Soap Box

To the editor,

On Dec. 10, 2018, La Plata Electric Association’s electricity provider Tri-State Generation & Transmission (TSG&T) sent well-groomed executives to Durango to reassure us rural folk about TSG&T’s massive $3.3B debt-load.

Repeatedly questioned for hours by LPEA’s CEO, Board Directors and members about their financial strategy, TSG&T’s four managers (with combined salaries around $2.5M) offered wit, eloquence and confidence. But they carefully skirted the details that we and the LPEA Board wanted. Painfully aware of our contractual bondage to TSG&T’s debt-load, we came away frustrated, with unanswered questions such as “What protects LPEA customers from the towering financial liability of TSG&T? From eventual rising rates needed to satisfy TSG&T’s massive debt? Or from outright financial failure?”

TSG&T’s business model apparently depends on about 20 megamillion-dollar debts totaling $3.3B. On most of these debts, TSG&T pays only the interest, deferring principal payments.

Let’s look closely at this. Imagine that you bought a $250M house for your family. You decide to pay interest only (at 5 percent, that would be $12.5M/year) for the term of 10 years, then you owe the full $250M on the 10th year. Good choice? Well, maybe, but if you want security for your family, save 1/10th of the principal ($25M) per year, then PAY OFF the debt. Make sense?

At the meeting, TSG&T did provide one specific example of its current debt handling: a $250M, 10-year debt that actually comes due in 2024. TSG&T pays only interest, and will therefore owe the full $250M in 2024. We LPEA members breathed a sigh of relief when TSG&T’s CFO reported saving $25M/year toward the debt. But on closer questioning, he admitted that those “savings” are then spent each year, “to avoid having to borrow another $25M.” Wait, what? Say that again?

Why would TSG&T suggest that they are saving $25M/year toward a $250M balloon payment, when in fact they spend all those “savings?” It turns out that for the majority of their loans, TSG&T has no apparent plans to EVER pay them off.

That means LPEA and other cooperatives’ members must pay debt interest amounting to about $150M/year, every year, indefinitely. So that’s one part of why our wholesale rates are higher than other regional utilities. Another is the high cost of coal-fired electricity itself, considerably higher than gas or renewable energy.

TSG&T sells electricity to 43 member cooperatives (including ours). What we cooperatives don’t purchase, TSG&T sells wholesale on the open market AT A CHEAPER PRICE than we member cooperatives pay. Why cheaper? Because since around 2010, open market prices (driven by renewables and gas prices) have been cheaper than our cooperative member price. TSG&T relies for survival on long-term contracts like ours – contracts that lock us in to pay whatever price TSG&T sets, until the year 2050. On the open market alone, TSG&T could not survive.

TSG&T blended wholesale rates to LPEA increased over 85 percent from 2002 ($39.14) to 2017 ($73.58) while other electricity source prices fell dramatically. By 2010, all market projections showed coal’s demise. Nonetheless, that year our LPEA Board made the tragic mistake of extending our costly contract with TSG&T until 2050. Capitalizing on our blind willingness to legally guarantee their debts, TSG&T was then able to convince bankers to refinance their debts well into the 2040’s.

In addition to blind-faith cooperative contracts like ours, TSG&T’s primary collateral when refinancing their staggering debt-load indefinitely is coal plants.

That brings up another glaringly obvious problem: coal’s plummeting asset value. Coal is the horse-and-buggy of today’s cheapening energy market. It turns out that digging, shipping and burning millions of tons of flammable rock is more expensive than plugging in panels, catching the wind, even fracking and piping gas. Who knew, huh?

Of 600 North American utility executives surveyed in 2017, (https://s3.amazonaws.com/dive_assets/rlpsys/ SEU_2017.pdf), 52 percent expect coal generation to decrease significantly. and another 27 percent expected it to decrease moderately, replaced largely with solar and wind resources.

It’s already happening. Over 200 coal plants have been shuttered since 2010, many fully functional, and coal con-

sumed for electricity nationwide fell over 32 percent since 2010 https://www.eia.gov/coal/annual/. That’s good news for America’s skies, climate and lungs.

But not for LPEA. TSG&T (the worst emitter of CO2/ MWh of the 100 top domestic electricity producers https://mjbradley.com/sites/default/files/Presentation_of_Re sults_2018.pdf) plans only cosmetic changes to its coal-heavy generation portfolio. Remember, we LPEA members are bound by contract to pay whatever rate hikes TSG&T demands.

And TSG&T has no Plan B for its eternal loans. Come 2024, what happens if no one refinances TSG&T’s first quarter-billion loan? Or the following one?

– Kirby MacLaurin, Durango

To the editor,

I just wanted to thank Sarah Rankin for her lovely piece on the homeless (“La Vida Local,” Jan. 3). It was a beautifully written and thoughtful commentary, and should be required reading for every citizen of Durango. Her son sounds like a great little guy, too.

– Jane Dunn, Durango

To the editor,

We are now in a government shutdown, and Trump said, “Good, I’m having my New Year’s party in Florida, and you taxpayers are paying for my tents at a cost of $54,000. Thanks so much. But what a party it will be.”

I would like to mention that the POTUS has stated he is proud to be American and wants to make America great again ... whatever that means. America has always been great. Just ask our migrants who have come to our shores.

Trump in his mind has made America great again by doing the following:

• Hanging around criminals starting with his lawyer, Cohen; Flynn; Manafort and others. Chumming up to dictators and leaders from Russia, Turkey, Syria, China, North Korea, Phillipines while insulting NATO and putting strains on Canada, Great Britain, Germany, Italy, France and all in NATO;

• Using his foundation to pay for his own oil painting to hang in his own property from moneys given to him by GOP supporters. Are you one? The state of New York is checking on this as a crime run by his daughter and family with no board meetings for 19 years.

• Trump has lied to the American people over 5,000 times and just lately to the military on their pay raise stating they received only one in the last 10 years. A big, big lie. He has proven he knows more than the generals – five have left in two years.

• The emolument clause means nothing to him. All staff stay at Mar-a-Lago. You pay for their rooms, the money goes in his pocket.

• Trump said Mexcio is going to pay for the wall.

America is great, that’s why you don’t leave. I hope you have a great 2019, but read the paper and not fake news.

– Bob Battani, Durango