The Jemez Mountains Electric Cooperative Board is exploring the possibility of opting out of its contract with Tri-State Generation and Transmission Association.
Tri-State, an electrical cooperative, provides power to over 40 electrical cooperatives around the West.
In recent months, members have begun questioning Tri-State’s financial health and energy policies.
Standard and Poor’s Global Credit Rating downgraded Tri-State’s credit rating last year, after one of its members announced its departure and two others filed complaints with the Colorado Public Utilities Commission to determine how much it would cost them to exit their contracts with Tri-State.
“We believe the imminent departure of one member and applications by two other members to the Colorado commission to establish an exit fee, expose the utility to the potential loss of 25 percent of its members’ energy sales, which could erode the revenue stream,” a Nov. 19 announcement from Standard and Poor’s states.
The announcement also cited “member friction” as a reason for the downgrade.
The Co-op’s contract with Tri-State extends until 2050, according to Co-op General Manager, Ernesto Gonzales.
“With the unrest and everything that’s going on with Tri-State, the road and the path Tri-State is going down, I think it would be in the best interest of this cooperative if we do an analysis and we look at a possible, I’m just saying a possible, opting out of Tri-State, buy out of Tri-State, in case something goes really south,” Co-op Board President Leo Marquez said in a Jan. 24 Board meeting.
He said the Co-op needs to protect its own interests and that if it is necessary to increase rates for member-owners, he would prefer to do so because the Co-op is buying out of its contract with Tri-State rather than raising rates to compensate for Tri-State’s debts.
He recommended that the Co-op perform a study as to how much opting out will cost the Co-op and whether it is in their best interest to do so.
“Mr. Chairman, thank you very much, I’ve been saying that for a year now,” District 6 Trustee Bruce Duran said.
Duran expressed frustration that the Board had not continued with the work of former General Manager Joseph Sanchez, who, he said, started the process of exploring opting out of Tri-State.
“We’re trying to move forward now, OK?” District 5 Trustee Nick Naranjo said. “What happened in the past you can’t undo. You can’t even undo what you said a few minutes ago. So let’s move forward with a study.”
District 1 Trustee Dennis Trujillo pointed out that Tri-State has just released a new energy plan, and that it would be important to consider that plan in the study.
The plan states that Tri-State will reduce 100 percent of its emissions in New Mexico by 2020 and in Colorado by 2030 by closing power stations and mines; that by 2024, 50 percent of Tri-State’s energy will come from renewables; and that members are working together to increase contract flexibility to allow for more local renewable energy generation.
Trujillo moved to approve Marquez’s suggestion to perform a feasibility study, and District 4 Trustee John Ramon Vigil seconded the motion. No trustees objected to the motion, but District 4 Trustee Lucas Cordova abstained from approving it, as he is the Co-op’s Tri-State representative.