The Delta-Montrose Electric Association is officially divorced from the Tri-State Generation and Transmission Association.
At the same time, the DMEA took new vows with Guzman Energy, a Denver-based wholesale power supplier.
The transition ends a long-standing dispute between the local power association and the multi-state power cooperative that primarily stems from DMEA’s desire to utilize more renewable energy sources.
Its new partnership with Guzman will allow that to happen and save its customers money on their power bills, DMEA officials said.
“This partnership will make a significant impact on our local community, in the form of price stability, increased local generation and local economic development,” said Jason Bronec, DMEA’s chief executive officer. “We expect to save millions of dollars over the next 12 years. In fact, we have no plans to increase energy rates for our members through 2021 thanks to this beneficial agreement.”
To make it happen, DMEA was required to pay Tri-State a $62.5 million “exit fee” in order to end its contract with the larger cooperative sooner. Guzman paid that fee in order to take over that contract, which had 12½ years left on it.
The local association said its new partnership with Guzman provides it with a more competitive rate.
At the same time, it remains far more flexible to develop local renewable energy sources. Its previous contract with Tri-State limited it to obtaining only 5% of its power from renewable, but under Guzman it can increase that to as much as 20% immediately, with the prospect of doubling that capacity over time.
To start that process, the two are already planning a joint, large-scale initiative to develop at least 10 megawatts of local renewable generation.
Ultimately, DMEA and Guzman hope to increase their renewable generating capacity to at least 40%.
“Local associations, like DMEA, are leading the nation in driving a cleaner, more sustainable energy future by exiting agreements that limit their ability to innovate and better serve their members,” Robin Lunt, chief strategy officer for Guzman, said in a statement.
Guzman has entered into similar agreements with other energy cooperatives and helped municipal electric suppliers get out of similar agreements with large-scale generation and transmission companies, most recently with the city of Fountain south of Colorado Springs, and in Aztec, New Mexico.
Tri-State officials bid DMEA a fond farewell, noting that the local cooperative had been a Tri-State member for nearly three decades.
“We wish DMEA and its consumer-members well,” Duane Highly, Tri-State’s chief executive officer, said in a statement. “The separation of a distribution cooperative and a generation and transmission cooperative after 28 years together is complex, and we appreciate the efforts of our respective teams to complete this work.”