Tri-State G&T
Duane Highley is CEO of the Tri-State Generation and Transmission Association. Clint Vince is Chair of Dentons’ US Energy Practice.
Dentons partnered with the Keystone Policy Center in late January to hold its Smart Cities and Connected Communities Think Tank with Keystone's Key Conversations. The virtual gathering was held to bring to the audience, conversations with top energy leaders, policymakers, and key stakeholders, to explore issues and emerging challenges affecting energy and the environment.
These events, domestic and global, are sure to shape the future of the energy and utilities industry. Many hot energy topics were explored in these Fireside Chats.
Listen in on these conversations with top executives, hosted by Clint Vince and Adriana Vélez-León with Dentons, as this is a dialogue not to be missed. Enjoy these memorable moments.
Tri-State Generation and Transmission Association recently filed a landmark settlement agreement at the Colorado Public Utilities Commission, setting near-term targets for greenhouse gas emission reductions prior to 2030. That settlement was entered into with more than two dozen parties on its 2020 Electric Resource Plan. Clint Vince, Chair Dentons' US Energy Practice, in this Fireside Chat, sat down with Tri-State's CEO Duane Highley to discuss what that all means, excerpted here.
CEO, Tri-State G&T, Duane Highley: Tri-State's one of those poorly named companies that serves through forty-two utility members in four states of Nebraska, Colorado, Wyoming, and New Mexico. We're member-owned by those forty-two utilities who are in turn member-owned by their about one and a half million consumers.
The news is Tri-State's announcement of its filing of a resource plan with the State of Colorado where we achieved agreement with over twenty stakeholders, including environmental NGOs, cooperative member systems, and government agencies. Lots of stakeholders weighed in on this resource plan, the first one filed by Tri-State, in which we are demonstrating we will meet an eighty percent carbon reduction delivered to Colorado by 2030.
We're already in the middle of that transformation, adding thousands of megawatts of wind and solar and retiring coal plants in Colorado and New Mexico. Last year, we had about thirty-six percent of our energy coming from non-emitting sources.
November had forty percent, as we brought on a new wind farm, and by 2024, half the energy we deliver will be clean. By the end of the decade, across all four states, we'll be at seventy percent clean. We'll be doing that in the cooperative way by maintaining reliability and lowering costs to members.
We just announced a second of two rate decreases. It's so hard to say that. I'm so used to saying, rate increase, as the utility executive, but we're having rate decreases, and that's a rare thing in the industry these days, to be able to announce an energy transformation of this magnitude, while reducing costs for members.
Moderator and Chair, Dentons' US Energy Practice, Clint Vince: As you move from, and deactivate, some of your fossil fuel facilities toward renewables, what are some challenges you're facing, including transmission?
Duane Highley: First of all, we're trying to take care of those communities that are left behind. Ensuring a just transition for the formerly coal-dependent communities is essential for us as a cooperative. We're reinvesting in renewables in those areas to restore lost tax base, and we're helping with economic development.
As we look at the need to build out so much renewable energy, we believe we have to have an RTO to help balance the massive amounts of renewables we and our neighbors are building, to meet these state policy goals. We can't do it with any simple utilities balancing area, and we need that over multiple states.
We're pushing hard for an RTO that will help us de-bottleneck the transmission system. We're pushing hard for increased east to west transmission, so we can move renewable energy across time zones and give it greater value.
Clint Vince: What do you feel about joining an RTO, versus creating an RTO out west?
Duane Highley: In California, you have the California ISO, which has a day-ahead market. Southwest Power Pool is the west-most RTO in the Eastern interconnect. They come right up to our border.
In fact, some of our customers in Nebraska are served in the SPP footprint. We'd like to see SPP expand west. There is a body of thinking that maybe the west should just create its own RTO from scratch, and when you think about that, the SPP tariff now is twenty-five hundred pages.
There's been a lot of work to develop that over the years, and it's not a trivial task to think about getting all the states together and agreeing on a new set of rules. I don't think we have time for that.
While that might be an admirable intellectual exercise, we need to move fast to meet these state energy policy goals. We're going to need a balancing area much bigger than any one of our utility balancing areas.
Hence our desire to move quickly with someone who's already got a model ready to go, rather than create one, which could take several years and delay our ability to get to those policy goals.
Clint Vince: How about resilience? As you're moving so quickly, what are you doing to ensure resilience in addition to transmission support?
Duane Highley: Storm Uri was the real test for us last year in February. We had about five days where our wind farms were not producing. When it gets really cold, that's a common occurrence.
In the winter, our loads peak early in the morning, and that's too early for the solar panels to be helping. We relied on fossil fuels to get us through that event, and keep us from having extreme rate increases. We fell back on fuel oil when natural gas went to a hundred times its normal price.
Having a diverse power supply is the key to resiliency and keeping fossil fuels in the mix — even though we won't use them very much — when we need them, we really need them. Storm Uri was an example of that.
In the resource plan we just filed, where we had all those stakeholders come together, come to agreement, and a settlement, it includes a gas plan with the retirement of coal, and that plant is there — it doesn't run much — but when it has to run, it really has to run. It's there to preserve resilience and reliability.
Clint Vince: A couple of years ago under your leadership, Tri-State did something that in the past would have been unusual. It's becoming more of a trend with electric cooperatives in multi-state jurisdictions. You requested FERC jurisdiction.
Duane Highley: So many people asked, what were you thinking? You want to be regulated by FERC? The case was, though Tri-State is an interstate utility, it serves at wholesale, non-profit electric utilities in four states.
What we had developing with different state policy goals, was a war between the states with Tri-State stuck in the middle. New Mexico and Colorado are moving more quickly in green energy goals. Wyoming and Nebraska are moving more slowly, and that created tension for us.
We needed one federal regulator that would look at things from a global perspective, on an interstate basis, and where all of our members would have a voice. The deal being if the State of Colorado has a PUC hearing, they're not likely to want to hear from people in Wyoming or Nebraska.
Their job is to take care of Colorado consumers. Now that we're under one federal regulator, we have everyone who can have a voice in what our rates are, and it's one independent voice when it comes to making those decisions on our rates.
Dentons Fireside Chats:
