NOTE 1 – ORGANIZATION

Tri‑State Generation and Transmission Association, Inc. (“the Association”) is a taxable wholesale electric power generation and transmission cooperative organized for the purpose of providing electricity to our member distribution systems (“Members”), that serve large portions of Colorado, Nebraska, New Mexico and Wyoming. We also sell a portion of our electric power to other utilities in our regions pursuant to long‑term contracts and short-term sale arrangements. In 2016,  2015 and 2014, total megawatt‑hours sold were 18.4, 17.8 and 18.7 million, respectively, of which 86,  89 and 85 percent, respectively, were sold to Members. Total revenue from electric sales was $1.3, $1.2, and $1.3 billion for 2016, 2015 and 2014, of which 90 percent in 2016 and 2015 and 85 percent in 2014 was from Member sales. Energy resources were provided by our generation and purchased power, of which 59 percent in 2016 and 63 percent in 2015 and 2014 were from our generation.

We have entered into substantially similar contracts with each Member extending through 2050 for 42 Members (which constitute approximately 96 percent of our revenue from Member sales for 2016) and extending through 2040 for the remaining Member (Delta-Montrose Electric Association). These contracts are subject to automatic extension thereafter until either party provides at least a two years’ notice of its intent to terminate. Each contract obligates us to sell and deliver to the Member and obligates the Member to purchase and receive at least 95 percent of its electric power requirements from us. Each Member may elect to provide up to 5 percent of its requirements from distributed or renewable generation owned or controlled by the Member. As of December 31, 2016,  18 Members have enrolled in this program with capacity totaling approximately 113 megawatts.

Revenue from one Member, United Power, Inc., was $159.4 million, or 14.0 percent, of our Member revenue and 11.8 percent of our operating revenues in 2016. No other Member exceeded 10 percent of our Member revenue or our operating revenues in 2016.

Power is provided to Members at rates determined by the Board of Directors (“Board”). Rates are designed to recover all costs and provide margins to increase Members’ equity and to meet certain financial covenants, including a debt service ratio (“DSR”) requirement and equity to capitalization ratio (“ECR”) requirement.

We supply wholesale power to our Members through the utilization of a portfolio of resources, including generating and transmission facilities, long‑term purchase contracts and short‑term energy purchases. Our generating facilities also include undivided ownership interests in jointly owned generating facilities. See Note 3—Property, Plant and Equipment. In support of our coal generating facilities, we have direct ownership and investment in coal mines.

We, including our subsidiaries, employ 1,585 people, of which 335 are subject to collective bargaining agreements. None of these agreements expire within one year.