Tri-State board approves 2007 operating budget of $991 million

Tri-State Generation and Transmission Association's board of directors has approved the power supplier's 2007 operating budget of $991 million, which includes an increase in the average Class A wholesale rate to its 44 member electric cooperatives - from 5.1 cents per kilowatt-hour to approximately 5.65 cents per kilowatt-hour effective Jan 1, 2007 - while cutting in half the premium charge associated with its renewable energy program

Tri-State Headquarters

J.M. Shafer, Tri-State general manager

Tri-State executive vice president/general manager J.M. Shafer said that the consistent increase in demand for electricity among the 44 member systems, combined with the fact that all of the association’s existing baseload generation resources are fully committed, puts Tri-State in the unenviable position of having to raise rates in order to meet its obligations.  “Until we get some new baseload generating facilities developed, we’re going to have to buy expensive power on the open market to meet the growth.  Because of that, our purchased power costs are projected to increase from $204 million this year to nearly $247 million in 2007, which makes up a significant portion of our operating budget” he said.

“Along with rapid system growth, comes increased financial obligations, which must be met to maintain our fiscal stability and the continued health of our power supply infrastructure,” Shafer continued. “We’re working toward a period of operational stability by building additional facilities to meeting the growing loads, but in the meantime, we’re facing numerous challenges - and pressure on rates is primary among them.”

In August 2005 the Tri-State board took action to address the pending power supply deficit when it authorized a comprehensive resource development plan aimed at adding to the association’s generation and transmission network through a series of projects over the next 15 years, which includes up to 2,100 megawatts of generation assets and the necessary related transmission infrastructure.

“To move forward and return to an era punctuated by reasonably stable member rates, we must take action to strengthen our financial standing in order to acquire the necessary funds to develop these much-needed facilities. Right now we are doing everything in our power to accelerate the process of securing those new generation and transmission resources,” Shafer said.

Rates charged by each of Tri-State's 44 member distribution systems are set independently of each other and of Tri-State, depending on the specific financial and operational circumstances faced by each member system. Wholesale power supply expenses normally make up the largest component of retail costs.

Since the inception of its voluntary green power program in 1999, Tri-State has made available to all of its members energy derived from a variety of renewable resources, with a $2.50 per month premium charge on every 100 kilowatt-hour block per month sold. However, due to the current favorable conditions in the renewable energy credit market, that premium will be reduced by 50 percent (to $1.25 per 100 kilowatt-hour block per month), effective Jan. 1, 2007.

Headquartered in the Denver suburb of Westminster, Tri-State employs more than 1,000 people throughout Colorado, New Mexico, Nebraska and Wyoming, and lists assets of $2.4 billion. The association owns a total of 1,629 megawatts of capacity at six different coal-based generating facilities in the region and 525 megawatts from various natural gas-fired combustion turbine plants. Along with an allocation of federally-generated hydroelectricity, Tri-State also provides to its member systems green power produced from renewable resources.

The 44 electric cooperatives and public power districts to which Tri-State supplies power cover a 250,000-square mile area of Colorado, New Mexico, Nebraska and Wyoming. The member systems, in turn, serve more than 560,000 meters, translating to a population of approximately 1.2 million end-use consumers.