Focused on the Wrong Question – LPEA Spotlight: Sept ’17

By September 27, 2017Coal, Renewable Energy
Photo: Alex Pullen

This blog series covers the monthly La Plata Electric Association (LPEA)* Board of Directors meetings. We’re tracking the board for transparency and accountability, as well as to stay current on their renewable energy initiatives. Find past and future spotlights here.


Renewable energy buzzed at the center of several La Plata Electric Association* (LPEA) meetings last week. Monday, the LPEA Board of Directors discussed renewables in a work session. Tuesday night, LPEA staff held a packed public workshop on the economics of solar. Then, Wednesday, many local citizens in Pagosa Springs spoke in support of renewable energy at the regularly scheduled LPEA board meeting.

Our community is deeply engaged in this conversation and LPEA has taken note. That’s great, but one significant issue arose from this week’s dialogue: we’re focused on the wrong question.

Right now we’re asking… “How do we address LPEA’s ‘subsidizing’ of rooftop solar customers?”

 

Last week, we learned that LPEA loses money when solar customers generate some of their own power behind-the-meter, a cost LPEA staff referred to as a ‘subsidy.’ To address this, Director David Montoya suggested charging these customers extra to pay for the losses. There are two major problems with this conversation: (1) it unfairly vilifies solar, and (2) it doesn’t take into account future changes in the energy economy.

It’s highly problematic to simplistically call out rooftop solar’s expense as a ‘subsidy’ without also discussing LPEA’s many other, likely larger, subsidies. For instance, how urban customers pay more to help cover the high costs of servicing rural customers at the end of power lines. Now, we can get into a lengthy argument over the minutia of LPEA’s expenses and whether or not they’re subsidies. But that’s exactly the point: focusing at this micro level is a waste of time. When we zoom out and look at the question within the larger context of the current energy economy we can have a more productive conversation.

During Monday’s work session Director Guinn Unger presented some startling charts and statistics about the future of LPEA. The graph below shows how rates are expected to rise slightly over time. That’s normal for LPEA, as we buy our energy from Tri-State Generation and Transmission which is chained to its long term coal-fired power investments**. What’s startling is the contrast with projected costs of rooftop solar.

Right now, it costs LPEA customers about the same amount to buy power from LPEA as it does to install their own rooftop solar. But by 2028 the cost of rooftop solar will be half that of paying LPEA. So, when considered at this higher vantage point, it’s clear that this rooftop solar ‘subsidy’ problem is only going to get worse. We have to acknowledge that charging new solar customers extra, as Director Montoya suggests, will eventually only lead to customers buying energy storage and disconnecting from the grid entirely.

The bottom line is that LPEA will lose customers if we don’t do something to swerve away from the status quo. Debating whether or not rooftop solar is a waste of time only misleads us into pitting solar advocates against affordable energy goals. Worse yet, it confuses “behind-the-meter” solar with “utility-scale” solar, which we’ll come back to.

So, what do we do? Well, what if we tried to ask a different question?

What if, instead, we asked… “How can we ensure affordable energy for all of LPEA’s customers now and into the future?”

 

This question is at the heart of every rural electric co-op’s mission and we can look to our neighbor co-ops for ideas, as Director Unger did in his presentation.

As you may have heard, Kit Carson Rural Electric Cooperative in Taos, NM just bought out of their contract with Tri-State for $37 million, with help from Guzman Energy Partners, in order to produce their own solar energy. Why? Because solar will provide more affordable energy for their members. Kit Carson worked the loan repayment into their rate structure so that there is basically no rate increase for the next six years (about the same as LPEA rates)then their rates will drop in half.

That’s right. Half. How? Well, as promised, this brings us back to “behind-the-meter” solar vs. “utility-scale” solar. See, rooftop solar that the customer owns is “behind-the-meter” and LPEA doesn’t get any revenue from it. Utility-scale solar, like what Kit Carson is installing, is the exact opposite – it’s large scale solar that the utility owns and customers pay for. Kit Carson is getting ahead of the curve by installing renewables before their customers do.

We are not Kit Carson and their path is not the only option. But finding answers isn’t the goal of this post. The point is that LPEA is headed into trouble. To keep our rates affordable and competitive we must get creative, we must start thinking about utility-scale solar. Otherwise, our rates will continue to rise with Tri-State’s, we’ll start losing customers to rooftop solar, and those who can’t afford the investment will be hurt the most, unable to break free from the rising costs.

How do we get creative? We stop talking about the problems rooftop solar poses to LPEA and start talking about how we can get ahead of it by obtaining utility-scale solar. Why? Because lowering rates for everyone is a goal we can all agree on.

 

OF INTEREST

  1. HUMAN RESOURCES
    LPEA is hiring! Check out their webpage for the job descriptions.
  2. SOCIAL MEDIA
    LPEA is working to engage with their customers more through social media. Check out their Facebook and Twitter pages to engage directly with their customer service team (and let them know you care about renewable energy!)
  3. EQUITY MANAGEMENT
    LPEA is a member-owned co-op, which means we all have equity invested in the company (through our electricity bills). If LPEA doesn’t spend all the money we give them they are supposed to give it back to us. This means LPEA is constantly balancing how much of their leftover money they should devote to paying off debts vs. giving back to members. At the next board meeting, the LPEA board of directors will vote on whether to change their structure from 50%/50% to 75%(to members)/25%(to debts).

WHAT’S NEXT

  1. COMMITTEE OF THE WHOLE – October 16th, 8:30am-12:30pm
    COW’s are work sessions held periodically for the Board of Directors to meet and take a deep dive into research and topics that there isn’t time to cover in regular board meetings.
  2. NEXT BOARD MEETING – October 18th, 9:00am
    Public comment is accepted first thing and lasts less than one hour. Check back to SJCA for another LPEA Spotlight after! This month LPEA CEO Mike Dreyspring will present his vision for the future of the co-op.

* La Plata Electric Association (LPEA) is a member-owned rural electric cooperative that provides power to La Plata County, Archuleta County, and parts of Hinsdale and Mineral counties in Southwest Colorado. LPEA buys all of its power from Tri-State (see below).

** Tri-State Generation & Transmission Association is a not-for-profit, wholesale power supplier that services 43 electric cooperatives and districts in Colorado, Nebraska, New Mexico and Wyoming, including LPEA.

Leave a Reply