By - Jim Vess

Colorado PUC moves to block Tri-State plan to move from state to FERC regulation

Energize Weekly, August 21, 2019

The Colorado Public Utilities Commission (PUC) has filed an unprecedented protest with federal regulators seeking to block the bid by Tri-State Generation and Transmission Association to move from state to federal rate regulation.

Tri-State, which wants to shift rate regulation to the Federal Energy Regulatory Commission (FERC), provides wholesale power to 43 rural electric cooperatives in four states, but most of its customers and sales, about 60 percent, are in 18 Colorado co-ops.

Terry Bote, a spokesman for the PUC, said in an email that in his 25 years at the commission, there has never been a protest filed with FERC. He said he didn’t know if a protest had ever been filed with FERC.

The PUC in its protest said that the proposed switch by the Tri-State was “procedurally unsound, premature, incomplete and jurisdictionally problematic.”

“The PUC took this step because the state has a responsibility to protect its jurisdiction,” Bote said. “There are matters yet to be resolved before the PUC that are pertinent to Tri-State’s filing, and such resolution needs to precede FERC action.”

Tri-State is reviewing the protest, association spokesman Lee Boughey said in an email.

“This is a fairly aggressive stand by the Colorado PUC,” said Ellen Kutzer, an energy attorney with Western Resource Advocates, an environmental group. “It will definitely leave a mark on the FERC commissioners.”

In July, Tri-State filed a rate application with FERC and hoped to have it accepted within 60 days.

Tri-State has been challenged by member co-ops in New Mexico and Colorado on rates, and two co-ops have bought out their contracts and left Tri-State.

Both Colorado and New Mexico adopted clean energy laws this year requiring a sharp reduction in carbon dioxide emissions by utilities and an increase in renewable generation. Tri-State depends on coal for nearly half its electricity.

The Colorado legislature this spring also gave the PUC clear approval power over Tri-State’s planning for new generation and transmission projects.

“The PUC wants to make sure that Tri-State isn’t trying to go around those state efforts,” Kutzer said.

Tri-State’s decision to switch jurisdictions came as a case was heading to the PUC over the effort by the Delta-Montrose Electric Association (DMEA) to leave the association. DMEA filed a complaint with the PUC saying the exit fee Tri-State was demanding was “discriminatory.”

Tri-State and DMEA reached an undisclosed settlement before the PUC’s scheduled August hearing on the case. DMEA will leave Tri-State early next year paying an undisclosed exit fee.

Tri-State operates in Nebraska, Wyoming and New Mexico, as well as Colorado, and as regulatory policies change in each state, the association said it made sense to seek uniform rate regulation across the states.

This would allow for “rate certainty and predictability going forward,” according to Boughey.

Tri-State said that while rate and contract issues would move to FERC, it will still be under state jurisdiction for the resource planning and pollution-reduction goals.

“We are committed to working with the Governor, the legislature and the Colorado Public Utilities Commission to implement the state’s energy goals, including complying with Colorado’s carbon reduction rules and working with the commission and other stakeholders through the new resource planning process for Tri-State,” Boughey said.

In its protest, however, the PUC raised questions of whether the split oversight will undermine state efforts. “There are jurisdictional issues created if the state has jurisdiction over resource plans, which Tri-State admits, and the FERC has jurisdiction over rates,” the filing said. “Will FERC honor state decisions?”

To be eligible for FERC oversight, Tri-State has to add a new member that is not a rural cooperative. The PUC filing said that Tri-State has not named the new member, making the application premature.

In the filing, it said that the PUC will discuss at its Aug. 21 meeting whether the commission must approve that new member.

The protest also said that Tri-State’s long-term contracts that limit co-ops to generating no more than 5 percent of their own electricity, and the association’s opposition to co-ops buying local renewable energy under the Public Utility Regulatory Policies Act (PURPA) are not consistent with FERC policies to promote the development of new resources.

The PUC said considering the “significant procedural, legal and jurisdiction flaws” in the Tri-State application, it should be dismissed by the FERC.

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