Freeing Electric Cooperatives from Fossil Fuel Serfdom?

Ed Marston (pictured right) holds a doctoral degree in experimental physics.  He’s the Chairperson of the board of directors at Solar Energy International, a nonprofit dedicated to training people in renewable energy.
...
“Think of the rural electric coops as zombies,” says Marston.  “Think of them as the walking dead.”  Around the 1950s, most electric cooperatives still bought electricity from investor-owned utilities.  To control their own destiny, they formed generation and transmission cooperatives, or “G&Ts.”

The G&Ts became giants, a “billion dollars” to its member cooperatives’ “million dollars.”  They built coal-fired power plants almost exclusively.  They invested in coal mines.  They stretched long power lines across the country, connecting member cooperatives together.  And though the G&T was supposed to be a “cooperative of cooperatives,” the relationship became more paternalistic over time.

“The rural electric co-ops are willing participants in this lord-serf relationship,” says Marston.  The legal instrument that cements it all together, he continues, is a partial-requirements contract.  (These are known as all-requirements contracts if the member cooperative must purchase all of its energy requirements from the G&T.)  Delta-Montrose’s contract requires the co-op to buy 95% or more of its electricity from its G&T, Tri-State Generation and Transmission Association.

These contracts become like the roach motel — “you can check in, you can’t check out,” says Marston.  When Tri-State came to its “serfs” for a contract extension in 2004, Delta-Montrose said no, allowing them to exit in 2040 (the co-ops that re-signed can’t leave until 2050).  Some cooperatives even objected that the chains of these long-term contracts violated federal antitrust law meant to skewer monopoly power.

While Tri-State pushes for uneconomic projects (such as a $2.8 billion coal plant getting approved the day before the Clean Power Plan was announced), its member cooperatives must take out tens of millions of dollars of debt to cover the project costs.  Before, “bigger was better,” says Marston, but today “bigger is more costly.”  These power plants are in danger of becoming dead weight, or “stranded assets” in utility-speak, as rising coal prices, regulations to ensure clean air and water, and cheaper renewable energy make their operation more costly.

What Streams Might Come
For years, Delta-Montrose has suggested that there might be another path:  building out local energy resources while using load management and energy efficiency to reduce energy demand.  Gradually, the electric cooperatives under Tri-State could begin to grow grassroots energy at what has been, historically, a top-down organization.
...
Last year, after a Delta-Montrose petition, the U.S. Federal Energy Regulatory Commission decided that PURPA requirements trumped Delta-Montrose’s 5% self-generation limit. ... “It appears that the FERC ruling allows us to generate 100% locally,” says Marston.

The legalities of the ruling are being tested right now, with Tri-State appealing FERC to allow it to impose a “rate penalty” on DMEA and other co-ops that go past the 5% limit, and Delta-Montrose narrowing in on a contract that will take it above the self-generation limits.  It’s part of a history of “bully boy” tactics, says Marston, and the latest in a string of incidents causing him to say, “Tri State is a law firm with a few power plants attached.”

Read more at Freeing Electric Cooperatives from Fossil Fuel Serfdom?