A win-win in Southwestern #Colorado: Why La Plata Electric thinks splitting only one sheet with Tri-State Generation and Transmission is the best way forward — @BigPivots

Costs of a full vs. a partial buyout.

Click the link to read the article on Big Pivots (Allen Best):

Tim Wheeler may have had the best line among the directors of La Plata Electric Association after they unanimously approved a resolution that firmly puts them on a path to a half-a-loaf arrangement with their current electrical provider, Tri-State Generation and Transmission.

Even in the 1990s, he explained, he had begun asking why they couldn’t provide more electrical generation locally in a way that could lead to a lower cost and with a greater benefit to the existing climate.

“I am very mindful of people who told me along the way for 25 yeas that this couldn’t be done,” he said. “I want to thank them for being wrong.”

The case for the new arrangement was laid out in a video-conference town hall held by La Plata last week.

La Plata’s existing contract with Tri-State allows the Durango-based cooperative to generate just 5% of its own power. Under a new contract approved conceptually in October 2020 by Tri-State’s members, individual members will be able to provide up to 50% of their own electricity, either through their own generation or purchases from others.

In this case, La Plata is eyeing a contract with Crossover Energy Parnters, a relatively new energy supplier financed by the Wall Street firm KKR. Crossover would provide 71 megawatts of generation and Tri-State 71 megawatts.

Dan Harms, the vice president of grid solutions for La Plata, said the cooperative and Tri-State have agreed to a final partial contract payment arrangement that will be submitted to the Federal Energy Regulatory Commission for approval. Because of the sensitivity of the negotiations, he said, details could not be divulged.

Dan Harms.

La Plata hopes to enter this new 50-50 future beginning January 2024, he said. If this happens—the deal still isn’t final—then La Plata will immediately reduce its carbon footprint 50%.

Why a partial-requirements contract instead of a full buyout? Harms cited several reasons. It meets La Plata’s climate goal, which is to decarbonize 50% by 2030 as compared to 2018. It also uses Tri-State’s transmission infrastructure that will allow La Plata to tap Tri-State’s more regional generational resources.

By staying with Tri-State on a half-time basis, though, La Plata avoids some of the headaches of being a solo operator, he said, if not in quite as many words. A full buy-out would require La Plata to cover costs of regulatory compliance, transmission access and other elements.

“With partial buyout, we still have access to a lot of the benefits and services that Tri-State provides,” he said.

The case for a partial

The most compelling evidence in the hour-long session was a chart (see top) showing costs of a full vs. a partial buyout. That chart showed much larger savings from the partial requirements.
The partial requirements contract will save La Plata $7 million a year.

Given that La Plata currently spends $68 million buying electricity, even 1% cut can make a big difference, Harms said.
None of the options are off the table permanently. It can go to a full exit later, said Harms.

The coop’s existing all-requirements contract was approved in 2006, a time when most coop directors could not envision the rapid dive of renewable prices.

La Plata began showing discontent with its contract with Tri-State in 2017. In early 2018 it began investigating its alternatives. It formally notified Tri-State later that year what it was up to and also asked what it would cost to get out of its contract.

Kit Carson Electric, a member in New Mexico, had left in 2016 after paying $37 million. Delta-Montrose Electric, a Colorado member, was then negotiating with Tri-State for its exit, which later was tabulated at $62 million. And United Power had also indicated it wanted to explore options.

The Colorado Public Utilities Commission likely would have determined the exit fee for La Plata had not Tri-State, by then under the leadership of Duane Highley, used a legal strategy to move such deliberations to FERC, the federal agency in Washington D.C. Much of this legal shuffling occurred during the dark of the covid lockdowns in 2020.

Tri-State has submitted methodologies for determining both buy-downs and buy-outs. They’re called and buy-down payments (PDPs) and contract-termination payments (CTP). FERC has not yet approved either methodology.

Mark Pearson, of the Durango-based San Juan Citizens Alliance, called the partial buy-out “a great step forward.”

“It’s a great way for us to accelerate our transition to a much less carbon-intensive electricity supply, and hopefully all 50% of La Plata’s generation will be local renewable energy,” he said. He also sees value in exploring the benefits of a full buyout, once that methodology has been approved by FERC.

Lee Boughey, communications officer for Tri-State, said he expects FERC to conduct a hearing on the contract termination methodology in May. He said Tri-State directors will not need to take any additional actions on this or other partial requirements contracts filed with FERC.

Tri-State last year announced a pool of 300 megawatts of generation available to its 42 member cooperatives. Three of the coops bid in what Tri-State calls the open season, La Plata among them. The other two were not identified. Tri-State will conduct another open-season in May.

