LPEA

La Plata Electric Association, Inc. P.O. BOX 2750 Durango, CO 81302-2750
Phone: (970) 247-5786 0 Fax (970) 247-2674

A Touchstone Energy? Cooperative Kr .Ipea.coop

December 21, 2018

Michael McInnes, Chief Executive Of?cer

Tri-State Generation Transmission Association, Inc.
1100 West 116th Ave.

Westminster, CO 80234

Dear Mike:

Thank you, Ken, Brad and Pat for attending Committee of the Whole meeting
Monday, December 10th. We appreciate the time you took to talk with us about our
concerns about Tri?State?s debt and the resolution we jointly arrived at regarding the ?go?
shop? letter.

directors and I discussed in detail your comments and responses to the concerns
expressed regarding Tri?State?s debt at regular board meeting on
Wednesday, December 12. The Board majority asked me to follow up with you and would
appreciate your response to the following:

II Tri?State?s bulleted debt as an industry practice, as we stated, is not a concern, except
for those notes for which Tri?State is receiving through rates principal and interest
repayment, but is not applying the principal to reduce that debt. Bulleted debt that
forces principal repayment to the end of with an expectation of re?nancing
that debt, coupled with potential increasing debt costs, plus a likely decrease in the
value of Tri?State?s coal ?eet, all point to increase rates through WESC
contract horizon. LPEA does not feel TS responded to these points, questions, and
concerns.

0 With interest rates increasing from a period we all agree is low, the risks of principal
balances not being reduced and the assumption that an aging ?eet of mostly coal
plant with the risks we see of 1)likely increases in capital expenditures for things such
as C02 sequestration, and 2) other improved environmental standards, may not
sufficiently extend the life of those assets to satisfy prospective lender?s collateral
requirements. Therefore, LPEA is concerned this could put upward rate pressure on
Tri?State rates, that otherwise would not happen if Tri?State used the money it
collected in rates and member exit charges to repay those principal amounts.

LPEA is an equal opportunity provider and employer WF/Disability/Veteran

Ifyou wish to ?le a Civil Rights program complaint of discrimination, complete the USDA Discrimination Complaint Form, found online at
?lmi- or at any USDA of?ce, or call (866) 632-9992 to request the form You may also write a letter containing all of
the information requested in the form. Send your completed complaint form or letter to us by mail at Department of Agriculture, Director, Of?ce of
Adjudication, 1400 Independence Avenue, S.W Washington, 20250-9410, by fax (202) 690-7442 or email at 

 

LPEA

La Plata Electric Association, Inc. PO. BOX 2750 Durango, CO 81302-2750
Phone: (970) 247-5736 0 Fax (970) 247-2674

A Touchstone Energy? Cooperative KT - .Ipea. coop

Additionally, we discussed with you the issue of governance ?exibility. Tri?State?s current
governance structure and the lack of options presented to its member systems is causing
increasing pressure on LPEA and its membership to seek a more ?exible alternative. While
Tri?State commissions rates and contract committees to address member related issues,
those processes have produced little to nothing in the way of ?exibility that LPEA has
sought for increased local renewable generation. LPEA has actively tried to work as a part
of the solution with the white paper I presented to Tri?State, and the current proposal Dan
Harms has introduced under Tri-State Policy 118. Coops should demonstrate ?exibility
through member engagement. LPEA strives to do this with our membership, and we?re
disappointed with the in?exibility we experience with Tri-State.

We look forward to your response or welcome additional dialog on these issues.

 

LPEA is an equal opportunity provider and employer M/F/Disability/ Veteran.

If you wish to ?le a Civil Rights program complaint of discrimination, complete the USDA Discrimination Complaint Form, found online at
?ling cusl .hlml, or at any USDA of?ce, or call (866) 632-9992 to request the form You may also write a letter containing all of
the information requested in the form. Send your completed complaint form or letter to us by mail at US. Department of Agriculture, Director, Of?ce of
Adjudication, 1400 Independence Avenue, S.W Washington, C. 20250-9410, by fax (202) 690-7442 or email at