Delivering what’s next for rural Indiana
The Tipmont REMC board of directors has unanimously voted to exercise our cooperative's right to exit its power supply contract with Wabash Valley Power Alliance. This page explains why, and if we succeed, what it will mean for you.
The effort is ongoing, and the decision will not be final until the board is confident that the move will:
- Provide the electric reliability you're accustomed to;
- Stabilize the rate Tipmont pays for your power supply, and;
- Offer flexibility to meet your current and future energy needs.
We invite you to stay informed about our progress by periodically returning to this page.
The Backstory
Tipmont REMC (Rural Electric Membership Corporation) is an electric distribution cooperative, responsible for securing power supply and distributing it to your homes and businesses. Throughout our history, we have been a leader among Indiana’s distribution co-ops, and we’ve become known for our innovation. We also have an unspoken but binding obligation to you, our members, to provide – and, when necessary, fight for – the best, most affordable electric services, today and into the future.
Wabash Valley Power Alliance is a power generation and transmission (G&T) utility, responsible for purchasing or generating electric power and transmitting it to local distribution co-ops like Tipmont. It was founded by a group of REMCs that wanted to pool their purchasing power to obtain electricity for their members.
Tipmont REMC secured the power supply for its membership by joining Wabash Valley Power Alliance in 1977, signing a 50-year, contract in effect until 2028. This contract gave Wabash Valley exclusive control over our power supply and the rates we pay for it. In 2006, we signed a new contract, similar to the original, that will be in effect through 2050.
At the time we entered into these agreements, contracts like ours were standard. The extended duration of these – 40 years or more – was seen as necessary to ensure the long-term security of power supply in rural communities
The road to a better energy future
In 2018, Wabash Valley 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.
Tipmont’s existing contract with Wabash Valley explicitly states that we have the right to terminate service upon payment of an exit fee.
Understanding the options and benefits of a competitive power supply market, Tipmont’s board of directors voted not to enter into this new contract and asked Wabash Valley for an estimated exit fee: What it would cost to withdraw from our commitment to purchase power through Wabash Valley?
Negotiations on a fair and equitable exit fee are ongoing. Tipmont requested the Federal Energy Regulatory Commission weigh in on several proposed exit fees and replacement contracts, and we hope to reach an agreement sometime this year.
Why end our contract with Wabash?
Historically, joining Wabash Valley was the right choice for Tipmont REMC's wholesale power needs, but the world – and the entire utility industry – is radically different now. The proliferation of energy markets (Midwest Independent System Operator (MISO)), open access transmission, natural gas, renewable and distributed energy resources (battery storage) have transformed the energy marketplace. Additionally, the emergence of competitive energy wholesale businesses, known as independent power providers (IPPs) have changed how energy is bought and sold. Competition in the wholesale energy market means power supply is now available at prices lower than those charged by many G&Ts.
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 REMC’s contract explicitly states that subject to payment of an exit fee, we have a right to terminate service with Wabash Valley. Based on our research and careful consideration, our Board of Directors believes Tipmont REMC can better serve its membership – and better manage your electric power costs – if we explore other options.
What will change, what won’t
Tipmont REMC understands that legally (and ethically), we can't walk away from our contract without fulfilling our obligations. When you want to cancel a phone or cable TV contract, typically you have to pay a fee, and the same idea applies here. We expect and will willingly pay a reasonable fee to Wabash Valley as we exercise our contractual right to exit our contract, a fee that helps ensure against any adverse impacts on other Wabash Valley member co-ops. The amount of that fee is yet to be determined, but when it is and we've made a final decision to exit, here's what you can expect to happen.
- No change in power transmission and reliability. Tipmont will receive power through the same substations and over the same transmission lines used today. Most of those are operated and governed by MISO, an independent transmission organization located in Carmel, Indiana that delivers electric power across 15 U.S. states and the Canadian province of Manitoba. The reliability of our power supply will not change either. The mix of energy sources (gas, solar, wind, etc.) will ensure that, barring extreme events, you will always have power when you need it.
- Stabilized rates. Access to the competitive wholesale power market will, at minimum, stabilize the rate Tipmont pays for your power supply. Tipmont won't enter into any new power partnership that doesn't offer the certainty of stable wholesale power rates.
- Flexibility and community energy investment. Freed from the limitations in our Wabash Valley contract, Tipmont will have the flexibility to manage our mix of power supply sources, including distributed resources and battery storage owned by our members.
We’re fighting for you – and our shared vision
Tipmont REMC is dedicated to providing the best possible electric services and innovations at the lowest possible rates, not only for today, but for generations to come. To do that, we need autonomy and the flexibility to take advantage of advancements in energy markets and new technologies. We can better manage your electric power costs only by freeing ourselves from Wabash Valley.
A final decision on that exit naturally depends on reaching an agreement on a reasonable exit fee. Tipmont REMC commits to ensuring transparency in our efforts to exit our Wabash Valley contract – to making sure we keep you, our members, fully informed at every significant step along the way. To stay up to date, check back with us on this page.
