New Mexico Co-op Dumps Monopoly Supplier to Offer More Solar — Episode 143 of Local Energy Rules

The first was we wanted more affordable and stable rates. We had just gone through a series of rate increases that we thought were becoming unaffordable. The second is we wanted our members to choose, or our members wanted to choose their power supply or have some options. And one of those options was more solar. And so we exited in 2016, we had had several meetings with our members, but after the exit, uh, in 2016, uh, we established a co-op goal of 100% daytime solar, and then we’re going to hit it by 2022, which ironically was the same year that we would finish paying off that big exit fee that we negotiated with generation & transmission co-op. So you fast forward and we’re going to do it through DER. We’re going to distributed – It may cost a little bit more, but it was a member’s feelings that everyone wanted their kind of their solar facility in their community. And so that will come to benefit us in the future as things evolve, but that was our model. And so fast forward today, we’re going to hit that target. Right now, we’re about 63% daytime solar and finishing our last two big solar projects. The last two big projects will come with battery storage. So at the end, we’ll have enough solar we’ll have about 41 to 42 megawatts of distributed solar that will match our daytime demand or capacity. And we will probably at the end, John, generate about 42 to 44% of our energy will come from solar.

Kit Carson is located in the high in the mountains here, uh, spur off the Rocky Mountain Sangre de Cristo mountains. Uh, we’re actually a nighttime winter peaker. And so we do, because of the cold weather, we’re a resort town, a mountain town. We saw a lot of energy at nighttime. Snowmaking is a big driver in the winter time for the four ski areas that we serve. And so, you know, that’s, that’s kind of the first step in this transition that would have never happened under the old model. And I think that’s important as we are seeing the effects and impacts of climate change and the impacts of us not moving quick enough into this renewable energy world. And so the next step is, and let’s, let’s add some storage and then let’s, let’s start address transportation.

And so besides Kit Carson having, uh, we’ll hit our goal by June of 2022, to hit that a hundred percent daytime solar. And you know, what that really means is when the, when the sun starts to come over that horizon and hits that first solar array on the east side of our system, we start generating electricity. And when it sets in the, uh, in the west and we have arrays in the east, the west, the north, the south, and in house, you have solar generation distributed across our territory. Uh, we’re generating solar as soon as the sun comes up and, you know, it’s, like anything it’s not perfect. We know that there’s cloudy days and there’s rainy days. And we know that at night, it doesn’t shine, but we think this is a process and technology will catch up. The next step is installing batteries. We think battery technology will evolve to long duration. You know, we, we read and see the research then hydrogen for base load. And so I think as, as we move into this new world, technology will keep up.

And then with the addition of, uh, electric vehicles, we’re starting to build out our EV charging infrastructure and looking at ways to have EVs deployed in, in, in our territory. And I think the, one of the underlying goals is access to all. The old kind of old model, outside of the 5%… the only people who really could afford rooftop solar was those who had some means. And I think that that, that is starting to change. You see more community solar projects. Our system, if you’re a member of Kit Carson, you’re going to get solar energy, uh, because it is, it is our, it’s our primary resource mix. And so we want to take that same philosophy for electric vehicles and charging. That just because you may not be financially able or you’re low or moderate income doesn’t mean that we, we can’t give you opportunities to experience, uh, EV transportation, whether it’s something you own, whether it’s in the secondary market, used cars, or whether it’s enhancing or growing public transportation.

Again, these are things that John aren’t, aren’t pie in the sky. We actually, if you come to our territory, you can see probably we’ve probably done 12 different projects on the solar side. Everything’s, uh, you know, from a hundred KW to 15 megawatts, um, we’re putting about 15, almost 16 megawatts of storage. So they aren’t small batteries. They are big enough to take us through peak times if we use batteries for peak or for reliability, if we have to pick up critical circuits during outages. So we’re really on this track to be a, a carbon-free, you know, our goal right now is 2030 as other people shoot for 2040, 20 50. We think it’s doable much sooner. You know, one of the issues when you’re the first adopter is it’s a little tougher and maybe a little bit more pricey, but we get to experience the benefits sooner. So, so that’s where we’re at.

It’s been a great journey and we’ve, we’ve learned a lot about solar and batteries. We’ve also learned about a lot about our members and, and their, their requirements, their needs and how important it is to listen to them. So that’s, you know, we’re kind of in phase one of this, this journey after we’ve left and it’s really been kind of right now, one of the highlights I think the, not just what I’ve done here at the co-op, but the co-op itself. And I think nationally, what co-ops can do when they decide to engage their members, listen to their members, and then put that plan actually into action.