Tri-State looks like a very different electrical supplier than it was in 2017. Then, it was still dragging its feet on embracing changes. La Plata was itching to make them.

Duane Highley via The Mountain Town News

Since Duane Highley arrived as chief executive in April 2019, Tri-State has promised to achieve 70% renewables in the electricity it delivers in Colorado by 2030. That’s an 80% reduction compared to 2005 levels.

The wholesale provider has also stopped raising rates and is now lowering them, 2% last year with another 2% reduction schedule for this fall. It is working with La Plata to install a 2-megawatt community solar project.

At the same time, it has failed to placate its single largest member, Brighton-based United Power, which has 105,000 members, nearly twice as many a La Plata. In December, United announced it had made up its mind. It wants out—and Mark Gabriel, the chief executive, said at a recent conference that he’s counting the days.

The precise numbers of this partial buy-down have not been revealed, which is likely what directors and chief executives at other cooperatives will want to see. At least six others have indicated they are studying their options.

What’s in this for Tri-State? Even after Highley arrived, the wholesale provider seemed to be desperate to hold onto members. The initial buy-outnumbers [Tri-State] provided La Plata and United Power were preposterous.

Pat Bridges, a senior vice president and chief financial officer at Tri-State, said at the town hall meeting last week that this agreements will be a win-win for Tri-State because the 50% contract will help it pivot from coal plants to renewables.

It will “actually allow us to move faster in that regard,” he said. There are upfront costs in the energy transition, he added.

Good questions 15 years ago

Win-win was also a phrase frequently used by board members in Durango on Wednesday.

Bob Lynch, a board member, called it a “monumental thing.” The board’s approval brings it “as close as you get without hooking up new power.”

Lynch also pointed to the changed leadership, both in the chief executives of La Plata and Tri-State, in moving the discussion along. “We have the right leaders in place.”

He also credited a former board member, Jeff Berman, with “starting the discussion and starting the argument” about green power.

Berman, who let the board 5 years ago, told Big Pivots that he listened for a couple of years during his 12 years on the board before he started asking basic questions about power sources, costs and alternatives. “It’s a shame it took 17 years, but better to move forward now and do it right,” he said.

He remains in Durango, having become a licensed engineer and is now “laser focused on actually building solar power and battery storage.”

Rachael Landis, a board member, pointed out that despite the national division and diversities among the directors themselves, they had thought critically about how to keep the best interests of La Plata customers in mind.

Joe Lewandowski shared that as recently as a year and a half ago, even after Tri-State had new leadership, he was discouraged. “It just didn’t look like we were going anywhere with Tri-State.” He, too, called it a win-win.

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2022 #COleg: Bill providing millions in relief to #RepublicanRiver, #RioGrande basins clears first hurdle — @WaterEdCO

A powerful sprinkler capable of pumping more than 2,500 gallons of water per minute irrigates a farm field in the San Luis Valley June 6, 2019. Credit: Jerd Smith via Water Education Colorado

Click the link to read the article on Water Education Colorado (Larry Morandi):

Colorado lawmakers have given initial approval to a bill that would provide millions of dollars to help two major water-short farm regions reduce water use and comply with legal obligations to deliver water to Kansas, Nebraska, Texas and New Mexico.

On Feb. 10 the Colorado Senate Agriculture & Natural Resources Committee unanimously approved [SB22-028 Groundwater Compact Compliance Fund: Concerning the creation of the groundwater compact compliance and sustainability fund] that creates a Groundwater Compact Compliance and Sustainability Fund to help pay to buy and retire farm wells and irrigated acreage in the Republican and Rio Grande basins in northeast and south-central Colorado. Colorado and federal tax revenue would bankroll the fund, and the Colorado Water Conservation Board would distribute the money based on recommendations from the Republican River Water Conservation District and the Rio Grande Water Conservation District, with approval by the state engineer.

The need

The fund is needed, according to proponents, to help reduce groundwater use that is depleting surface water flows in the Republican River and threatening Colorado’s ability to comply with a compact among Colorado, Kansas and Nebraska. It is also intended to help drought-stressed aquifers in the San Luis Valley recover and to meet aquifer sustainability standards required by the state in the Rio Grande Basin.

To achieve those goals, 25,000 acres of irrigated land must be taken out of production in the Republican basin, and 40,000 acres in the Rio Grande, by 2029. David Robbins, general counsel for both districts, noted that, “Both districts have received letters from the state engineer indicating that if they fail in the task they will receive orders shutting down the wells in each basin, which will have dramatic and very difficult consequences for everyone in both basins.”

