A new era for Tri-State

Colorado’s second biggest electrical utility will soon identify its path to 80% reduced emissions by 2030. Surely this map will include Arizona and Wyoming.

by Allen Best

Tri-State Generation and Transmission last week promised to deliver what Colorado wants, an 80% reduction in carbon emissions by 2030. As for how it will deliver on that pledge, it remains a bit of a mystery.

Less coal production, obviously. More wind and solar, ditto. And, as has been highlighted in recent filings, more transmission to get electricity from renewable sources to its 16 member co-operatives in Colorado.

But how exactly?

For that, a more definitive answer will likely have to wait until Dec. 1 and perhaps beyond. That’s when Tri-State is scheduled to deliver an electric resource plan to state regulators. This plan is to explain in detail how it intends to procure electricity in coming years for its Colorado cooperatives. Colorado’s co-ops together account for about two-thirds of Tri-State’s demand across a four-state area.

Tri-State is Colorado’s second largest utility based on the amount of electricity it delivers in the state. In 2019 it delivered 38% as much electricity as compared to Xcel.

This electric resource plan will be a first for Tri-State. The utility has never been directly regulated by the Colorado Public Utilities Commission. SB 19-236, one of the many laws passed by Colorado legislators in 2019 to complement new economy wide carbon reduction targets adopted in the same session, makes it clear that the PUC has jurisdiction over Tri-State’s resource planning activities. A September filing by the Colorado PUC staff asserted that the “overriding concern” in evaluating Tri-State’s plan is how the utility “can meet Colorado’s emissions reduction cost effectively.”

Foundational to Colorado’s efforts to decarbonize its economy 50% by 2030, with even deeper cuts by mid-century, is removing carbon emissions from the electrical sector and then using electricity for other uses now fulfilled by fossil fuels in the transportation, industrial, and building sectors.

The 2019 legislation laid out an explicit requirement of 80% emissions reductions of Xcel Energy, which had by then agreed to do so. The state’s authority over other utilities, however, is more fuzzy.

In recent months, Will Toor, executive director of the Colorado Energy Office, has secured commitments from Platte River Power Authority, the wholesale provider for four municipalities along the Front Range, and also Colorado Springs Utilities. This commitment by Tri-State binds the overwhelming majority of Colorado electrical production to the emissions reductions identified by legislators.

A smaller utility, Holy Cross Energy, has adopted a more restrained goal of 70% by 2030 but is almost certain to hit that target within the next year.

Tri-State announced in January it would close its Escalante coal plant in New Mexico this year. It did so in September. 2019 photo/Allen Best

Tri-State in January announced it would close the Escalante  coal plant in New Mexico this year, which it did in September, and that it would have all the three units near Craig that it operates closed by 2030.

Still, Tri-State has a long, long way to go. Baseline modeling done by the utility in advance of its Dec. 1 filing showed a 34% reduction in Colorado in carbon dioxide emissions by 2030 as compared to a 2005 baseline.

Last week, after Tri-State’s announcement, Tri-Harder, a new coalition of Tri-State members, issued a statement. Speakers were cautious in their praise.

“Telluride can’t meet its carbon reduction goals unless Tri-State takes the lead on carbon reductions, so we’re thrilled with this news,” said Todd Brown, mayor pro-tem of Telluride. “I hope this means that Tri-State will invest in local, clean energy in our communities so that our local economies can benefit as well as the climate.”

Wyoming and Arizona 

With Colorado Gov. Jared Polis rubbing virtual elbows, video-conference style, Tri-State chief executive Duane Highley took questions about his utility’s pathway.

Highley said the utility will be adding thousands of megawatts of new generating capacity in wind and solar and expects to be at 50% renewables across its entire system by 2023; in 2019 it was about 30%, about the same as Xcel.

But what will it do about imported power into Colorado? Tri-State imports power to meet needs of Colorado consumers from the Laramie River Station at Wheatland, Wyo., and from the Springerville 3 plant in Arizona. Tri-State is a minority owner in the Laramie River Plant but owns all the output from the unit at Springerville.

Highley said that Tri-State will diminish the power from the Wyoming plant over time, but did not give a time line.

The PUC staff report in September pointed out that aside from natural-gas generation, almost all the other carbon dioxide emissions in 2030 are from these out-of-state coal units.

“According to Tri-State, there are no provisions for modification or early termination” of the contracts” and Tri-State “has not analyzed such an action. The staff report went on to say that the resource planning review before the PUC “may include clear evidence that for Tri-State to meet its cumulative Colorado GHG reduction obligations, it cannot continue to serve Colorado load (demand) using those out-of-state resources.”

Tri-State, in an Oct. 2 filing, said it is developing several scenarios as part of its planning. “These scenarios will address the social cost of carbon on a system-wide basis, as well as specified carbon reduction goals in the state of Colorado,” the filing said. “These scenarios include aggressive levels of renewable energy additions and energy storage, allow for demand-side management, limit thermal additions, allow for retirement of existing resources, and incorporate either base or low-load forecast.”

