Lighting a path forward for LPEA
To the editor,
LPEA Board candidates Bassett, Wheeler, Skeehan and Mannix (along with many co-op members) are encouraging discussion about options for how we source electricity, largely because our rates – as our CEO says – are “in the upper range when compared with other electric co-ops.” He is right – most regional municipalities and some non-Tri-State co-ops (like Holy Cross and Moon Lake) offer considerably cheaper rates than Tri-State co-ops can offer.
Xcel’s residential rates are 3¢/kWh cheaper than ours due in part to the geographical density of its customer base and the lower proportion of costly coal in its fuel mix. Xcel is aggressively adding renewable energy to lower costs, recently receiving bids for wind and solar energy (both under 3¢/kWh). Market-watchers are excited to investigate our local options.
Let’s have an conversation that is respectful, inclusive and cooperative. We can let go of insinuations and character attacks seen at LPEA meetings. Our co-op conversation is the necessary route to a future of cheaper, more reliable electricity for all of us. Let’s settle down and do the work.
Behind some attacks I sense fear, which is understandable. No one wants our rates to climb, nor service to be interrupted. Plus, there are jobs at risk. I share the same fears! To protect ourselves, we need to fully examine not only the dangers and benefits of the long, gradual process of shifting our sources but also the dangers and benefits of sticking with a coal-based contract until 2050.
Here’s one danger: under our current Tri-State contract, LPEA’s wholesale rate has no contractual ceiling. Personally, I would never sign an adjustable-rate mortgage for my home – I’ve seen too many bankruptcies, including in my family. Tri-State’s average wholesale rate to member coops rose 87 percent from 4.19¢/kWh (2002) to 7.54¢/kWh (2017), largely without the current heavy competition from ultra-cheap renewable energy. LPEA’s wholesale rate is especially prone to further increases, as Tri-State’s investments (almost all coal) become less competitive in a market fleeing coal for cheaper gas, wind and solar (see www.utilitydive.com/library/2017-state-of-the-electric-utility-survey-report and www.mjbradley.com/sites/default/files/ Benchmarking-Air-Emissions-201.pdf p.11 and 21 for details.)
I am concerned about financial stability undermining our grid. Even if Tri-State starts flat-lining rates, other energy prices are dropping quickly, presenting very attractive options. What happens if BP, which consumes a quarter of LPEA power, decides to install solar with back-up from natural gas, which they produce? Last year, Aztec Electric contracted with a wholesale supplier for (delivered) solar energy for 4.4¢/kWh. Many homeowners are pursuing options too, with solar PV prices amazingly cheap. Even lithium-ion battery prices dropped 73 percent from 2009-16 and are still dropping dramatically.
I fear more co-op members defecting from our grid, causing remaining members to carry proportionately more fixed costs. More folks leave, LPEA rates climb. See the potential vicious cycle? The same could happen to Tri-State as well – some analysts say it “will happen.” Our old technology paradigm – centralized, expensive coal-burning facilities – is ending. The question is: how are we going to respond?
We need our grid for several reasons. Most importantly, it provides electricity for those who cannot afford off-grid systems. Only by proactively defending our grid can we ensure secure and reliable service, clear of financial instability. We need to successfully compete with members’ energy alternatives.
One option is to install super-cheap utility-scale renewable electricity. This requires up-front costs and minimal maintenance, but fuel is absolutely free. That’s appealing.
Kit Carson Electric (Taos) is installing 35MW of solar, enough to offset summertime loads. This creates local jobs, lower rates and an energy system for succeeding generations. They exited Tri-State for a market-priced, 10-year fixed-rate contract that provides baseload electricity while allowing them to build solar. Their rate is so cheap that after adding their Tri-State exit debt payment, they pay almost exactly what we do. When Kit Carson pays off its debt in six years, co-op members could pay one-third less.
Thanks. Let’s keep talking!
– Kirby MacLaurin, Durango