Transcription
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.2022 Investor Presentation
Forward-looking statements detail our plans, objectives, goals, strategies, future events, future revenueor performance, capital expenditures, financing needs, or intentions relating to acquisitions, closure offacilities, business trends and other information that is not historical information.When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,”“intends,” “believes” and “forecasts” or future or conditional verbs, such as “will,” “should,” “could” or “may,”and variations of such words or similar expressions, are intended to identify forward-looking statements.These forward-looking statements are subject to a number of risks, uncertainties and assumptions,including those described from time to time in our filings with the Securities and Exchange Commission.All forward-looking statements, including, without limitation, management’s examination of historicaloperating trends and data, are based upon our current expectations and various assumptions.Our expectations and beliefs are expressed in good faith, and we believe there is a reasonable basis forthem. However, we cannot provide certainty that management’s expectations and beliefs will be achieved.There are a number of risks, uncertainties and other important factors that could cause our actual resultsto differ materially from the forward-looking statements contained in this presentation.Tri-State Investor Presentation 2
Power today,potential tomorrowWe are Tri-State, a not-for-profit wholesale power supplier to 42 electriccooperatives and public power districts across the Western United States.Together, we provide power to more than one million energy consumers inColorado, Nebraska, New Mexico and Wyoming.We believe that reliable power is the lifeblood of the rural West and is critical tothe future of our communities. That’s why we’ve made it our mission to supplyreliable, affordable, responsibly-generated power to the farms, ranches, resortsand small towns that our members serve.42 Utility MembersTri-State’s member systems span areasin Colorado, Nebraska, New Mexicoand Wyoming.200,000 Square MilesWith our members, we serve over a millionconsumers across an area greater thanCalifornia.Our members are the sole state-certifiedproviders of electric service to retail customerswithin their designated service territories.Tri-State Investor Presentation 3
Our TransitionOur transition to becoming a 21st century G&T.Tri-State Investor Presentation 4
Tri-State Investor Presentation 5
Responsible Energy PlanIn January 2020, we announced our Responsible Energy Plan to pursue a clean energy transition.The plan will help us expand renewable generation and reduce greenhouse gas emissions whileensuring reliable, affordable and responsibly-generated electricity for our member cooperativesand public power districts, and for the communities they serve.Goals for our energy transition include: Meeting member clean energy goals and complying with environmental andrenewable requirements Reducing member rates Preserving electric reliability/affordability Maintaining the association’s financial strengthTri-State Investor Presentation 6
Responsible Energy PlanWe eliminated CO2 emissions from Tri-State-owned coal generation in New Mexico in 2020. In Colorado, by 2030,we are targeting a 100% reduction in CO2 emissions from Tri-State-owned coal generation, a 90% reduction in CO2emissions across generation we own or operate, and an 80% reduction in CO 2 emissions associated with statewholesale electricity sales. At the same time, we are bringing more than 1,000 MW of wind and solar resourcesonline by the end of 2024, with a goal to supply our members with 70% clean energy system-wide by 2030.Closures include:Rifle Stationin 2022*Craig Unit 1in 2025Craig Unit 2in 2028Craig Unit 3before 2030We’re providing retraining and transition support for employees affected by these changes. We are also workingwith impacted communities, as well as state and federal government entities to find meaningful economicdevelopment opportunities to support a just transition.The Colorado PUC approved Tri-State’s phase I of the 2020 Electric Resource Plan. Tri-State has agreed toreduce greenhouse gas emissions related to its wholesale electricity sales in Colorado as follows: 26% in 2025,36% in 2026, 46% in 2027, and 80% in 2030. With the settlement agreement approval, Tri-State began Phase II ofits 2020 Electric Resource Plan, and solicited bids in May 2022, with a focus on projects that support emissionsreductions. These resources would be scheduled to come online by 2025 and into 2026.* With Colorado PUC approval.Tri-State Investor Presentation 7