So I do think that if the GNTs are going to survive, they’re going to have to adapt. And I don’t think it should be the other way around that the distribution co-op has to adapt. I think we, as distribution co-ops, created the G&Ts right? The G&Ts were a product of the distribution co-op’s desire to have their own power supply. And so, uh, I think if generation transmission co-ops don’t adapt, then you’re going to have more co-ops wanting to exit. And I think they’re going to want to exit not because the manager does or the board, it’s because the members want flexibility. Just as you mentioned, people want choice. What we’ve experienced here is people want to believe that the renewable energy they’re getting is local. So for someone to say, you’re getting renewable energy, but it’s from 500 miles away. It sounds good, but it’s not really ever getting here to my, to my home. With Kit Carson, you can, you can drive a couple of miles away and you can see that solar array that you just follow the lines that goes right to my house. So I do think they have to adapt.

And if they don’t, I, I do think this should, distribution co-ops have an obligation to exit, to fulfill their member’s expectations and requirements. John, that’s why we were formed, for the members and, and this tail wagging the dog that’s occurred, right, where the generation transmission co-op is dictating to the distribution co-op what’s good for us, but it doesn’t work anymore. I think the other issue is the generation transmission co-ops policy makers have to make it affordable for, for, for distribution co-ops to exit. There can be this outlandish fee to exit. And I understand, and we, we actually had a kind of key hole, Kit Carson’s exit should not cause any distribution co-op to subsidize us. And so I think that’s important because I don’t want anyone to subsidize us as if we decide to move a different direction. When you follow what’s happening, when you have court cases and millions of dollars going to lawyers to help. So additional distribution co-op wants to leave to meet its members expectations. I just think that’s wrong. I think the G&Ts in this case are just wrong too, because at the end of the day, it’s the rate payer, it’s the member who pays the legal bill. And so I don’t think that’s right. And I think there has to be flexibility. It has to go back to how we were formed: the democratic process.

And I think if we don’t allow distribution co-ops to really explore what’s out there, rural areas will continue to get further and further behind when it comes to energy whether it be, because right now the policy, at least in the Western states is to close coal mines. And a lot of coal mines are being closed. And so if people don’t have choice from their co-op or their G&T they’re going to do it, a lot of people they’re going to start putting solar on their home. They’re going to start putting batteries on their home and make that choice that not every member has, right. That, that right now that’s still kind of cost prohibitive for a lot of members. So again, my hope is that the generation transmission would create a model going forward that allows those who want to stay to stay. And those who want to exit, exit affordably and, and without a lot of litigation and move on to what we were created was to deliver services to rural Americans.

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Economic development,  one of the things that we decided is that we were going to build these locally with local contractors. And so we got the local developers in a room, asked them if they could partner together to build it. Four came into the room, three left as partners. And so for the past six years, we’ve had local people building our arrays, which keeps people working, but we’ve also been able, these companies now are able to export their skills to other parts of the Southwest. So it’s, it’s created an economic development. John, you hear a lot from policymakers, even from power suppliers saying, well, they’re, they’re temporary short-term jobs. They may be, but if you’re, if you work six months here, and six months there, and six months, and all of a sudden, you’ve worked two years at four different jobs, but it’s the same, same skillset. That’s no different than someone building a house. You build a house, you have to move on to the next house and the next house. So construction has always been kind of temporary permanent. And so it’s, it’s brought that economic development aspect.

It’s brought us a kind of a marketing tool, you know, if we live in the Rockies and, uh, our tourism is based around clean air, clean water, making sure we have sufficient snow to ski. What, what better energy supply than have solar energy supplying the energy to ski areas and to schools and to businesses. So there is a lot of factors and a lot of benefits in, in building distributed solar because of our grid.

You know, if I lost a lost a solar array, let’s say on the east side, I can serve it from the west side to our transmission lines. And so it does give me now some redundancy with the solar facilities. It also allows us the ability to island or, you know, we in essence are creating a micro grid that if we have to, we can isolate ourselves from the main grid at times that week, you know, uh, we may have to, I think with, with, uh, COVID, it’s hard to say nothing is bad is going to happen, right? Because that really showed us we’re pretty vulnerable to things that we aren’t prepared for or don’t think will ever happen to us. And I think we have to think that same way when it comes to operating a utility. Now you could have a fire that you didn’t have before. And how are you going to handle that? You could lose a power plant and how are you going to handle that? Those things happened.

