Changes will jolt electric customers

By Dan MacArthur
North Forty News

Quiet but profound changes are afoot that could dramatically increase the cost of electricity as utilities face increasing pressure to become cleaner and greener.

Locally, that change is perhaps most evident in recent contests for seats on the Poudre Valley Rural Electric Association board of directors. Following narrow losses last year, one of three dissidents allied as the PV Pioneers this time breached the gates of a co-op unaccustomed to such aggressive and at times adversarial challenges.

That change is arriving in an even bigger way at PVREA's wholesale power supplier, Tri-State Generation and Transmission Inc. In a major turnaround, the nonprofit utility just announced that it will reassess its long-term goals, essentially abandoning any immediate efforts to build coal-fired generating stations in southeastern Colorado or western Kansas.

Noting that a construction permit was denied in 2007, Executive Vice President and General Manager Ken Anderson said continuing delays "make it unlikely to be available in the near-term." If eventually permitted, he said, both the Kansas and Colorado projects remain long-term options.

Much to even his surprise, Roger Alexander, a Fort Collins renewable energy advocate and seller of solar energy systems, won a seat on the 11-member board of directors at PVREA's 70th annual meeting. Alexander fell 44 votes short in 2008 but this year won by a 357-vote margin.

He unseated Ed Hansen, a member of the REA for 49 years and board member for 26 years. A well-known Livermore rancher, Hansen was generally considered to be a sure bet for re-election.

His defeat in turn set into motion a shift in PVREA's relationship with Tri-State. Hansen for 12 years had represented Poudre Valley on the Tri-State board. It is composed of representatives from each of the 44 co-ops Tri-State serves in Colorado, Wyoming, Nebraska and New Mexico.

The vacancy Hansen's departure created was filled by board member Thaine Michie. He is similarly well known for the 12 years he served as manager of the Platte River Power Authority. It provides electricity from the Rawhide Energy Station and other locations to the municipal owners of Fort Collins, Estes Park, Longmont and Loveland.

While the shake-up falls far short of a seismic shift, Alexander and Michie both expect to see real but carefully calculated changes in the direction of the REA and Tri-State.

Staid and steady organizations serving primarily rural residents since being formed during the Depression, customer-owned electric co-ops by their very nature resist dramatic change. But today they must more quickly confront new pressures from within and without as their customers become increasingly urban and regulators extend their reach.

Internally, board members often elected for decades without opposition are facing contests similar to PVREA's. A particularly bitter insurrection took place at the state's largest REA, where another trio of dissidents unsuccessfully attempted to win a majority of the board seats. Challengers are pushing co-ops to promote greater use of renewable energy and to prod Tri-State into doing the same.

Externally, the co-ops are rallying member/owners to challenge new federal pollution-control regulations, which they fear will lead to continuing rate increases threatening their mission of providing affordable energy. Such fears were realized in April when the Environmental Protection Agency announced plans to limit the release of greenhouse gases - particularly carbon dioxide resulting from burning fossil fuels.

While the climate-change debate continues, PVREA General Manager Brad Gaskill said there's no doubt that the administration, in concert with the Congress, will take some action to limit greenhouse gasses at a staggering cost to the nation's utilities.

At the co-op's annual meeting, he characterized the proposed cap-and-trade approach as a "vast revenue-raising scheme for the government" likely to lead to at least a 15 percent rate hike.

Under the scheme, a limit would be set on the amount of greenhouse gases that could be emitted from any given source. As an incentive, those sources reducing emissions below that limit would earn credits they could sell to those exceeding the cap.

"We think it's a tax," said Michie. "Nobody knows exactly what it is."

If it is effectively a tax, he said, the government should be upfront about it and commit to using the proceeds to fund further energy research rather than as a source of general revenue.

"It's not the best way to deal with it, but it's almost certainly going to happen," said Alexander. He instead advocates a direct tax on carbon that would fairly price energy so market forces would come into play.

"Right now it's so cheap people don't care how much energy they use," he said. "The only way to get America to react is through the market. You've got to hit them in the pocketbook."

Such regulatory uncertainty prompted reassessment of its long-term resource plan, according to Tri-State. Released in 2005, that plan included options for the new coal-based generating units.

A review will evaluate energy efficiency, renewable energy, natural gas, clean coal and nuclear technology as part of its long-term planning process, according to Tri-State. The power plant site in southeastern Colorado could accommodate any of those technologies in the long-term.

In the near-term, Tri-State said it will "continue to expand its energy efficiency programs, make investments in renewable energy and increase natural gas capacity to meet member system growth and diversify its resource portfolio."

More specifically, Tri-State will contract for 220 megawatts of natural gas-based capacity in eastern Colorado to meet imminent power requirements and assist in the integration of renewable energy. It also will invest $30 million for efficiency improvements at power plants and reduction in transmission system losses.

Both Michie and Alexander acknowledge that coal-fired plants will remain a primary source of power for the foreseeable future.

"I would like not to see more coal plants built," said Alexander. "The only way to move away from them is to quit building them."

Michie said coal necessarily will remain a major part of the energy mix with 300 to 400 years worth available in Wyoming--although critics insist that figure is greatly exaggerated.

Even as a self-described "renewables guy," Michie said wind and solar energy can't do it all. He said renewables now produce about 3 percent of the nation's electricity and certainly can provide up to 15 percent without a problem.

Michie said he increasingly believes that nuclear power might be the best long-term solution--a position shared by 59 percent of those surveyed in a recent poll. Michie said the French have made great strides in developing nuclear energy by standardizing nuclear plants.

Despite any differences, Alexander and Michie agree that there must be a greater emphasis on conservation.

They also expressed optimism that Tri-State is becoming more open and is getting more serious about renewables as evidenced by the 30-megawatt, 500,000-panel solar photovoltaic power plant it is building in northeastern New Mexico. The "Cimarron I Solar Project" is the largest photovoltaic project by an electric cooperative and among the largest facilities of its kind in the world, according to Tri-State. It is scheduled for completion in December 2010.

"Tri-State is doing a lot with renewables behind the scenes," said Michie, suggesting that additional initiatives will be announced soon.