REP Progress Highlights Brought 2 wind projects online—about a third of the resources toreach our 50% clean energy bythe end of 2024 goal CO PUC approved phase I of our ERP with afocus on emissions reduction. Allows Tri-Stateto start on Phase II, which opens the biddingprocess for renewable energy projects Supported installation of 369 EVcharging stations and counting inmembers’ service areas Donated 5 million to supportcommunity economic developmentnear the retired Escalante Station inNew Mexico Allocated 300 MW of memberrequested self-supply capacityto 6 participating members Reduced wholesale rates tomembers by a total of 4%in 2021 and 2022Tri-State Investor Presentation 8
Our membersColoradoEM Empire Electric Association, Inc., CortezGC Gunnison County Electric Association, Inc., GunnisonHL Highline Electric Association, HolyokeKC K.C. Electric Association, Inc., HugoLP La Plata Electric Association, Inc., DurangoMC Morgan County Rural Electric Association, Fort MorganMP Mountain Parks Electric, Inc., GranbyMV Mountain View Electric Association, Inc., LimonPV Poudre Valley Rural Electric Association, Inc., Fort CollinsSI San Isabel Electric Association, Inc., Pueblo WestSV San Luis Valley Rural Electric Cooperative, Inc., Monte VistaSM San Miguel Power Association, Inc., NuclaSC Sangre de Cristo Electric Association, Inc., Buena VistaSE Southeast Colorado Power Association, La JuntaUN United Power, Inc., BrightonWR White River Electric Association, Inc., MeekerYW Y-W Electric Association, Inc., AkronOur resources1.2.3.4.5.NebraskaCR Chimney Rock Public Power District, BayardMW Midwest Electric Cooperative Corporation, GrantNW Northwest Rural Public Power District, Hay SpringsPH Panhandle Rural Electric Membership Association, AllianceRS Roosevelt Public Power District, ScottsbluffWB Wheat Belt Public Power District, Sidney6.7.New MexicoCN Central New Mexico Electric Cooperative, Inc., MountainairCO Columbus Electric Cooperative, Inc., DemingCD Continental Divide Electric Cooperative, Inc., GrantsJM Jemez Mountains Electric Cooperative, Inc., EspañolaMO Mora-San Miguel Electric Cooperative, Inc., MoraNR Northern Rio Arriba Electric Cooperative, Inc., ChamaOC Otero County Electric Cooperative, Inc., CloudcroftSR Sierra Electric Cooperative, Inc., Elephant ButteSO Socorro Electric Cooperative, Inc., SocorroSW Southwestern Electric Cooperative, Inc., ClaytonSP Springer Electric Cooperative, Inc., SpringerWyomingBH Big Horn Ruaral Electric Company, BasinCB Carbon Power & Light, Inc., SaratogaGL Garland Light & Power Company, PowellHP High Plains Power, Inc., RivertonHW High West Energy, Inc., Pine BluffsNB Niobrara Electric Association, Inc., LuskWL Wheatland Rural Electric Association, WheatlandWY Wyrulec Company, TorringtonNon-Utility MembersEllgen Ranch CompanyMIECO, Inc.Olson’s Greenhouses of Colorado, LLC8.9.10.11.12.13.14.Headquarters and OperationsCenterWestminster, ColoradoCraig StationCraig, ColoradoBurlington StationBurlington, ColoradoJ.M. Shafer Generating StationFort Lupton, ColoradoLimon Generating StationLimon, ColoradoFrank R. Knutson GeneratingStationBrighton, ColoradoRifle Generating StationRifle, ColoradoLaramie River StationWheatland, WyomingPyramid Generating StationLordsburg, New MexicoDavid A. Hamil DC TieStegall, NebraskaSpringerville Generating StationSpringerville, ArizonaColowyo MineMeeker, ColoradoNew Horizon Mine (in fullreclamation)Nucla, ColoradoCimarron SolarSpringer, New Mexico15. Kit Carson WindpowerBurlington, Colorado16. Colorado Highlands WindFleming, Colorado17. Carousel WindBurlington, Colorado18. San Isabel SolarTrinidad, Colorado19. Alta Luna SolarDeming, New Mexico20. Twin Buttes II WindLamar, Colorado21. Crossing Trails WindSeibert, Colorado22. Spanish Peaks Solar*Trinidad, Colorado23. Niyol WindLogan County, Colorado24. Spanish Peaks Solar II*Las Animas County, Colorado25. Coyote Gulch Solar*La Plata County26. Dolores Canyon Solar*Dolores County, Colorado27. Axial Basin Solar*Moffat County, Colorado28. Escalante Solar*McKinley County, New Mexico*Generation projects will be operational by the endof 2024Tri-State also receives power from several small hydropower projectsand under long-term contracts with the Western Area PowerAdministration and Basin Electric Power Cooperative.Tri-State Investor Presentation 9
