Winter storm has immaterial financial impact on Tri-State; S&P affirms investment grade rating and raises outlook
- Strong performance from Tri-State’s diverse resource portfolio and a robust transmission system ensures no wholesale rate impact from record cold winter weather, or high wholesale power and natural gas costs.
- S&P affirms its 'A-' issuer credit rating, raises Tri-State’s outlook to “stable,” citing improved regulatory landscape, continued stable financial performance and sharp carbon reductions.
(March 9, 2021 – Westminster, Colo.) – Tri-State commented on its operational and financial performance during last month’s widespread winter storm, and also noted an improved outlook from S&P Global Ratings.
Initial analysis on the operational and financial impacts from the Feb. 13-17 winter storm, which has created financial difficulties for utility services providers in many parts of the U.S., show that the storm had an immaterial financial impact on Tri-State. No wholesale rate increase will be required or passed along to Tri-State's 42 member cooperatives and public power districts as a result of the storm.
“When challenged with record cold weather affecting much of the U.S., our members’ investment in Tri-State ensured that power was delivered reliably and affordably. Our diverse portfolio of resources and power contracts, and our vast transmission network, mitigated risks and enabled us to avoid any significant operational and financial issues,” said Tri-State CEO Duane Highley.
“The most meaningful measure of a utility is how it performs when conditions are at their very worse, and I couldn’t be prouder of our employees’ and members’ performance to keep the lights on, and do it affordably,” added Rick Gordon, Tri-State’s chairman and director at Mountain View Electric Association in eastern Colorado.
Tri-State’s coal generation fleet performed well during the weather event, providing reliable and low-cost power. Tri-State’s solar resources, which are the most of any G&T cooperative in the U.S., performed adequately, but were below forecast. Wind resources were more significantly impacted and performed well below forecast due to low wind speeds or icing conditions, and were unavailable when Tri-State set its year-to-date peak during the weather event. Such conditions for wind generation performance, however, are not unexpected during these types of severe winter weather events.
Tri-State made the decision to use fuel oil at its dual-fuel combustion turbine generating plants, in response to the limited availability and high price of natural gas. This action significantly reduced Tri-State’s exposure to record high natural gas prices, which were driven by lower supply and higher demand as space heating needs increased.
Tri-State's recent entry on Feb. 1 into the Southwest Power Pool’s (SPP’s) Western Energy Imbalance Service (WEIS) market also supported the cooperative’s members though the weather event.
“Despite being only two weeks old when the severe weather event started, the WEIS market performed well, maximizing the efficient usage of the transmission system and dispatching the lowest-cost resources,” Highley said.
The record cold weather affected SPP’s regional transmission organization serving Tri-State members in the eastern grid, including in western Nebraska and small portions of northeastern Colorado and southeastern Wyoming. SPP directed all transmission operators in its balancing authority, including Tri-State, to implement two brief and limited controlled interruptions to help ensure grid reliability as reserves tightened.
S&P affirms investment grade A- credit rating and raises outlook to stable
Separately, S&P Global Ratings earlier this month raised Tri-State’s long-term outlook to “stable” from “negative,” and reaffirmed its long-term A- issuer credit rating. Tri-State’s ratings remain classified as investment grade, and Tri-State maintains its strong financial position. S&P's rating action cited Tri-State’s improved regulatory landscape, and favorably viewed its carbon reduction strategy.
“Our efforts over the past 18 months to create regulatory certainty at the federal and state level, reduce carbon emissions and demonstrate strong financial performance are being recognized,” Highley said. “We will continue to transition our generation fleet to cleaner energy with lower emissions, pursue our goal to reduce wholesale rates and increase contract flexibility with our members.”
The effort to provide more renewable options to members is a part of a larger, transformative effort by Tri-State, known as the Responsible Energy Plan (REP), launched in January 2020 and including more than 1,000 megawatts (MW) of new renewable resources. In December 2021, Tri-State filed its electric resource plan, which identify 1,850 MW of additional renewable generation, more than 200 MW of energy storage by 2030, and the retirement of its remaining Colorado coal units.
By 2030, Tri-State forecasts to have 70% of the energy consumed in its system come from renewable resources, and an 80% reduction its greenhouse gas emissions associated with wholesale electricity sales in Colorado.
Tri-State continues to provide long-term rate certainty for its 42 members. Tri-State noted that wholesale rates for utility members will not change in 2021, for the fifth year in a row. Tri-State has returned $130 million in patronage capital to its members over the past five years. Further, in October 2020, Tri-State set an ambitious goal to lower wholesale rates for its utility members by 8% by the end of 2023.
Tri-State is a not-for-profit cooperative of 45 members, including 42 utility electric distribution cooperative and public power district members in four states that together deliver reliable, affordable and responsible power to more than a million electricity consumers across nearly 200,000 square miles of the West. For more information about Tri-State, visit www.tristate.coop.
Certain information contained in this press statement are forward-looking statements including statements concerning Tri-State’s plans, future events, and other information that is not historical information. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described from time to time in Tri-State’s filings with the Securities and Exchange Commission. Tri-State’s expectations and beliefs are expressed in good faith, and Tri-State believes there is a reasonable basis for them. However, Tri-State cannot assure you that management’s expectations and beliefs will be achieved. There are a number of risks, uncertainties and other important factors that could cause actual results to differ materially from the forward-looking statements contained herein.