CORE Electric outlines energy transition, warns of near-term rate increases

CORE Electric Cooperative’s chief executive told Conifer residents that the utility is moving away from its contract with Xcel Energy and building its own generation capacity, and warned members to expect higher rates in the near term.

Pam Furenstein, chief executive officer of CORE Electric Cooperative, said the co-op decided about five years ago to leave Xcel to “have more control and flexibility on the resources that get built to serve our members and, also have more control over the costs of those resources.”

The move is partly a response to state greenhouse-gas requirements, Furenstein said, which she said would otherwise require Xcel to retire baseload plants and build new renewables and gas capacity that could be recovered in rates. CORE said it aims to avoid absorbing stranded-asset recovery costs that would be built into Xcel’s rates.

Furenstein told the Conifer Area Council meeting that rising costs have made the transition more expensive than anticipated. She cited supply-chain problems, tariffs on materials, and changes to federal tax-credit timing for wind and solar as drivers of higher costs. "If these resources aren't built before a certain time frame, those tax credits will not be applicable anymore," she said, adding that the loss of the tax credit would raise project costs by about 30 percent.

CORE is pursuing large renewable projects and some new gas facilities it will control directly, she said, to speed interconnection and reduce other cost drivers. But the co-op’s estimated near-term rate impacts remain substantial: CORE’s current projection is “probably anywhere from 16% to 24% rate increases over the next 4 years.” Furenstein said those increases reflect higher costs than anticipated when the transition began but that costs should flatten once new resources are built and operational.

She also described CORE’s cost composition: roughly 60% of CORE’s costs are power supply and thus exposed to market and construction pressures, while about 20% are “controllable costs” such as labor, operations and wildfire-mitigation maintenance the co-op can manage to limit rate pressure.

Furenstein said CORE is taking steps to manage controllable costs and to complete projects in time to preserve federal tax incentives, but she acknowledged persistent uncertainty around state policy targets for greenhouse-gas reductions through 2040 and their cost implications for members. "I fully believe that it's still a 100% the right decision for CORE and our members," she said.