| Resource Type | Policy Primer |
| Author / Source | The Center for the New Energy Economy (CNEE), Colorado State University |
| Publication Date | March 2019 |
| Location | Colorado (applicable to co-ops in all-requirements G&T relationships nationally) |
| Initiative Type | Policy, Program |
| Project Complexity | Advanced |
| Recommended For | Board, Staff, State Legislators |
Estimated reading time: 30+ minutes
Why This Matters for Rural Electric Co-ops
This policy primer examines how long-term all-requirements contracts with Tri-State G&T have constrained Colorado distribution co-ops from adopting lower-cost local generation, energy storage, and renewable technologies, even as wholesale power from Tri-State runs 53% above average market rates. Beyond affordability, the primer surfaces governance conflicts that many co-ops in similar G&T relationships will recognize: limited member transparency, board-level conflicts of interest, and contract terms that undermine cooperative principles of autonomy and democratic control.
Co-op leaders navigating their own G&T relationships will find both a useful diagnostic framework and concrete examples of how these tensions have played out and been challenged in a real-world context.
Key Takeaways
| › | Most Colorado rural cooperatives are bound by long-term contracts (until 2050) requiring them to purchase 95% of their power from Tri-State. Policy 115 imposes escalating financial penalties on co-ops that develop local renewable generation. These penalties have increased three times since 2015 and now make even low-cost solar projects uneconomical. |
| › | Rural cooperatives face a significant affordability gap: Tri-State's wholesale rate of 7.5¢/kWh is approximately 53% above the average Western market rate of 4.9¢/kWh, driven largely by Tri-State's coal-heavy generation mix (48% coal as of 2018). |
| › | FERC ruled that Tri-State's cost recovery fees on qualifying renewable facilities violated PURPA; however, Tri-State implemented those fees anyway through Policy 101, illustrating how G&T governance structures can effectively override federal regulatory protections at the distribution level. |
| › | Member transparency and board accountability are structurally compromised: contracts between Tri-State and member co-ops are confidential from member-owners, and distribution co-op board members simultaneously serve on the Tri-State board, creating an unresolved conflict of interest between their roles as buyer and seller of wholesale power. |
Implementation Considerations
- Regulatory or Governance Considerations: Co-ops in all-requirements G&T relationships should carefully audit contract terms (particularly provisions like "Policy 115" that restrict local generation or impose fees on self-generated power) as these may conflict with FERC rulings, state net metering statutes, or cooperative principles. Achieving meaningful flexibility may require engagement at the state legislative or PUC level to clarify co-op legal rights.
- Member Buy-In: Driving governance reform requires an informed membership, but cooperative board elections historically see under 10% turnout. Co-ops pursuing contract renegotiation or greater local energy autonomy will need intentional transparency efforts, including ensuring member-owners have meaningful access to the contractual agreements that govern their utility.
Notable Examples
- Delta-Montrose Electric Association (DMEA)
- Kit Carson Electric Cooperative
Estimated reading time: 30+ minutes
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