So, yeah, I think there’s just, it’s just not getting clean energy and clean energy that’s affordable. It’s all these other benefits that the community gains, everything from a resiliency to economic development and everything in between. I think the other thing is creating a model that other co-ops can, can, can look at and take from it the lessons learned. There’s some things that, yeah, we probably wouldn’t do that the same way as Kit Carson, but there’s a lot of things we do because we’ve been successful in deploying this. John today, we probably have, we have about 29 unincorporated communities. So they’re not a municipality that, you know, just little, little communities we have over half of them today, and I’m looking outside, it’s a sunny day. We already have half of our system already, 100% daytime, right. That schools and that’s churches. And that’s a post office. That’s a health clinic. You know, it works. I think that’s, that’s, it, it works. The members are satisfied with that energy, the lights aren’t dimmer, right? There’s not a reliability issue. It works fine. We have it in the north part where we have a lot of irrigation, that solar today is pumping water on the crops. And so it’s almost become the rule, not the exception. It’s almost, if you don’t have solar on your house, then… I would, when we first started this, my fellow co-ops basically said, you know, we weren’t the cool kids. Cause who, who does solar? Just Kit Carson and a few hippies. You fast forward to 2022. If you’re not doing solar, you’re not the cool kids anymore, because it has become a very valuable, low cost reliable resource.

Because we didn’t get, we didn’t get any big loads that would stabilize that out. Uh, there was not a fundamental change in how, how Tri-State was operating their system. It’s kind of what I said. I think they finally heard what the members wanted and that was normal rate increases, or we were just going to leave and we wanted more renewables or we’re just going to leave. So I think they actually became a victim of, if you don’t listen to your members, then the members will decide and dictate what’s going to happen. So this is a good case of where I think Tri-State had to be responsible or forced to be responsive to its members. And for, and for Kit Carson, again, we haven’t raised our rates. Our power cost from Guzman Energy is lower than it was with Tri-State, we’ll pay the exit and we pay the exit fee that will be done basically forever, right? So our members will see a decrease.

I think the one area that we really are focusing now is on transmission because when you look at the whole energy picture and you, you want to move renewable energy, let’s say solar east and wind west, you need a transmission system to do that. But if the transmission providers are, are, are too expensive, then we were back in that same dilemma. So not being able to have access to renewable energy because now the transmission system is too expensive. And that’s why I think our DER model, uh, weathers that, because we’ll have to take our non renewables from a transmission, but more and more, we’ll generate more of our system resources here locally so that we can kind of weather that, mitigate those costs. But we’re, we’re actually in a, in a, in a really good position going forward, both on having a lot more renewable resources available to us going forward and also rate stability without jeopardizing reliability.

You know, there’s a lot of talk from lawmakers and utility companies that going renewable, it’s going to be unreliable. We’ve been… you know, it’s been really, it’s been very reliable. You know, it’s kind of talking out of both sides of your mouth. When you say it’s, it’s unreliable to go to renewable while you’re building a hundred megawatt solar facility somewhere, right. It is reliable. It just, I think, I think we have to get out of these scare tactics and, and say, you know, sun doesn’t shine at night, so let’s put some batteries or let’s get wind that, that follows that nighttime profile. And instead of us as co-ops and utilities making excuses why we can’t, we should figure how we can. I think once we get past that hurdle, then I think you’ll see a, even a faster adoption of renewable energy.

But once we decide we can’t fool our members anymore, by putting these obstacles in front of them, because our members are pretty sophisticated, they’re pretty smart. And they formed a co-op. I mean, they, they formed our entity, they have us, you know, so I think we’re in a great position, everything that we thought we’re going to get out of this exit we’ve accomplished. I do think, and again, we’re kind of scouring all the websites, but I think when in, in, in June of 2022 would probably be the first, at least on the continental United States to hit 100% daytime solar were our energy is coming from resources that are local. You know, it’s pretty cool to be one of the first ones to be able to accomplish that. And, you know, we’re a small to midsize co-op. We have 30,000 members, uh, serving three counties. And if we can do that, certainly the bigger co-ops and bigger utilities can do it.

Speaking of that, I’d love to ask you a little bit. I know we’ve talked a lot about the clean energy work that you’ve done, but you’ve also done some investments in internet service is something that’s been common among a lot of rural electric cooperatives as well. I have a colleague here at ILSR who directs a program that looks at community broadband networks, and he loves to surprise people by telling them that the internet service they get in the city they live in is probably slower and more expensive than most of North Dakota, where co-ops have made huge investments in that. So I’m really interested to hear what Kit Carson has been doing around broadband. And if you can explain a little bit about how you’re able to do that in a way that a lot of other utilities can’t be so nimble.

And during COVID we connected schools, did hotspots, started programs basically to connect rural school districts and the, and the students at no cost just so they could get on. And it really has kind of dovetailed real nicely with the renewable energy world, because we had a lot of people, we have a lot of people moving in from, like you mentioned urban areas because of COVID they could work anywhere as long as they had a connection. So people moving here would like to work in the morning and hike in the evening or a ski in the morning and do some outdoor recreation in the evening, but they had, they had to get connection. And so, and really helped our schools. We had a lot more schools, uh, uh, students connected or going to school because we had a connection. You can tell when you’re on a zoom if you’re on Kit Carson or someone else, because you didn’t have to turn off your video because you didn’t have enough bandwidth.

