The La Plata Electric Association convened Friday and formally voted to propose a rate increase slated to go into effect April 1. On average, rates will go up 7.7%.
The rate increase is surrounded by swirling fears that LPEA’s scheduled April 1, 2026, exit from its contract with wholesale power supplier Tri-State Generation and Transmission Association will cause electricity costs to spike even more.
“We’re going to have a big, big increase in rates, that just can’t just be denied,” said Dave Peters, former chairman of the La Plata County Republican Party who has tried to rally residents to speak up against the exit.
But Chris Hansen, LPEA’s new chief executive, is denying it. He is trying to assure the co-op’s customers (who are also its owners) that “that is not going to happen to us.”
LPEA will have to pay an estimated $210 million fee to escape a restrictive contract with Tri-State that currently obligates LPEA to buy no less than 95% of its power from the wholesaler through 2050. That estimated fee will be set in stone by the Federal Energy Regulatory Commission just a month before the exit actually occurs.
After years of debate and negotiation, the co-op’s board of directors voted in March 2024 to leave the Tri-State contract so that LPEA can pursue greener and local power generation.
It is mostly myth that LPEA is raising rates to cover the exit costs – but not entirely.
LPEA’s latest rate increase, which is open to public comment through March 16, is the first levied by the co-op in five years. However, rates jumped on average 4% last year when Tri-State raised its prices 6.4%, and that got passed on to consumers.
The board of directors is expected to formally approve the increase on March 26, and it would go into effect April 1. Residential customers would, on average, see an increase of 6.7%, or $7.54, on their monthly bill.
That’s mostly to cover inflation over the last five years, Hansen said.
“We’ve had increased material costs – the price of copper and transformers and breakers – all the equipment we use. And then, of course, we’ve got our own escalation on the labor costs,” he said.
LPEA has also recognized that the transition away from Tri-State does factor into it.
“A component of this rate adjustment does include preparing for the energy transition,” one line of an email sent to members Tuesday said.
Two other co-ops in Colorado have left Tri-State in recent years, as well as Kit Carson Electric Cooperative in Taos, New Mexico.
Peters said at a meeting of county Republicans earlier this month that members of the Delta-Montrose Electric Association, which left Tri-State in 2020, saw their bills jump 40%. In an interview with The Durango Herald on Tuesday, Peters said he is awaiting documentation from DMEA customers that show the increase.
However, the numbers reported by DMEA and United Power, which left in 2024, do not support that claim.
According to DMEA’s annual reports, the average monthly residential bill in 2019 (the year before the co-op left Tri-State) was $107 and the co-op spent $43.6 million on wholesale power, of which at least 95% was purchased from Tri-State. In 2023, (the latest year for which numbers are available), DMEA’s average monthly residential bill had risen to $109 – 1.9% – and its wholesale power costs were $39 million, a decrease of 10.5%.
DMEA contracted with Guzman Energy, a private wholesale supplier, which paid the co-op’s $62.5 million exit fee to Tri-State in exchange for a 12½-year contract with DMEA.
United raised rates following its exit as well, but nowhere near the 40% level. The average monthly bill went from $125 to $136 – an increase of 8.8%.
The co-op paid Tri-State $627 million to leave its contract and, like LPEA, is purchasing about 30% of its power from the wholesaler under less restrictive terms.
Hansen is trying to assure LPEA members that rumors of 40% bill increases at other co-ops are untrue and “not going to happen to us.”
It is “absolutely correct,” Hansen said, that rates will not jump immediately after the exit in order to cover the cost.
According to Hansen, it is untrue that leaving Tri-State will cost LPEA members more – and he’s on-record saying so.
The fees associated with exiting the contract are broken down into two large chunks: about $60 million in up-front payment to continue using Tri-State-owned infrastructure, and about $150 million to pay off LPEA’s portion of debt that Tri-State has accrued, which is largely tied to shuttered coal power plants.
But, LPEA says, opponents are incorrectly thinking of the $150 million debt payment as an additional cost rather than something LPEA will pay one way or another.
“We’re basically just paying for the debt that we already are on the hook for,” Hansen said.
Rather than pay it on a monthly basis, LPEA will take out a loan to make a one-time payment to Tri-State and then pay off the lender. The interest rates for that loan have not been settled, according to the CEO, and should be available sometime this fall.
Hansen said he’s well aware of the belief that staying with Tri-State would be cheaper. But, he said, “We continue to see a clear signal that that is not the case.”
Some people, such as longtime La Plata County resident Steve Harris, have called on LPEA to reverse its decision to leave Tri-State.
“It is time to declare victory and avoid the potential negative economic and lifestyle impacts … associated with withdrawal,” Harris wrote in a December opinion column.
He argued that Tri-State has acquiesced to member co-op demands by transitioning to greener energy (the wholesaler’s latest electric resource plan outlines a transition to 70% renewable energy sources by 2030). FERC has also approved a program that, in short, allow co-ops to exit only part of their contracts.
However, within the month, Harris admitted defeat in a follow-up letter to the editor.
Hansen says LPEA is committed to its current path.
“That ship has sailed,” he said.
And, he noted, LPEA has doubts about Tri-State’s ability to complete the transfer to green energy sources.
Coffee with Chris
La Plata Electric Association CEO Chris Hansen is meeting with community members for informal conversations at “Coffee With Chris” events over the coming months. The events will take place:
- 10 to 11:30 a.m. Feb. 20 at Pine River Library, 395 Bayfield Center Drive in Bayfield.
- 8 to 9:30 a.m. Feb. 25 at Smiley Cafe, 1309 East Third Ave. in Durango.
- 8 to 9:30 a.m. March 27 at Rise & Shine, 410 Goddard Ave. in Ignacio.
- 8 to 9:30 a.m. April 8 at Root House, 445 San Juan St. in Pagosa Springs.
“Tri-State certainly has a plan to get to lower carbon (emissions), but that plan is heavily dependent on federal (subsidies), and that means that they have a huge amount of risk with the new administration right now, and so those plans are, frankly, uncertain,” Hansen said.
The LPEA board will meet in person Wednesday, Feb. 19, and again virtually on March 26, when it will consider the rate increase before a final vote. Information on the increase is being circulated to members and is available online.
rschafir@durangoherald.com
