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Co-ops confident about meeting new carbon mandates

Copyright © 2019 Albuquerque Journal

New Mexico’s rural electric cooperatives are depending on Tri-State Generation and Transmission Association to help them meet the rigorous, carbon-free mandates contained in the state’s new Energy Transition Act.

The law, which took effect in June, obligates New Mexico’s 19 co-ops to derive at least 50% of their electricity from renewable resources by 2030. That grows to 80% renewable and 100% carbon-free by 2050.

To comply, New Mexico’s 11 Tri-State member co-ops are relying on their wholesale energy supplier to steadily transition away from its current reliance on coal-fired generation while adding a lot more renewables to the grid.

Lawmakers agreed to hold Tri-State accountable for meeting the mandates, not the distribution cooperatives that buy its wholesale power, said Continental Divide Electric Cooperative CEO Robert Castillo.

“The initial legislation made distribution cooperatives responsible, but we lobbied to explain that we don’t generate the electricity,” Castillo said. “Under the amended legislation, Tri-State is responsible, and Tri-State has said it will meet those obligations on our behalf.”

The law also allows hydroelectric power to count as renewable, easing the burden for Tri-State and some member cooperatives that use hydropower, said Keven Groenwold, general manager and CEO for the New Mexico Rural Electric Cooperative Association.

Given those caveats, most Tri-State members are upbeat about the mandates.

“I’m very confidant,” said Otero County Electric Cooperative General manager and CEO Mario Romero. “We negotiated a good place for the co-ops under the new law.”

Tri-State is now designing a road map to meet carbon mandates that calls for incremental retirement of coal installations, new utility-scale solar and wind, and more flexibility for member co-ops to pursue renewable projects on their own.

Some of that, however, could be painful for New Mexico, since Tri-State is likely to close its 250 megawatt Escalante coal plant near Grants in the near future. About 240 people currently work at the plant and nearby coal mine.

“The prognosis isn’t good,” said Castillo of Continental Divide. “We don’t know how soon Escalante will close, but it’s under consideration by Tri-State.”

For now, with Tri-State managing transition to renewable and carbon-free resources for its members, few New Mexico co-ops are inclined to consider contracts with alternative power provider Guzman Energy, which offers faster renewable adoption with potentially significant cost savings compared with Tri-State. But if Tri-State’s fails to control costs as it shuts down coal plants and builds renewable infrastructure, that could change.

“Tri-State is committed to not raising rates for the foreseeable future,” Groenwold said. “We’ll have to see if it can hold to that or not. There’s always upward pressure on rates, and all the cooperatives are paying close attention to expenses and revenue.”

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