Tri-State Generation and Transmission Association Inc., a 41-member co-op in a four-state region that includes parts of Wyoming, has received $679 million from a federal rural electrification program aimed at boosting renewable energy generation to support the retirement of coal-fired power plants.
The money came from the U.S. Department of Agriculture’s Empowering Rural America (new ERA) Program, which is designed to help rural cooperatives like Colorado-based Tri-State with the transition to renewable power.
The Tri-State funding for the energy transition to buy solar, wind and battery storage was announced late last week as part of a larger pool of a federal $7.3 billion investment in clean energy projects associated with the Biden administration’s Investing in America agenda.
This is the largest investment in rural electrification since President Franklin D. Roosevelt unveiled his New Deal policies to pull the country out of the Great Depression in the 1930s.
Tri-State’s application to the new ERA program was for 18 projects located in its four-state territory of Arizona, Colorado, New Mexico, Nebraska and Wyoming.
A portion of the money is earmarked for three wind farm electricity suppliers under power purchase agreements (PPAs) among Wyoming’s eight electricity distribution co-ops and Nebraska’s six co-ops.
Tri-State spokesman Lee Boughey could not say how much of the $679 million would be set aside for PPAs with Wyoming and Nebraska for buying wind power, or how much of the renewable energy makes up the energy mix outlined in the distribution co-op’s Electric Resource Plan (ERP) filed in June with the Colorado Public Utilities Commission.
Last month, an administrative law judge with the utility commission recommended approval of the plan from Tri-State to buy 1,250 megawatts of renewable energy and energy storage between 2026 and 2031, with a “mix of PPAs and “owned resources.”
Colorado Public Utilities Commission spokesman Katie O’Donnell was not available to comment on the status of the ERP filing with her agency.
Laramie River Station Not Targeted
A PPA refers to a long-term electricity supply agreement between two parties, usually between a power producer and a customer, like Tri-State.
As part of the new ERA funding, Tri-State proposes to build or buy 1,480 megawatts of solar, wind and battery storage projects throughout its four-state territory and support the retirement of 1,100 megawatts of coal-fired generation in Arizona, Colorado and New Mexico.
The Laramie River Station, a 1,710 megawatt coal-fired power plant in Wheatland, Wyoming, is not being considered for closure because of its strategic importance to supply electricity to the electrical grid for reliability purposes.
The three-unit power plant, which is owned jointly by Tri-State, North Dakota-based Basin Electric Power Cooperative, Nebraska-based Lincoln Electric System and the Western Minnesota Municipal Power Agency, is unique because it delivers electricity to two electrical grids, the only one of its kind in the United States.
The plant’s Unit 1 is connected to the Eastern Interconnection, while Units 2 and 3 are connected to the Western Interconnection. These grids, which divide the United States into two sections, were developed independently and must be supplied electricity separately.
LRS will represent the last coal-fired plant in Tri-State’s portfolio once it retires the 458-megawatt Unit 3 of Arizona’s Springerville Station in 2031, unless Tri-State gets a federal funding lifeline to support the cost of stranded assets.
Several factors can lead to assets becoming stranded. These include new government regulations that limit the use of fossil fuels, a shift toward renewable energy because of lower energy costs or legal action against high-pollution emitters.
Coal-fired power plants are the most exposed to the risk of becoming stranded and can face retirement several decades sooner to meet climate goals.
Tri-State Savings
This transformative shift in funding for Tri-State’s energy transition in resources is estimated to create nearly 2,200 short- and long-term jobs, reduce Tri-State’s member costs by $422 million over 20 years and reduce climate pollution by nearly 5.8 million tons annually, according to the company.
This proposal will reduce greenhouse gas pollution by the equivalent of 1.4 million gasoline-powered cars each year, according to Tri-State.
Tri-State was invited to apply for up to $679 million in program budget authority, and USDA selected its application. Through a mix of low-interest loans and grants, Tri-State wants to leverage the $679 million to support investments that could total more than $2 billion for 18 projects throughout its service territory to more than 1 million customers, the member-owned co-op said in a statement.
Wyoming’s top electricity distribution co-ops include Big Horn Rural Electric Co. in Basin; Carbon Power & Light Inc. in Saratoga; Garland Light & Power Co. in Powell; High Plains Power Inc. in Riverton; High West Energy Inc. in Pine Bluffs; Niobrara Electric Association Inc. in Lusk; Wheatland Rural Electric Association; and Torrington-based Wyrulec Co.
As part of the new ERA funding, six other co-ops in Nebraska would get new power generation from wind farms under PPA contracts tied with Wyoming’s co-ops.
Nebraska’s electricity co-ops include Wheat Belt Public Power District in Sidney; the Midwest Electric Cooperative Corp. in Grant; the Northwest Rural Public Power District in Hay Springs; Panhandle Rural Electric Membership Association in Alliance; Roosevelt Public Power District in Scottsbluff; and Chimney Rock Public Power District in Bayard.
Separately, Brighton, Colorado-based United Power Inc., formerly the largest of Tri-State’s co-ops that paid $702 million in May to break away, received $261 million from the new ERA program to offset the cost of its transition to a clean energy portfolio.
“We would not have gotten any of this money had we remained with our former power supplier,” said Mark Gabriel, president and CEO of United Power, in a statement to Cowboy State Daily.
The $702 million exit fee paid by United Power is broken down using a complicated formula defined by a federal energy regulator in Washington, D.C. United Power paid Tri-State $448 million to buy out the remaining 26 years of United Power’s electricity supply contract with Tri-State, a $179 million prepayment of transmission service that Tri-State is repaying United Power with interest over the next 40 years, and $75 million to repurchase substation assets which United Power original sold to Tri-State several years ago.
North Dakota-based Basin Electric Power Cooperative, which is a co-owner of the Laramie River Station, announced that it is a finalist for in excess of $400 million in funding from the New Era program to buy and build additional renewable energy generation in Montana, North Dakota and South Dakota, according to Basin Electric spokesman Andy Buntrock.
Pat Maio can be reached at pat@cowboystatedaily.com.
