Biden IRA Electricity Industry Money Out Of Reach Of Small Utilities

The people who produce and distribute electricity care. In terms of concern for the seamless delivery of electricity to the nation, their dedication is up there with the selflessness of health care workers and air traffic controllers.

The extraordinary thing is that there are some 3,000 electric distribution utilities which work together to bring about what has been called the world’s largest machine.

Mountain View Electric Association, Inc., which serves a 5,000-square-mile territory, including portions of Colorado Springs, is one of those. Chief Executive Officer Ruth Marks’ concerns are largely those of the entire industry: reliability, affordability, resiliency and, nowadays, environmental responsibility.

Electricity is an essential commodity; without it everything falls apart. This sense of service, essential service, permeates the industry from the management suite to a line worker up a pole in sweltering heat or subzero cold. The lights must stay on — 24 hours a day, 365 days a year.

I was reminded of this when talking to Marks. Mountain View Electric Association (MVEA
VEA
), based in Falcon, Colorado, is a distribution cooperative but, like all the parts of the electricity archipelago, it is bound into the whole.

These more modest, rural electric cooperative utilities – MVEA has just 64,000 meters — are a critical part of the lattice of electric providers. The co-ops owe their genesis to the New Deal, when for-profit utilities didn’t serve rural areas. They are owned by the residents and businesses they serve.

Marks is steeped in the world of rural electric cooperatives and feels deeply for their mission. That mission for MVEA has just increased dramatically as it seeks to bring access to broadband to its membership. This venture will eventually double the utility’s electric plant and has added further to the public service dynamic of the utility. Also, it is an example of when the market has failed in rural America, the co-ops are there.

MVEA’s members are made up of farmers and ranchers as well as urbanites in Monument and Colorado Springs, one of the nation’s fastest-growing large cities.

Marks worries about the future supply of power not just to her cooperative but nationwide. Her concerns are typical and reflective of a general state of alarm in the electric utility industry.

Further, Marks has concerns about pending rules from the Environmental Protection Agency, designed to reduce greenhouse gas emissions. If implemented, these could curtail existing and new fossil generation, particularly natural gas, with their mandating new and possibly unattainable greenhouse gas emissions controls.

Sympathetic To EPA Aims

While Marks is sympathetic to the aims of the EPA proposed rules, she fears they will add to the difficulties and expense as utilities struggle to meet future demand. The EPA comment period ends in August.

Marks told me, “I’m a firm believer in the concerns that NERC [North American Electric Reliability Corporation] and FERC [Federal Energy Regulatory Commission] have expressed that in moving too quickly to renewable resources without a backup plan, we will have a destabilizing effect that could lead to rolling blackouts in much of the country.”

She said government money, which is available to the industry in the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, could help with new solar and wind generation assets. However it is hard for small utilities, like hers, to access the funds.

There are a lot of requirements, including Buy American, in those two laws. Although Marks supports those, she said they represent an increased difficulty in the present time of supply chain shortages, exemplified by a crisis in the availability of transformers — the devices that step down the current supplied to homes and businesses.

She said the time limits to apply for these funds is tight and small entities don’t have the resources to go after the money being granted through the departments of Energy and Agriculture. “We don’t have the grant writers and experts on staff for dealing with pursing government funding opportunities,” she told me. So there is the potential that the money may go begging or bypass the small utilities.

To address the challenge, Marks notes that membership in their cooperative power supplier, Tri-State Generation and Transmission Association, offers access to federal funding opportunities that directly benefit MVEA and the other co-ops across the West. Tri-State led efforts to get cooperative provisions written into IRA.

Marks said the urban areas of her service territory, in the west around Monument and Colorado Springs, are interested in contemporary, evolutionary things like rooftop solar, wind turbines and electric cars. But the farmers and ranchers in the rural, eastern areas are most interested in the low cost of electricity, she said.

Marks has been with MVEA just a year. Previously, she spent 11 years with Tri-State as vice president of transmission maintenance. And she spent 16 years at United Power, another Colorado electric cooperative, where she rose to be chief operating officer.

MVEA is one of 45 members of Tri-State which is the cooperative power provider, through generation and purchases, and a vast transmission network, to its members.

The Cooperative Structure

In the electric cooperative structure, there are generation and transmission “associations” or cooperatives, which generate and buy electricity that they distribute to their distribution co-op members. This bottom-up system gives smaller co-ops like MVEA a voice and ownership in their power supply.

It should be noted parenthetically that United Power, the largest member in the Tri-State association, says it will be leaving, probably next year, when the FERC arbitrates the terms of its departure — a move watched closely by the other members, including Marks and MVEA, to ensure the expansive distribution systems near Denver doesn’t force costs onto its fellow members.

Colorado Springs, famous for its U.S. Olympic and Paralympic training center, Air Force Academy and Pikes Peak, now attracts people who want to live there year-round.

Ninety-two percent of MVEA members are residential and that means a fairly standard demand profile with an evening peak. Last winter was especially cold in Colorado, and the winter demand nearly reached the levels of summer.

In terms of power supply concerns, the greatest concern for Marks were last Christmas, when it was exceptionally cold, and in February 2021 with Winter Storm Uri, which knocked out power across Texas and strained supply in Colorado and across the Southwest.

Electricity suppliers will be severely tested in the years ahead by more frequent severe storms and rising electricity demand. But the electric utilities are determined to find ways of coping. It is in their service DNA — especially the DNA of the co-ops like MVEA and its leader Ruth Marks.