2021 Generation Portfolio(as of Dec. 31, 2021)A diverse reliable generation portfolioHow we generate and purchase power is important to our members.Tri-State is able to meet our members’ needs by deploying, renewableenergy resources via our long-term purchase power contracts, an efficientfleet of owned generation resources, and market purchases.Our diverse generation portfolio leverages the West’s plentiful naturalresources to generate reliable and affordable electricity for our membership.We manage risks and costs of power generation by utilizing renewableenergy resources, including hydropower, wind and solar. We back that upwith our efficient base load-serving coal generating units, intermediate loadserving natural gas combined-cycle generating units, and peak load-servingnatural gas and oil combustion turbines.Projected Generation Portfolio for 2026*(as of Dec. 31, 2026)To manage the costs of fuel supply, we use coal from Tri-State-owned minesand contract for other coal supplies through our cooperative network.*2026 includes generic resources not yet acquired, but as forecasted by the Revised Preferred Plan.Tri-State Investor Presentation 10
Our transmission lines span the WestReliable electricity hinges on our multi-state transmission network. It carries electricity from our generationresources to our members’ distribution systems or to energy markets for sale. Our transmission networkincludes lines, substations, telecommunications, maintenance centers and field offices.Keeping the lights on for our members’ consumers means our transmission system must be maintainedand invested in regularly. Because we own most of our transmission network, we can more quickly addfacilities and delivery points to serve our members’ growing energy loads.Tri-State joined SPP’s Western Energy Imbalance Service (WEIS) Market on February 1, 2021.In addition, Tri-State also expanded its participation in the CAISO Western Energy Imbalance Market(WEIM) real-time energy market into New Mexico on April 1, 2021, as the Public Service Company ofNew Mexico (PNM) balancing authority joined the market. Tri-State will have 100% of its members’ loadin organized markets in 2023, following the announcement of Public Service Company of Colorado to jointhe SPP’s WEIS.Tri-State Investor Presentation 11
FERCTri-State Investor Presentation 12
Long-term wholesale power contracts createa stable and predictable revenue streamWholesale power contracts 42 member contracts extend to 2050Contract obligations Contracts obligate Tri-State members to pay all of Tri-State’s costs and expenses,including debt service associated with owning and operating its power supply businessContract flexibility Tri-State completed two “open seasons” which allowed members to apply for a portion of300 MW to self-supply up to 50% of their load, with the total 300 MW being allocated acrosssix different members Each member system has the option to provide up to 5% of its energy requirements fromgeneration it owns or controls, such as distributed or renewable energy, and above that levelmay add a certain amount of community solar projects.Tri-State Investor Presentation 13
2021 Tri-State numbersTri-State’s strong financial position provides the association with the continuedability to meet the future needs of the member distribution systems and theirmember-owners.Energy salesNet marginEnergy sold to membersMember coincident peak demandTri-State Investor Presentation 14
Our master indentureTri-State’s master indenture provides for a lien over nearly all of our assets.*Debt issued under the indenture is secured equally and ratably with all other securedobligations. Pursuant to the indenture, we are required to meet two main financialcovenants: a Debt Service Ratio (DSR) and an Equity to Capitalization Ratio (ECR).The DSR requirement of at least 1.10 ensures that we have adequate cash flow tocover our debt payments, and the ECR requirement of at least 18% ensures that wemaintain a sufficient balance between debt and equity.Total Debt( in Millions)*The master indenture does not provide a lien on the assets of our subsidiaries, including the Springerville GeneratingStation and the Colowyo Coal Mine. The Springerville certificates are secured outside of the master indenture.DSR & ECRTri-State has consistently maintained a debt service ratio well above the requirementsof the master indenture. We have also steadily invested in assets while maintainingequity growth.*5% decline in total debt from 2018 to 2021Tri-State Investor Presentation 15
