Yesterday the post covered the Distribution Cooperatives, today we will cover the Generation and Transmission Cooperatives (G&T). There are 64 G&T cooperatives that have 830 Distribution Cooperatives that own them.
Each G&T is owned by the Distribution Coops they serve. The board of a G&T typically has one board member from each Distribution Coop. Note that TVA and BPA provide generation and transmission services like a G&T would Coops near them (TVA serves 49 Coops, BPA serves 54 – we will cover them later).
All G&Ts are responsible for providing generation and transmission to member distribution coops. In addition, for G&T located in markets (e.g., MISO) they are the wholesale market participant. G&T sign up the members largely prior to building any new generation facility or transmission line obligating those members for a portion of a new generation plant or transmission upgrade for the life of that plant.
This a binding contract Most of which are “All Requirements Contracts” [ARC]) that can run up to 80 years. An ARC in most cases obligate the G&T to provide all the power required by the Distribution Coop, and the distribution Coop to not build any generation. ARC have a downside when members want to build rooftop solar or small wind, since the Distribution Coop is legal not allowed to have generation. The ARCs have been slowly changing over time to allow some self-generation, but it mostly allows the Distribution Coop to add generation when the G&T facilities are fully utilized. Many solar marketing firms run into this issue when they try to sell to coop members.
Since the goal of the Distribution Coops is to provide reliable, safe, low-cost power, retiring a generation asset early is a difficult process, the contracts do not have loopholes.
G&Ts can provide other services to their members, including monitoring all the operational technology, forecasting, specialized engineering support, cyber security. If the total cost for a member is cheaper (and the quality of service, equal or better, then if members agree, the G&T can take on the tasks and charge members for those services). G&Ts produce over 5% of the power consumed in the US. Because TVA and BPA, Coops deliver over 13% of the total power consumed in the US.
G&T are non-profits, but they lay taxes just like Coops do ($1.5 billion in state and local taxes in 2023). Their accounting system basically case (not return on invested capital) and their primary revenue is kilowatt-hour sales from contracts that may run decades. Fuel and other variable costs are done with riders. NRECA and EPRI both provide research and support to the G&T.
Part #2 - Distribution Cooperatives
NEXT: Federal power districts