler's devotion to coal has started to wane, partly because of management changes and pressure from some member co-ops. Outside political forces are also a major factor: In 2007, Colorado and New Mexico passed renewable power generation requirements for rural co-ops, and national climate legislation looms on the horizon. Tri-State says it has committed to meeting the state requirements on behalf of its members. But a number of its member co-ops have begun to invest in and generate their own local renewable power as well, in part to ensure they can continue to offer cheap electricity in a changing world. And coal-fired power, which accounts for 82 percent of U.S. greenhouse gas emissions from electricity, doesn't look like it will be cheap forever.

The rural electric co-op system was created by President Franklin Delano Roosevelt during the Great Depression to provide power to remote farms and ranches that large urban utilities refused to handle or couldn't afford to reach. There are now 864 rural co-ops in the country, with their electricity supplied by 66 power wholesalers, including Tri-State. Unlike the much larger investor-owned utilities, such as Xcel Energy, utilities like Tri-State are not publicly traded and have remained largely free from government regulation over the decades. Because they've faced little pressure to change, they lacked incentive to help cut greenhouse gas emissions.

Tri-State's members get reliable electricity at the lowest feasible cost in exchange for a commitment to purchase their power from the company. Coal supplies 72 percent of Tri-State's energy mix -- well above the national utility average of about 49 percent. Hydroelectricity accounts for another 13 percent, and only 1 percent comes from non-hydro renewable sources. Historically, coal has been favored as the lowest-possible-cost power source. And Tri-State has another reason to promote it; it has a stake in three Western coal mines that supply its power plants.

But the fossil fuel binge may be finally slowing.

In 2006, two of Tri-State's member co-ops broke ranks from the Tri-State "family." In an unprecedented and financially risky act of defiance, Delta-Montrose Electric Association in western Colorado and Kit Carson Rural Electric Cooperative in Taos, N.M., refused to extend their power contract with Tri-State, slated to expire in 2040, for an additional 10 years. Tri-State wanted the added purchasing guarantee so it could secure financing for two 700-megawatt coal plants planned in Holcomb, Kan. The co-ops' leaders feared that Tri-State's investment in those plants could unduly raise their electricity rates, given federal plans to cap carbon emissions and penalize polluters. They also wanted to generate more local and renewable energy independently.

The two co-ops' rebellion has not gone unnoticed. Although Tri-State initially threatened to increase their rates, according to members of both co-ops' boards, it has not done so. And Tri-State has since decided to allow its co-ops flexibility to produce and control more renewable and distributed local energy, provided they sell any extra back to Tri-State. In turn, Delta-Montrose and Kit Carson have backed off a bit, though they never signed the extension. And they continue to press the wholesaler to be more open about its financial decision-making, and to grant members still more freedom to generate their own power and sell the extra to potentially higher-paying customers than just Tri-State. "It's become a power-struggle issue," says Kit Carson CEO Luis Reyes.

In 2007, both New Mexico and Colorado passed laws requiring rural electric co-operatives to generate 10 percent of their power from renewables by 2020. That's half of what investor-owned utilities in both states must achieve -- which has allowed Tri-State to be less aggressive in investing in renewables, such as wind and solar, on behalf of its members. But local environmentalists and co-op board members say that the utility has begun to embrace renewables and energy efficiency. Indeed, in addition to committing to the state renewable standards, Tri-State now offers its members seed money to help jumpstart local renewable projects.

Many attribute the changes to Ken Anderson, who was appointed last year as Tri-State's executive vice president and general manager. "The recent change in staff has had some effect on direction," says Bill Midcap, director of renewable energy at the Rocky Mountain Farmers Union, a former member of Tri-State's board of directors. "And the board of directors is also made up of rural folks who know their community will benefit from renewable energy projects. To keep opposing them may not be in their best interest."