Our financial goalsOur financial goals provide a cushion over our indenture requirements to collectmargins, set rates and maintain a sound financial position. Our board of directorsre-evaluates the policy periodically.Debt service ratioAt least 1.19 in 2021 and increasing0.005 each year until 1.20 is reachedin 2023.Equity as a % of total capitalizationAt least 24.0% in 2021 and increasing0.5% each year until 25.0% is achievedin 2024.LiquidityMaintain 30-60 days of cash on handand 100-300 days of liquidity on hand.Deferred revenueRecognize deferred revenue or deferrevenue to achieve DSR equal toDSR goal.For 2021,actual ECRwas above ourfinancial goal* Current long-term senior secured debt ratingsare “A3” by Moody’s, “BBB ” by S&P and“A- ” by Fitch. Current short-term ratings are“A-2” by S&P and “F-1” by Fitch.Tri-State Investor Presentation 16
Total capitalization(as of 12/31/2021)Tri-State obtains capital through a variety of sources, including both public and private debt markets and margins. Additionally,we maintain equity at a level that provides for a healthy overall capital mix. We also manage interest rate risk by maintainingan appropriate balance between fixed rate and variable rate debt.Total debt and equityTotal debtTri-State Investor Presentation 17
Our liquidityTri-State is well-positioned to fund its ongoing operations and capital requirements.Tri-State Investor Presentation 18
The road aheadTri-State anticipates financing through a variety of sources, giving us flexibility around howwe structure our debt portfolio in relation to interest rate risk, maturity profile andamortization structure.With our commitment to the cooperative business model and to serving our membersystems, Tri-State stands apart from other utilities. Our liquidity, healthy sales growth andreadiness to meet future obligations and challenges highlight our strong financial position.Our major financing sources Private placement SEC registered bonds CoBank CFC Credit facility Commercial paperTri-State Investor Presentation 19
Our different is betterWe are a member-owned cooperativeThis means we are not driven by profits; we’re driven by the communities we serve. Unlike investorowned utilities (IOUs), we have:We are among the largest generationand transmission cooperatives in thecountry in terms of total assets,annual operating revenue, miles oftransmission line owned, energygeneration and sales.As a cooperative, everything we do ismember-driven and member-focused.Our board of directors is made up ofrepresentatives from each of our42 member systems, and with theirguidance and governance, we continueto work with our member systems toserve the needs of communities andconsumers across the West. No EPS targets No high dividend payout ratios No EPS-driven M&A activityOur equity levelsOur equity is comprised solely of patronage capital, similar to retained earnings of a for-profitcompany. We don’t have paid-in capital on common stock.A valuable serviceWorking with our member systems, we provide power to consumers in rural areas that IOUs andmunicipals have historically ignored. Cooperatives, on average, serve far fewer customers per mile.Cooperatives are not usually afforded the opportunity to serve highly populated areas and insteadprovide for those in more rural communities, where our services are absolutely vital.Long-term wholesale power contractsContracts obligate our member systems to pay all of our costs and expenses, including debt service,associated with owning and operating our power supply business. Over the last few years, we haveworked with our members to create more flexibility in our contracts to better serve the growingdiversity of members.Tri-State Investor Presentation 20
Tri-State credit strengths A large and growing portfolio of renewableenergy backed by a baseload, intermediateand peak load fleet that provides affordable,reliable and responsibly generated power Extensive transmission network, whichenables Tri-State to improve reliability andadd resources in the future Long-term wholesale power contracts for atleast 95% of each member system’s energyrequirements to 2050 with 42 of our members Safety record remains better than thenational average Tri-State is located in a diverse region withsignificant wind and solar resources available Operating expenses have remained flat overthe past five years Cost cutting initiatives are being pursued tosustain rate reductions Rate reduction put into place with 2% in 2021and an additional 2% in 2022, with a ratemoratorium through May 2023, will be metensuring a competitively priced power supplyto our member systemsTri-State Investor Presentation 21
P.O. Box 33695, Denver, CO 80233www.tristate.coop
36% in 2026, 46% in 2027, and 80% in 2030. With the settlement agreement approval, Tri-State began Phase II of its 2020 Electric Resource Plan, and solicited bids in May 2022, with a focus on projects that support emissions reductions. These resources would be scheduled to come online by 2025 and into 2026. Responsible Energy Plan