What its load—the demand for its electricity—will be could be impacted by changes in the oil-and-gas sector, as Tri-State is a major supplier to oil-and-gas fields, but also the potential for existing cooperatives to leave or transition to partial requirements, Tri-State says.

In other words, there are a lot of uncertainties about just how much electricity Tri-State will need.

Another electric resource planning process will commence in 2023, not long after the current one is settled.

This is from the Nov. 20, 2020, issue of Big Pivots, which chronicles the great energy transition in Colorado and beyond. Sign up for copies at BigPivots.com.

Electric resource plans are wonky but rigorous things. Xcel Energy and Black Hills are required to file them. In addition to the filings of the utilities, laying out their plans and answering questions, intervening parties, including environmental groups, independent power producers, and the Office of Consumer Counsel, chip in statements, sometimes lengthy. Printing out all the filings in some of these cases can cost you a box of paper. The plans can drag on for years. Like painting the Golden Gate Bridge, the job is completed and then begins from the other side again.

The Tri-State filing will be a first for the utility itself. It will also be the first time for any resource plan since state legislators adopted the suite of energy laws in 2019. None was more expansive than SB 19-236, which reauthorized existence of the PUC but also delivered new criteria for how commissioners are to evaluate plans by utilities.

One example: The lengthy bill—it runs 64 pages—specifies that the commission must establish the cost of carbon dioxide emissions produced by electric generation resources, starting at not less than $46 per ton. The rate must be escalated based on the work by the federal interagency working group. This is called the social cost of carbon.

The PUC commissioners, at their weekly meeting on Nov. 12, ruled that Tri-State must use cost escalators in the models it submits for future electrical generation on Dec. 1.

Necessarily, the Colorado PUC will be examining Tri-State’s four-state operating system. Already, there are questions.

Reacting to Tri-State’s 80% announcement, Eric Frankowski, director of the Western Clean Energy Campaign, warned against any attempt to make this “an accounting exercise by shipping its expensive, dirty coal to its members outside of Colorado.”

Western Resource Advocates will also be watching carefully how Tri-State explains its accounting of greenhouse gas emissions in the review process.

Gwen Farnsworth, WRA’s senior energy policy advisor, says Tri-State’s announcement puts it at a better starting point for the electric resource plan in December as compared to the data provided by the utility earlier this year. That process before the PUC, she added, “provides a rigorous, evidence-based process to review Tri-State’s plan and emissions reductions claims.”

Tri-State’s cases will be different from the filing by Xcel Energy next March 1 in that the PUC has clear authority over setting rates in the case of Xcel. Tri-State sought oversight by the Federal Energy Regulatory Commission because it operates in four states.

One important area is that of transmission. Transmission has been constructed in a piecemeal fashion in Colorado over the decades. This new push for rapid development of renewable generation calls for a more unified and systematic approach to thinking about both new resources and transmission, instead of considering them separately.

Transmission, too

Transmission was also the subject of Highley’s second significant announcement last week. He said Tri-State and four other power providers have sent letters committing to evaluate expansion of the Southwest Power Pool’s regional transmission organization, or RTO, into the West. The other utilities are Basin Electric Power Cooperative, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska, and the Western Area Power Administration.

Duane Highley

In essence, Tri-State has assembled buddies to challenge the more dominant idea in Colorado that the most logical way to realize benefits of managed markets will be to join with the California and other utilities in the West. Like Tri-State, generation and transmission associations, the one larger and the other much smaller, MEAN is a public power provider of many Colorado towns and cities.

For a deeper dive on RTOs and EIMs and other wonky stuff considered by utilities crucial to achieve deep penetration of renewables electricity, see Lower electricity bills in Colorado, and also Why Colorado needs an RTO.

Tri-State and WAPA — the distributor of electricity generated by federal dams in the West— in September 2019 announced they were forming an energy imbalance market with the aid of the Arkansas-based Southwest Power Pool. Xcel Energy and three partners—Platte River Power, Black Hills Energy, and Colorado Springs Utilities—three months later said they were doing the same but with the aid of CAISO, the California-created operator.

Creation of these imbalance markets is seen as a low-risk, low-reward investment in coordinating supplies, especially low-cost renewables, to meet demands. Highley has said that Tri-State can earn back its investment within three years. The far greater benefits will be found in an RTO.

A recent study by Vibrant Clean Energy found that a regional transmission organization, whether operated by SPP or by CAISO, could greatly benefit Colorado consumers, but concluded that the somewhat greater benefits were to be found with the alliance with California.

Asked about that study, Highley disagreed with the conclusion about CAISO but also said that whatever the regional alignment, there will be benefits of integrated transmission and scheduling to share wind, solar, and other resources across broader regions.

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Allen Best