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JOINT COMMENTS TO TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION ON ITS OCTOBER 9, 2006 INTEGRATED RESOURCE PLANNING PRESENTATION

On October 9, Tri-State Generation and Transmission Association (Tri-State) held a meeting to present its integrated resource plan (IRP) to interested parties. The above listed parties were represented at that meeting and with this document submit joint comments. These comments generally follow the IRP regulations in 10 CFR 905. However, due to the relevance of the public participation requirements of the regulations, this element will be addressed first. In addition, while the load forecasting requirement are near the end of the Federal regulatory requirements, it will be addressed directly following the public participation process due to its importance as the starting point in resource planning.

Each section contains a narrative set of comments, along with specific enumerated comments and requests for data, information, or analyses consistent with the requirements of Section 905.11(4) to share information with the public and to respond to public comments.

The Public Participation Process

Tri-State is considered a member-based association (MBA) defined by the regulations to mean an entity composed of member utilities or user members. As such, it may submit an IRP on behalf of its 44 members. However, as part of the public participation process, the governing body of an MBA and each MBA member (such as a board of directors or city council) must approve the IRP, confirming that all requirements have been met. To indicate approval, a responsible official must sign the IRP submitted to Western or the customer must document passage of an approval resolution by the appropriate governing body included or referred to in the IRP. To the best of our knowledge, not a single board member from any Tri-State member cooperative was present at the October 9 meeting. Moreover, we were informed that the October 9 meeting was the only public participation meeting held by Tri-State under 10 CFR 905.11(b)(4). Thus is appears that this requirement also has not been met.

In addition, because Tri-state is submitting this IRP to Western on behalf of each of its members, resources that may be traditionally implemented at the retail level cannot be shortchanged. In particular, demand-side resources must be given the full evaluation on a consistent and integrated basis with supply-side resources.

Section 905.11(4) addresses the public participation requirements of the IRP regulations. The October 9 meeting was held to fulfill this requirement, which is repeated here.

The customer must provide ample opportunity for full public participation in preparing and developing an IRP (or any IRP revision or amendment). The IRP must include a brief description of public involvement activities, including how the customer gathered information from the public, identified public concerns, shared information with the public, and responded to public comments. Customers must make additional documentation identifying or supporting the full public process available to Western upon request.

Certain sections of the IRP regulations provide the customer with some degree of flexibility, however these regulations are quite specific.

·  The customer [Tri-State as their representative] must provide ample opportunity for full public participation in preparing and developing an IRP

Tri-State is a wholesale electric power supplier owned by the 44 electric distribution cooperatives that it serves. Tri-State generates and transmits electricity through over 5,000 miles of lines to its member systems throughout a 250,000-square-mile service territory across Colorado, Nebraska, New Mexico, and Wyoming, providing electricity for over a million people. We are puzzled that Tri-State feels it can satisfy this requirement with a single meeting in Westminster, CO. Given the importance of this resource plan to end-use customers from both a supply and rate impact perspective, why was the October 9 meeting so poorly attended?

We believe that Tri-State, as an MBA, should hold public participation meetings within the territory of each and every member cooperative it serves. It held one meeting only. We believe that one meeting does not constitute ample opportunity.

The second part of this requirement explains that the purpose of public participation is for preparing and developing an IRP. The structure of the meeting was not collaborative, but presentational. Yes, questions were allowed, but the standard answer was to put concerns and suggestions in the IRP comments where they would be given due consideration. Without follow-up meetings and opportunities to run iterative production models, even the few people attending the meeting have no way of knowing if their comments are truly considered. These concerns are emphasized by the second requirement of the public participation process.

·  The IRP must include a brief description of public involvement activities, including how the customer gathered information from the public, identified public concerns, shared information with the public, and responded to public comments.

This requirement clarifies that the purpose of the public participation process is to work with the public to address concerns, share information, and respond to comments. We described above the lack of public involvement activities. In addition, Tri-State refused to provide the underlying data for the presentation itself. It was asked specifically for the load data represented on the slides, and more generally for data represented graphically on other slides. The response was that this process was not under the auspices of the PUC, and it was not required to provide such information.

We want to emphasize that it is impossible to have public participation when the data upon which major decision are made is not available. Tri-State cannot claim to have provided ample opportunity for public participation as the process currently stands.

Specific Comments and Requests:

1.  Please describe the process used to invite the retail customer-owners of each Tri-State member cooperative.

2.  Please make all replies received available to the public participants.

3.  We request that Tri-State hold a public meeting within the territory of each member cooperative to provide an opportunity for all to participate.

Section 905.11(5) Load forecasting

In comparison to the requirements of many state public utilities commissions oversight of investor-owned utilities, the IRP regulations do not set a high hurdle in terms of load forecasting. Nevertheless, we have some very serious concerns with Tri-State’s forecast. Of greatest concern is the lack of data availability. Attendees to the October 9 presentation were left with a set of simple charts whose ostensible message is that load growth outpaces available resources. With 5,000 MW and 30,000 MWh represented on the y-axis of fairly truncated charts, the visual error factor could easily be a couple of hundred MW or a few thousand MWh. This certainly makes discussion difficult when attempting to review a utility system purportedly growing at 100 MW annually.

Setting aside the lack of opportunity to review the information more accurately, there are several issues which jump out at even the casual observer. First, the member demand is shown on slide 37, with the base case growing to about 3100 MW in 2025. Interestingly, this growth curve is slightly below the equivalent projection from the October 2005 Annual Progress Report that Tri-State filed with the Colorado PUC. Turning to slide 40, it appears that Tri-State’s current capacity, represented by the solid areas across the bottom of the graph reach 3100 MW in about 2012 and remains there through 2025. The obvious conclusion is that Tri-State has roughly sufficient resources to meet its member load growth through about 2025.

