Taos co-op's new power supplier paid $37M in buyout

By J.R. Logan
Posted 7/9/16

The $37 million to buy out of a long-term power contract was fronted by Kit Carson Electric Cooperative’s new power supplier.

Co-op CEO Luis Reyes told The Taos News that Guzman Renewable Energy Partners paid the $37 million exit fee to …

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Taos co-op's new power supplier paid $37M in buyout

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The $37 million to buy out of a long-term power contract was fronted by Kit Carson Electric Cooperative’s new power supplier.

Co-op CEO Luis Reyes told The Taos News that Guzman Renewable Energy Partners paid the $37 million exit fee to Tri-State Generation and Transmission. The fee was negotiated as part of a deal to end a contract that was not set to expire until 2040.

The 10-year contract with Guzman went into effect July 1.

Reyes said the buyout would be paid back by a higher cost for electricity. He said the contract specifics exactly what the cost of power will be for the next 10 years, but that Guzman requested that the price be kept confidential.

Reyes did say the cost will be comparable to Tri-State’s current rates until the $37 million is paid off. He said that would take 5 1/2 years.

Kit Carson customers paid Tri-State an average of 7.26 cents per kilowatt-hour in 2015.

Based on the co-op’s energy sales that year, members would pay an extra 2.31 cents per kilowatt-hour until the buyout money is paid back.

In a separate deal with the city of Aztec, Guzman agreed to sell the municipality electricity for 4.95 cents per kilowatt-hour.

A spokesperson for Guzman confirmed that the company paid the money, but said the details were subject to a confidentiality agreement.

When the Guzman deal was announced, the co-op said consumers would save $50 million over the 10-year term of the contract. Reyes has said the savings are tied to a lower power cost.

Co-op members will know the exact price they’re paying for electricity once they get bills for their electricity use in July. Under the co-op’s current rate structure, the cost of power is a “pass through,” meaning customers pay exactly what the co-op pays for wholesale electricity.

The price per kilowatt-hour is broken out on power bills.

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