The bill’s proponents hope to take advantage of a one-time funding opportunity—federal Covid-19 stimulus dollars under the American Rescue Plan Act of 2021 (ARPA). The General Assembly created the Economic Relief and Recovery Cash Fund last year to receive ARPA dollars and transferred nearly $850 million into it; investment in water infrastructure is among the eligible uses. It also established an Economic Recovery Task Force to recommend how to spend those funds. Sen. Cleave Simpson, R-Alamosa, who is also General Manager of the Rio Grande district and a co-sponsor of the bill, has requested $80 million from the task force to support the bill. The governor’s budget includes $15 million as a starting point.

Neither district is looking for a handout. The Republican has already assessed its water users $148.5 million to retire irrigated land, purchase or lease surface and groundwater, and pipe groundwater to the river near the Nebraska border to meet Colorado’s water delivery obligations. Aaron Sprague, a member of its board of directors, said the district had retired 42,000 acres of irrigated land since 2006 and thought they were in compliance, but then a court stipulation signed in 2016 by the three states, requiring 25,000 acres additional acres be retired, “effectively moved the goal posts on us.” The district has retired 3,000 acres of that additional land so far. Sprague figures the economic impact of well shutdowns to be $2.2 billion annually on local, regional and state economies.

Although the Rio Grande is also part of an interstate compact among Colorado, New Mexico and Texas, the issue there is reducing groundwater pumping to sustainable levels pursuant to state law. What constitutes sustainability is different in the shallow and deep aquifers that underlie the Rio Grande’s San Luis Valley, but it basically boils down to balancing inflows and outflows—precipitation, which averages less than 7” per year in that region, and return flows equaling groundwater withdrawals. As in the Republican basin, the Rio Grande district has taxed its farmers $69 million since 2006 to take irrigated land out of production and cut groundwater pumping, with 13,000 acres retired and well pumping reduced by a third in that period.

But 3,000 wells and 170,000 irrigated acres are at risk if the Rio Grande doesn’t meet the 2029 deadline. How would that affect the valley? Simpson emphasized that, “Irrigated agriculture in the San Luis Valley has about a $1 billion annual impact on our community…the culture, the economy were all built around it.”

The cost

So how much would it cost and where would the money come from? David Robbins suggests that each district would need at least $50 million “over and above” what they already have spent to achieve compliance. Sen. Jerry Sonnenberg, R-Sterling, another co-sponsor whose district includes the Republican River Basin, said he wasn’t sure $150 million total would be enough. “When commodity prices are where they are,” he noted, “it’s much more difficult to retire acres.” Corn now is selling at over $6/bushel, its highest level in years, making irrigated acreage more valuable.

The bill will go next to the Senate floor for debate. It has strong bipartisan support and is identical to a bill recommended by the interim Water Resources Review Committee last fall. But as Sen. Kerry Donovan, D-Vail, committee chair, pointed out, there is no appropriation attached. “This bill just creates an entity,” she cautioned, “and then we’ve got the real hard work to do of making sure we find money to put into it.”

Larry Morandi was formerly director of State Policy Research with the National Conference of State Legislatures in Denver, and is a frequent contributor to Fresh Water News. He can be reached at larrymorandi@comcast.net.

#Drought news (February 17, 2022): 1-category degradations were made to parts of W. and S. #Colorado based on longer-term SPIs and current #snowpack

Click on a thumbnail graphic to view a gallery of drought data from the US Drought Monitor.

Click on the link to go to the US Drought Monitor website. Here’s an excerpt:

This Week’s Drought Summary

A broad area of surface high pressure resulted in little to no precipitation throughout the contiguous U.S. from February 8 to 14. During this 7-day period, the most significant precipitation (more than 0.5 inch, liquid equivalent) was limited to the Cascades, Upper Mississippi Valley, northern New England, and the Florida Peninsula. Following a wet December with beneficial snowfall, a persistent area of mid-level high pressure anchored near the West Coast led to drier-than-normal conditions across the western U.S. since early January. During the second week of February, above-normal temperatures prevailed throughout the West and much of the Great Plains. Drier weather returned to Puerto Rico by mid-February, while enhanced trade wind showers resumed across the eastern side of Hawaii’s Big Island…

