Ron Lehr was chairman of the Colorado Public Utilities Commission (PUC) in the early 1990s when the Montrose-based Colorado Ute Electric Association went bankrupt because of what he deemed “a colossal blunder that put them out of business.”
Lehr, now an attorney for the renewable energy association Interwest Energy Alliance, said Colorado Ute built the Craig 3 coal-fired power plant in northwest Colorado that the co-op’s board felt would be needed to power the state’s about-to-boom oil shale industry. That industry went bust in the 1980s, and Colorado Ute followed suit a few years later.
It’s a cautionary tale for Westminster-based Tri-State Generation and Transmission, Lehr said, as that cooperative, member-owned utility — the state’s second largest — battles the current PUC to avoid oversight by the state board whose three members are appointed by the governor.
“Tri-State is getting very ready to make that same mistake, which is to build a coal plant that’s going to be a liability rather than an asset and could put themselves out of business,” Lehr said. “So do they need additional scrutiny? Absolutely they do. And the more the better as far as I can tell.”
Tri-State’s 44-member board is comprised of representatives of each of the rural electric co-ops it provides power to in Nebraska, Wyoming and New Mexico and 18 co-ops in Colorado. And that board has decided to invest heavily in a coal-fired power plant just across the Colorado border near the Kansas town of Holcomb.
Lehr said the recent severe recession demonstrates that energy loads don’t always rise, and that history shows building and investing in power plants based on the premise that they do can be fatal. He also pointed to regulatory factors such as the proposed American Clean Energy and Security Act, which may heavily penalize coal-fired power plants under a carbon cap-and-trade system.
Tri-State officials counter that investing in coal-fired power plants provides a reliable and affordable energy load in order to keep rates down for its member co-ops. They also say they’re doing everything asked of them — and then some — to promote renewable energy and energy efficiency.
“When you talk specifics about what it is the PUC has indicated they think we should be doing, our stance is we’re doing it above and beyond the call in the areas of energy efficiency, renewable energy and investing in new technology and research and development,” said Tri-State G&T spokesman Jim Van Someren.
Some critics say co-ops should have to get more than 10 percent of their power from renewable sources by 2020, bringing them closer to the 20-percent level required of investor-owned utilities such as Xcel, the state’s largest.
“But that’s not the law,” Van Someren said “We supported the legislation [in 2007 requiring 10 percent renewables for rural co-ops], which was passed and signed by the governor and presumably adopted in some fashion or another by the PUC, and we will certainly comply with that.”
Lehr said Tri-State is motivated to keep its renewable percentage as low as possible because it is essentially a coal company.
“They are in fact owners of two coal mines and in moments of extreme transparency tell us that they’re a coal company, and as a coal company, they don’t do wind, and they don’t do efficiency, they burn coal,” Lehr said.
Van Someren scoffed at such a notion, pointing out that Tri-State provides its integrated resource planning documents to the PUC on an annual basis [although only for review, not for approval] and has rewarded and provided incentives for efficiency programs since the 1980s. The co-op is also developing a 30-megawatt solar power plant in northeast New Mexico.
Tri-State is particularly put off by the notion that rural, member-owned co-ops can’t govern themselves and somehow need to be protected from making poor business decisions
“Having that level of government regulation — three appointed officials in Denver — trying to make decisions about what’s best for rural Coloradans, say in the San Luis Valley, makes no sense,” Van Someren said. “Tri-State and our member co-ops have a long, successful history of self-governance.”
Lehr, through personal experience, begs to differ.
“There’s an argument that they’re adequately regulated by their board of directors, and I think that’s a questionable assertion because of the experience we had with Colorado Ute, which also had an extensive board of directors regulating them, and they made a huge, colossal blunder that put them out of business,” he said.