However, also on slide 40 is a line representing “total obligations.” We do not know what this line represents, but it grows nearly 1000 MW in two years and generally seems to be about 1200 MW higher than the member demand. It certainly seems clear that the difference between this line and the projected member demand is non-member demand.

The capacity represented on slide 40 seems to represent the current capacity of Tri-State, but not some of the other capacity additions about which we have read. These include efficiency upgrades at the Craig and Laramie Stations, the Dry Fork unit, and an additional 75 MW Tri-State and Basin have been discussing.

Finally, slide 42 represents projected capacity and energy shortfalls, and also shows the equivalent load factor. Fifteen of the nineteen annual load factors exceed 100% - a mathematical impossibility. A particular load cannot be on the system more than 100% of the time. While it may be that Tri-state would prefer to run its units differently than it does presently, the fact remains that if sufficient capacity exists to meet peak demand, then sufficient energy can be generated to meet the consumption requirements. Any other operational scheme must be thoroughly explained, alternatives reviewed, and costs analyzed to determine the optimum mix of resources. Tri-State has not done this analysis.

Specific Comments and Requests:

4.  We renew our request for the underlying data for each of the slides using a graphical depiction in the October 9 presentation.

5.  There is no explanation of the large difference between the member load of slide 37 and the total obligations of slide 40. Please include an explanation in your IRP.

6.  The resources available appear to be constant over the planning period, yet there are other capacity expansions that will occur. Please provide a year by year accounting of available resources.

7.  Please provide a detailed explanation of the load factor determination, and an explanation as to why the capacity available cannot be run at higher levels to provide the required energy. The explanation should include a summary of Tri-State’s comparative analysis of the costs of meeting the energy requirements through a diverse set of resource mixes.

8.  Please break down the anticipated load growth in slides 37 and 40 to residential, large C&I, small C&I, Irrigation, and other.

9.  For the large C&I category, please describe Tri-State efforts to assure that the risks associated with providing service to very large new retail loads has been adequately addressed, and identify the risk management strategies utilized.

10.  Please indicate whether Tri-State has evaluated each of the following risk management strategies for large new retail loads, and if not, please do so.

  1. Long term purchase agreements, with provision for stranded cost recovery;
  2. Posting of bonds for potential stranded cost recovery;
  3. Contributions in Aid of Construction for the necessary generation and transmission;
  4. Construction of distributed local facilities to serve a portion (up to 100%) of these loads;
  5. Initiating rate structures that encourage more efficient use of energy; and
  6. Surcharges for unusual and risky loads.

Integrated Resource Plan Overview

Returning now to the resource planning requirements, Tri-State began its presentation with the general description of IRP from the Code of Federal Regulations (10 CFR 905.11(a)) and we will repeat it here to provide context.

General. Integrated resource planning is a planning process for new energy resources that evaluates the full range of alternatives, including new generating capacity, power purchases, energy conservation and efficiency, cogeneration and district heating and cooling applications, and renewable energy resources, to provide adequate and reliable service to a customer's electric consumers. An IRP supports customer-developed goals and schedules. The plan must take into account necessary features for system operation, such as diversity, reliability, dispatchability, and other risk factors; must take into account the ability to verify energy savings achieved through energy efficiency and the projected durability of such savings measured over time; and must treat demand and supply resources on a consistent and integrated basis.

This broad overview of IRP is informative in that it first provides a general description of a planning process, but follows with specific requirements. The plan must:

·  take into account necessary features for system operation, such as diversity, reliability, dispatchability, and other risk factors;

·  take into account the ability to verify energy savings achieved through energy efficiency and the projected durability of such savings measured over time; and

·  treat demand and supply resources on a consistent and integrated basis.

We don’t believe that Tri-State has complied with the “must” statements from the general description of Western’s IRP regulations. The shortcomings will be described in more detail below. In addition, the general description indicates that an IRP supports customer-developed goals and schedules. The IRP presentation did not identify any goals and schedules of the customers.

At a macro level, Section 905.11(1) requires that the options evaluated should relate to the uniqueness of each Western customer including existing system data and rates. A key feature of Tri-State’s existing system is its heavy emphasis on pulverized coal generation. In 2004 and 2005, approximately 78% of its energy was generated with coal using a single pulverized coal technology. Clearly, the first necessary system operation feature in the general IRP description – diversity – will not be accomplished through the construction of three more pulverized coal plants totaling 2100 MW – more coal capacity than Tri-State has on its system today.

Specific Comments and Requests:

11.  Please identify any goals and schedules of the members of Tri-State, when and how the goals and schedules were developed, and describe how the IRP supports such customer-developed goals and schedules.

12.  Please explain how the IRP promotes diversity of resources.

Section 905.11: Requirements of an IRP

Part (1) of this section is the identification of resource options. The “identification and comparison of resource options is an assessment and comparison of existing and future supply-and demand-side resource options available to a customer based upon its size, type, resource needs, geographic area, and competitive situation.” Tri-State provided a cursory pro and con analysis of resource options that did not take into account the resource situation unique to each Western customer. For example, the geographical characteristics of some of its member’s service areas are ideally suited to wind generation and indeed have some of the best wind resources in the nation. Moreover, many of these same members, particularly those in eastern Colorado, have been suffering economically and have had declining sales. Developing wind generation in the territories of the members would not only help to meet growing load requirements, but also provide a boost to local economies in the form of taxes, jobs, and royalties. The reasons provided by Tri-State as to why wind was not selected were: