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The Durango Herald

Reyes: Kit Carson co-op sets the record straight

In recent months, the topic of energy providers has emerged as a polarizing issue with information – some accurate, some patently false – being disseminated through public opinion forums and presented as fact.

As CEO of the Kit Carson Electric Cooperative, the only co-op that has successfully ended its relationship with Tri-State Generation and Transmission, I write this without opinion or conjecture, but rather with objective facts.

On Feb. 24, The Durango Herald ran a column titled “What I see for LPEA when it comes to power supply”authored by Mike Dreyspring, CEO of La Plata Electric Association. In it, he addresses Tri-State’s concentration on coal, both as an environmental concern and as to the dangers of relying on only one fuel source; Tri-State limiting the amount of local renewable energy LPEA can generate to just 5 percent of its total power needs; and Tri-State’s constant rate increases, including as recently as 2017.

Dreyspring concludes: “LPEA’s members want us to develop more local renewable energy resources, and they expect us to deliver on the promise of safe, reliable electricity at the lowest reasonable cost. That’s achievable, if we’re wise in assessing our evolving energy future.”

It is, indeed, achievable, Mr. Dreyspring. So please allow me to help in that assessment, as it relates to both your co-op’s agreement with Tri-State and what has transpired in our own KCEC partnership with Guzman Energy. You state:

“When one considers the blended cost of the 7.3 cents we pay Tri-State, we need to remember that this is a bundled cost that includes both the cost of energy, as well as capacity … Renewables are a great generator of energy kWh, but until storage technology matures and becomes economical, they come up short on suppling this demand.”The KCEC/Guzman Energy partnership is a Full Requirements Contract that includes energy, capacity and all associated ancillary services inclusive in the Purchase Price Agreement price.

“Tri-State currently projects stable rates for the next five years with no rate increases until 2023, at the earliest.”KCEC’s rate from Guzman Energy is fixed for the term of 10 years. Isn’t fixed a more desirable term than projected, which suggests “we don’t know?”

“Tri-State is increasing acquisition of wind and solar sources.”Any additional renewables added to the Tri-State energy mix only will economically benefit Tri-State; none will be locally developed and thus will not have a direct impact on LPEA members.

“LPEA is concerned with Tri-State’s concentration on coal, beyond its environmental impact … The 5 percent limit is a current challenge for LPEA, but other cooperatives will need to address it eventually as well.”Guzman is working toward KCEC achieving a goal of 100 percent renewable generation during its summer peak through locally sourced renewable energy, with all economic benefit staying within the communities of KCEC.

“Kit Carson’s rates increased in December 2016 … which suggests Kit Carson’s rates are not fixed.”Again, KCEC’s rate from Guzman Energy is fixed for the term of 10 years.

“We don’t know the exact terms of Kit Carson’s deal with its new wholesale power supplier.”The PPA price is fixed for the term of the agreement and it is not variable, thus eliminating volatility.

A pattern of uninformed, speculative and even false word choice is the common thread in this column.

This, however, is not speculative: After exiting its contract with Tri-State, KCEC in March 2016 entered into a 10-year agreement with Guzman Energy verified through KCEC’s independent consultants to save rate payers $50 million to $70 million through the life of the contract.

Once again, Guzman Energy has agreed to help KCEC achieve a goal of 100 percent renewable generation over its summer peak through locally sourced renewable energy, with all economic benefit staying within KCEC’s communities. Had KCEC not exited its former contract with Tri-State, a savings of more than $2.1 million per year for the next 25 years, would not have been possible.

Cost-effective, reliable, clean energy is an important decision for all rural communities. At KCEC, we are proud of our fantastic working relationship with Guzman Energy, a wholesale power provider that is a true partner in working with us to help shape the future of our energy infrastructure.

We’d love to have our neighbors at LPEA, and beyond, join us in making all of our communities more competitive in all facets of the energy arena and are happy to share our experience.

Luis A. Reyes Jr. is CEO of Kit Carson Electric Cooperative based in Taos, New Mexico. Reach him at (575) 758-2258 and lreyes@kitcarson.com.

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Date

April 14, 2018

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