For several years, Tipmont has been working to exit its existing contract with our power supplier, Wabash Valley Power Alliance (WVPA), and move toward a more fair and flexible energy future.
I am pleased to share that Tipmont and WVPA, with approval from the Federal Energy Regulatory Commission, have reached an agreement and the exit process is now underway.
What does this mean for you? Tipmont will gain local control of decisions, avoid unnecessary costs and begin investing in power sources that make economic sense for our membership.
In broad terms, here’s how the exit will work. Beginning in June, Tipmont will transition from WVPA membership to being a WVPA customer. This may sound similar to the current structure, but “customer” carries a crucial distinction.
As a WVPA customer, Tipmont will purchase only power from WVPA and no other WVPA services. Tipmont will purchase that power at WVPA’s 2023 rates, and the amount of power Tipmont purchases will decrease annually through 2032. At that time, Tipmont will no longer purchase power from WVPA.
Tipmont will bridge that gap with power purchased from another provider. After considering numerous proposals, the board of directors is finalizing the right choice to further enhance Tipmont’s service and strength. In the coming months, I’ll share more details about our new power provider.
As Tipmont begins this transition, here’s what will change and what will not:
Pricing will stabilize over time.
Tipmont will continue to receive power through the substations and transmission lines used today. You will receive the same exceptional service reliability that you’ve come to know from your co-op.
There will be no change in reliability.
Tipmont’s newfound access to a competitive wholesale power market can help stabilize the rate we pay for power supply. In other words, more choice will enable more long-term stability.
Tipmont will gain flexibility and local control.
Tipmont will now determine and manage its own mix of energy sources, including resources owned by members, such as solar and battery storage.
Your trust in Tipmont to look out for your best interests is at the center of every decision we make and any direction we choose. This journey has been a long one, but the promise and potential only reinforce why Tipmont continues fighting for you. The board and I are pleased with this outcome and look forward to working with WVPA through this transition phase.
I’ll discuss this topic and more at upcoming Kilowatts & Brats events. Watch for additional details on our website and in forthcoming editions of Indiana Connection.
Frequently asked questions
Historically, joining Wabash Valley Power Alliance (WVPA) was the right choice for Tipmont’s wholesale power needs, but the utility industry is radically different now. Competition in wholesale energy markets means power supply is now available at prices lower than those charged by many G&Ts like WVPA.
In 2018, WVPA asked Tipmont to enter into a new 40-year contract that extended until 2060. The contract essentially auto-renews every five years for an additional 40 years. In other words, it was designed to be a never-ending contract with a 35-year termination notice.
Careful study convinced us that the traditional G&T business model is not well-suited to provide the flexibility necessary to take advantage of current energy market opportunities.
Tipmont’s board of directors voted not to enter into this new contract and asked Wabash Valley for an estimated exit fee.
Tipmont and Wabash Valley Power Alliance (WVPA) were initially unable to reach an agreement in negotiating a contact exit fee. The exit case had to process through the Federal Energy Regulatory Commission (FERC).
After several years of proceedings, Tipmont is pleased with the outcome and the exit process is now underway.
Yes.
Initially, the Federal Energy Regulatory Commission (FERC) asked Wabash Valley Power Alliance (WVPA) to propose a new power supply contract. Tipmont found the terms of this contract unsatisfactory and challenged the contract. After several rounds of negotiation, FERC ultimately agreed with Tipmont’s challenge, and Tipmont and WVPA were able to come to an agreement on an exit fee that we feel is fair while adequately meeting Tipmont’s obligations.
Per the terms of our exit agreement, Tipmont will still purchase power from Wabash Valley Power Alliance (WVPA) for several years.
As Tipmont gradually purchases less power from WVPA, we will bridge that gap with power purchased from another provider. Tipmont’s board of directors is finalizing that choice.
