Tri-State Electric Co-op CEO Favors ‘Pencils Down’ Approach on Clean Power Plan

(June 9, 2016) — The top executive of Tri-State Generation and Transmission Association, Inc. today said he supports halting preparations for the Clean Power Plan until the Supreme Court stay of the rule is lifted.

“We have supported states ‘putting the pencil down’ for many reasons, but primarily because we feel it is wasteful to spend the money of tax payers and consumers to develop a plan for an unknown target,” said Tri-State CEO Micheal McInnes. “There are so many variables that could change that any plan developed today likely would have to be redone.”

McInnes delivered his remarks (PDF) during a U.S. Senate Environment & Public Works Committee hearing on the implications of the stay for the Clean Power Plan. Tri-State, based in Westminster, Colo., is a wholly member-owned generation and transmission cooperative serving distribution co-ops and public power districts in Colorado, Nebraska, New Mexico and Wyoming.

McInnes testified, however, that his co-op has reluctantly continued discussions with state regulators that are moving forward to ensure that its concerns with the Clean Power Plan are heard even though the rule is stayed. He noted that the state regulatory agencies Tri-State works with have taken different approaches to the stay: Two states are continuing to develop implementation plans – albeit at a slower pace – and three states have stopped preparatory work.

One of Tri-State’s main objections to the Clean Power Plan is that it fails to account for the ways in which electric co-ops are different from other utilities. McInnes pointed out that co-ops are not-for-profit businesses with far fewer customers per mile of line than investor-owned and municipal utilities, which means there are fewer customers over whom compliance costs can be spread.

He also said that during a time of significant cooperative growth in the late 1970s and early 1980s, the Power Plant and Industrial Fuel Use Act precluded Tri-State from using natural gas to produce electricity, making coal the most proven and affordable generation choice. Since then, Tri-State has invested hundreds of millions of dollars on pollution control upgrades to its coal fleet, which has significant remaining useful life. The co-op would face very substantial stranded asset costs if forced to shutter them prematurely.

Like Tri-State, NRECA supports the Clean Power Plan stay, because charging ahead with implementation of the rule would have caused immediate and irreparable harm to America’s electric co-ops. States and co-ops would be forced to spend time, money and resources developing implementation plans likely to be scrapped if the rule is thrown out—planning is moving ahead in some states regardless—and many co-ops would have to make immediate decisions on future generation needs with significant, unrecoverable financial impacts.

The National Rural Electric Cooperative Association is the national service organization that represents the nation’s more than 900 private, not-for-profit, consumer-owned electric cooperatives, which provide service to 42 million people in 47 states.