And so we had more people working, living here, even if temporary, cause they could work in Austin or Dallas or Phoenix or Denver, but they had a better connection here. And then the quality of life, right? I mean, you’re talking a population of Taos of, of 5,000 versus the population of Austin over a million. During these trying times, the smaller populations made it easier to navigate this COVID world it’s in. And we’re trying to create a model. We’re actually trying to create a model for the north central part of the state that we can connect rural communities on. And you said, we have probably faster speeds in neighborhoods than they do in Denver, Colorado, certainly faster than Albuquerque. And it’s affordable. I mean, we, we, uh, because of the co-op model and our basic or first principle is service, not profit. And so we’re giving fast broadband speeds to students, you know, for 25 bucks. And so they could get 50, 50 megabits up 50 megabits now for $25. So that three, you know, two, three or four kids and someone on Netflix at the same time. So their world wasn’t that much more disrupted because they had to take turns on zoom or those types of things that you’ve heard about. And it’s really then helped on our, our electric cars. Now we have about 90% of our system is smart grid we collected. And then we can almost in real time, get data back to the co-op to help us whether it’s an outages, a low voltage issues and all those, those technical issues that a utility historically needs someone to call in to say, there’s a problem. We almost know instantaneously because we have the meter connected to the fiber connected back to our dispatch center. I mean, it’s actually, our fastest growing business is, is, is broadband.

We get requests from even places out of state. You know, you just kind of query on best broadband and Kit Carson Internet comes up, uh, and we just serve this territory, but it’s, it’s really been a great service to the community. And, and because John, I don’t think, I think a lot of how we do business today is going to stay. I think a lot of businesses are going to allow their employees to work from home. If they have a good connection, that’s extremely important in rural areas because now they don’t, they won’t lose their jobs. If they can get a connection, they can keep them, they can still, you know, work and, and, and still be the primary caregiver for their kids or elderly parents that are more prevalent in rural areas, in urban areas where, because we do have extended families, right? There’s, you know, their families live in one whole community and take care of each other. So I think the other, other benefits that people don’t think of are those types of things of having that connection that’s helped with, uh, besides distance learning: medicine. Now the clinics are wired. So people don’t have to travel all the way into town or Albuquerque for a doctor’s appointment. You can do it versus video first because your connection is very good. Then, then if you have some issues that a doctor means, see, then you come into the office. So it saves both time and money and peace of mind because you can do it instantaneously.

So there’s a lot of other benefits that this broadband has brought in. And I think it’s, I think broadband is going to becoming a utility, just like electric, people are not going to tolerate being without it. In fact, I probably get more broadband calls if there’s an outage, then I get electricals. And even though they know they need electricity for broad band, some people just haven’t connected those dots. That’s okay. And I think it’s really, it’s helped us, um, you know, on our exit because, uh, when, when it’s given us more time, since we have to take our own power supply, we’re, you know, not being part of a G&T really takes a lot of energy. I think I got probably three to five more days of work and having to deal with power supply issues and the politics around power supply that I really can not pay attention to members and their needs such as a broadband and how to expand those services.

But if you don’t have a good communication tool with your members, a good rapport, then what generally happens is members are going to decide to do what they want without you. And so I think that’s a key because it may be staying with the G&T when it comes to power supply. So it may be the reverse where, where you have members saying, Hey, let’s do what Kit Carson is doing. And after you have a good discussion with their members, they may say, we want to stay. Maybe we’re not ready for that yet. So that’s what I mean by not put obstacles, because the first thing we do is right away with things that they want to leave. Some may not want to leave. They just want to have a good dialogue know to make sure that you’re doing, you know, me as a, as a manager is doing what’s in their best interest, really not what’s in my best interest. And, and I think you do that then than anything else you guys want to do, anything from energy efficiency to solar then becomes actually pretty easy because you have the support of the community. And, and if things don’t go well, you have a big support system that you just go back and says, okay, this really didn’t work that way. And let’s retool and let’s do this other way. And I think that’s key. It’s, it’s pretty simple. That’s what we did. We just, we just talked to our members a lot. We listened to them probably more than talking. And right now they’re saying we’re not moving our solar fast enough, right? We we’ve moved, I think pretty fast in, in, in five years, but that’s, it’s good to have those type of problems, right? When there says you’re not putting out broadband fast enough Luis, or you’re not putting up solar fast enough, we like what you’re doing, but you’re not doing fast. Those are good problems to have.