High Plains

Moderate drought (D1) was degraded to severe drought (D2) across central Kansas and merged with ongoing D2 in southwest Kansas, based on 120-day SPI and soil moisture indicators. Since a 1-category degradation was made the previous week across northern Kansas and eastern Nebraska, these areas remained status quo this week given the time of year when worsening conditions are slower to be realized in terms of impacts. Farther to the north, recent dryness with a lack of snow cover and above normal temperatures resulted in an increase of abnormal dryness (D0) and moderate drought (D1) across northern Nebraska and South Dakota. The updated depiction across the northern to central Great Plains follows closely the 30 to 90-day SPI and soil moisture indicators. Also, the SPI dating back 24 months was also weighed. Drought impacts for South Dakota include many days of high fire danger which is unusual during the winter, low stock ponds, and adverse conditions for recreational snowmobiling. Farther to the north across northern and eastern North Dakota, SPIs at various time scales supported a 1-category improvement. Recent snowfall (6 to 12 inches) and 6-month SPIs prompted a 1-category improvement to the Denver/Boulder metro areas, while 1-category degradations were made to parts of western and southern Colorado based on longer-term SPIs and current snowpack…

Colorado Drought Monitor one week change map ending February 15, 2022.

West

An expansion of extreme (D3) drought was made to parts of south-central Montana, based on SPI and EDDI at various time scales and soil moisture indicators. Although only light precipitation (less than 0.25 inch liquid equivalent) was observed in northeast Montana, a small area was improved from D3 to D2 due to a reassessment of indicators such as SPI values. Continued improvement of long-term SPI supported a slight reduction of D4 in northwest Montana. Severe (D2) drought was increased slightly in coverage across southwest Utah, as a result of low streamflows (below the 10th percentile) and 30-day SPI. 12-month SPEI along with worsening soil moisture indicators and 28-day average streamflows supported a 1-category degradation across parts of Oregon and adjacent areas of northwest California. The lack of precipitation since early January resulted in 28-day average streamflows falling below the 10th percentile throughout much of western Oregon. Following the persistent dryness since early January and above normal temperatures from early to mid-February, California’s statewide snowpack decreased to 73 percent of normal on Feb 14. If the dry pattern persists through the remainder of February, degradations in the current drought levels may be necessary for the remainder of California…

Southern Plains Drought Monitor map February 15, 2022.

South

Based on 90-day SPI values and soil moisture indicators, a 1-category degradation was made to parts of Arkansas and adjacent northwest Mississippi. Impacts related to these worsening drought conditions include dry ponds and continued high fire danger. The previous week’s D2 areas in southwest Mississippi and adjacent Louisiana were merged and slightly expanded eastward, consistent with SPoRT soil moisture percentiles, 28-day average streamflows, and 90-day SPI values. Precipitation deficits of more than 8 inches are observed during the past 90 days across a broad area of the Lower Mississippi Valley. Statewide precipitation across Mississippi during November-December-January was the driest since 1985/86. On February 15, a statewide burn ban was issued for Louisiana. An expansion of extreme drought (D3) was made across north-central Oklahoma, based on 90-day SPI and worsening soil moisture indicators. Persistent dryness along with periods of above normal temperatures and enhanced winds this winter prompted an expansion of severe to extreme drought (D2 to D3 ) across the middle Rio Grande Valley. Despite a dry week, a reassessment of SPI values at various time scales and soil moisture indicators supported a 1-category improvement from moderate drought (D1) to abnormal dryness (D0) across the southern Edwards Plateau. According to the USDA’s National Agricultural Statistics Service, 77 percent of the topsoil moisture was rated as poor to very poor across Texas as of February 13. Nearly two-thirds of oats, winter wheat, and rangeland and pastures were rated in poor to very poor condition…

Looking Ahead

On February 17, a low pressure system is forecast to develop with a subsequent track northeastward to the Ohio Valley and Northeast. A swath of snowfall, potentially more than 6 inches, is expected to the northwest of surface low track from the central Great Plains to the Midwest. In the warm sector of this storm system, thunderstorms with locally heavy rainfall (more than 1 inch) are forecast from the Ohio River south to the Lower Mississippi Valley. Mostly dry weather is likely across the Coastal Plain of the Southeast and Florida from Feb 17 to 21. As mid-level low pressure develops over the West on Feb 20 and 21, snow is anticipated to overspread the Cascades, Sierra Nevada Mountains, Great Basin, and Rockies.

The Climate Prediction Center’s 6-10 day outlook (valid Feb 22-26, 2022) depicts a major pattern change over the West and north-central U.S. from earlier in the month. Large probabilities (more than 70 percent) of below normal temperatures are forecast throughout the West and much of the Great Plains. Conversely, large probabilities (more than 70 percent) of above normal temperatures are forecast across the Mid-Atlantic and Southeast. Below-normal precipitation is favored for the Pacific Northwest, Great Basin, California, and Florida. A storm track, consistent with La Nina, elevates probabilities for above normal precipitation across the Ohio and Tennessee Valleys.

US Drought Monitor one week change map ending February 15, 2022.