The MPE Board voted to participate in the optional Partial Requirements Contract, a product Tri-State was offering in response to requests from Tri-State member co-ops for greater flexibility, lower cost of power, diversity of power supply, local renewables, and so on. Participating Tri-State members could achieve these goals through a buy-down payment (BDP), allowing those members to purchase a certain amount of power from a supplier other than Tri-State. MPE and six other co-ops attempted to take advantage of this option with the understanding that MPE would soon be able to self-supply or purchase from another energy provider up to 50% of MPE’s power needs. The details of the BDP became contentious for Tri-State, ended up before the Federal Energy Regulatory Commission (FERC), and this option was withdrawn from consideration at FERC in 2024. When the BDP process stalled out at FERC, in late 2022, MPE began to look at the option for a full exit.

The MPE Board voted to provide notice of withdrawal to Tri-State.

MPE publishes a request for information (RFI) for potential power supply providers. MPE received four responses to the RFI.

The MPE Board set a power supply goal as a part of the organization’s strategic planning process: “Negotiate a power supply contract that provides reliability, affordability, and flexibility for the (MPE) membership.” During the discussion, the board ranked the priorities of a new power supply contract: reliability, affordability, flexibility, organizational strength, and a term of 15-20 years.

The MPE Board reviewed the RFI responses and gave the General Manager direction to proceed with negotiating a wholesale power supply contract with Guzman Energy, as that organization’s response best fit the priorities outlined by the board. Proceeding with Guzman Energy was also the staff recommendation.

MPE announces a 20-year power supply agreement (PSA) with Guzman Energy.

Reliability

• Reliability always has been and will always continue to be a priority of our members, board, management, and staff. Guzman will have the responsibility of maintaining a balanced set of resources to make sure “the lights stay on” for us and their other power distribution customers.
• Guzman has a mix of resources, including coal, gas, wind, and solar. For us and the other Colorado co-ops, Guzman and other power suppliers (including Tri-State) are mandated to continue to increase the percentage of renewable energy sources to meet state
• Guzman owns generation assets and purchases power from across the U.S., ensuring that electricity will be available even if a certain region or regions are hit by a severe weather event or other issue causing stress on the power grid.

RESOURCE ADEQUACY

MPE’s contract with Guzman Energy includes resource adequacy considerations above current requirements. Simply put, resource adequacy ensures that power suppliers have more than enough power to continuously meet the need for electricity despite fluctuations in power generation and consumption. As load growth continues with more electrification and power suppliers move toward a generation portfolio that relies more heavily on renewable sources, which are more variable than traditional base load generation, resource adequacy requirements will likely increase. Robust resource adequacy was an important factor in our new power supply agreement with Guzman.

TRANSMISSION PARTNERSHIPS

MPE will continue to have transmission partnerships with Tri-State and the Western Area Power Administration (WAPA). MPE will be served through the same transmission systems that serve us today. MPE is working through the contractual changes that are necessary with both WAPA and Tri-State to move forward as ongoing transmission customers after Guzman becomes our power provider. Tri-State and WAPA are both required to meet the same reliability standards on the transmission system, regardless of who MPE’s power supplier is. Guzman will not be responding to transmission outages; the work on transmission systems will continue to be done by the transmission owners (Tri-State and WAPA). Guzman will not be responding to distribution system outages; that work will continue to be done by MPE line crews.

RELIABILITY IMPROVEMENTS THROUGH INCREASED CARVE-OUT

Area community generation projects and those that support MPE’s electric grid will be priorities for the future increased carve-out – or the portion of power that can be purchased outside the power supply agreement (PSA) – under Guzman Energy. One of the driving factors behind the Board’s decision to move toward a new power supplier was for greater f lexibility in purchasing power from other sources, including local generation projects from members. The Board directed MPE staff to move forward with a plan to have three rounds of request for proposals (RFP’s) over the first two years of the Guzman contract to fulfill the 2 MW initial carve-out. Details and scheduling of the RFP’s are yet to be determined, but an early plan of the RFP roll-out includes an RFP round dedicated to prioritizing resiliency, reliability, and system benefit.

EXAMPLE OF RESILIENCY / RELIABILITY / SYSTEM BENEFIT PROJECT

Power generation and/or storage to support reliability for critical community needs, such as emergency services or water/sewer. Pricing and development for future resiliency, reliability, and flexibility of system operations will be the priorities for the RFP process for PPA’s for the remaining bulk of 60,000 MWh with the Guzman carve-out.

FLEXIBILITY

Under Tri-State, MPE had less flexibility to meet members’ requests for local generation projects as there was a 5% carve-out cap. This means that only 5% of MPE’s total load could be purchased from a source other than Tri-State, including locally generated power or MPE-owned generation. The 5% carve-out left no room for additional local generation projects. Under the new contract with Guzman Energy, MPE has the flexibility to purchase an additional 60,000 MWh from sources other than Guzman. In addition to this new larger carve-out, all the current local generation will be grandfathered in, resulting in a nearly 25% carve-out. This is near ly five times the previous carve-out, giving MPE much greater flexibility.

GRANT FUNDING OPPORTUNITIES

The flexibility for direct contracting under the Guzman power supply agreement also opens a plethora of grant-funded opportunities. This includes the New ERA program that, if awarded, could bring up to $100 million to MPE for the power supply transition and possible projects to improve our grid’s reliability and resiliency. These funding opportunities would not have been possible under the constraints of our Tri-State contract.

MANAGEMENT STRUCTURE

Another aspect of flexibility benefit from this power supply change involves management structure. MPE has a one-on-one relationship with Guzman and agreements/adjustments can be made quickly to adapt to the rapidly changing energy industry.