November 27, 2018

Bob Lynch, Board President
La Plata Electric Association
PO Box 2750
45 Stewart Street
Durango, CO 81303
Dear Mr. Lynch,
I am writing today to begin a dialogue with you and, hopefully, meet with you to discuss one of the most
important relationships that we have as distribution cooperatives; our relationship with our generation and
transmission cooperative, Tri-State. For much of the time since 1952, United Power and other Tri-State
Members have enjoyed a mutually advantageous relationship with Tri-State Generation and Transmission
Association. The creation of Tri-State guaranteed an adequate source of electricity for its growing
Members. Throughout the intervening years, the partnership between Tri-State and its Members to
acquire power generation was a key part of our collective rural electric formula.
However, in the more recent years, market forces, regulations, and increasingly outmoded G&T business
models have forced distribution cooperatives and their G&Ts to contemplate more flexible ways of doing
business together. Based on the growing concerns that we have regarding Tri-State’s business strategy
and services that they provide for Members described in the following paragraphs, United Power and other
Members are encouraging Tri-State Members to amend the Tri-State bylaws to include a partial
requirements membership relationship. United Power has already submitted draft bylaw changes to the
Tri-State staff for their review.
I cannot speak specifically to the needs and concerns of the management and Boards of the other 42 TriState members, but the Board members and management of United Power have grave concerns about key
elements of Tri-State’s key generation products and services provided to United Power and its other
Members. Uppermost on our list of concerns is cost. Since United Power abuts Xcel Energy’s service
territory in many locations and competes with Xcel Energy for large industrial loads, competitive pricing
for power is paramount to United Power. Unfortunately, we have discovered that Xcel Energy’s wholesale
combined demand charge and energy charge, for the amount of energy that United Power currently uses
on an annual basis is 28.5% lower than Tri-State’s wholesale combined demand charge and energy charge.
This wholesale cost differential between United Power and our neighbor and competitor is a serious
problem.

 November 27, 2018
Page 2 of 2
United Power also feels that Tri-State’s reluctance to embrace additional sources of renewable energy
generation due to constraints of its largely fossil fuel generating fleet, creates growing problems with our
environmentally conscious residential, commercial, and industrial Members. Our Members are looking
for ways to reduce their carbon footprints, especially our large industrial Members (United Power’s key
accounts). Not being able to deliver on this need due to Tri-State’s generation portfolio mix is also a
serious problem for United Power and its growth trajectory and opportunities.
These two deficiencies alone have caused some Members to continue to propose potential changes to the
way that Tri-State does business. United Power and several other Members have tried to have discussions
with Tri-State, to no avail, regarding the opportunities to create partial requirements contracts. DeltaMontrose Electric Association has amended its articles of incorporation allowing them to buy themselves
out of their all requirements contract with Tri-State. Other Members have confided that they are seeking
solutions that would hopefully “turn the Tri-State ship around”. Thus far, in our experience, the
management of Tri-State and a majority of the Members of the Tri-State Board have tried to thwart the
discussions and solutions that are driven by the Members’ needs and the marketplace.
We would like the opportunity to continue to tell our story and begin a dialog with you and our fellow coops about the partial requirements bylaw changes that we will be bringing to the Tri-State Members for a
vote at the Tri-State Annual Meeting. This isn’t an ‘us’ vs ‘them’; it’s a discussion of where the industry
is going, how all Members can remain financially whole, how Members can gain more flexibility in their
power supply, and how Tri-State can remain relevant and responsive to its Members.
If you would like to be part of this conversation with us, please let us know. We have a presentation that
we would like to share with you in-person or through a webinar format. We would like to talk to you
directly and let you know some of the things we see as critical as we move forward together in a
cooperative way. Please contact our CEO, John Parker, at (303) 637-1219 to schedule some time for us
to visit with you and your team.
Sincerely,

James Vigesaa
United Power Board Chairman
CC: Mr. Michael McInnes, Tri-State Generation & Transmission