Tri-State adds new member, natural gas broker MIECO, in bid to qualify for FERC regulation
Energize Weekly, September 11, 2019
Tri-State Generation and Transmission Association has added energy services company MIECO Inc. as its first non-rural electric cooperative member, clearing the way for the association to be regulated by the Federal Energy Regulatory Commission (FERC).
In July, Tri-State, which serves 43 electric cooperatives in four states – Colorado, Nebraska, Wyoming and New Mexico – filed a tariff case with FERC seeking rate regulation. The Colorado Public Utilities Commission (CPUC) filed a protest objecting the move.
The Tri-State decision to seek federal regulation came after New Mexico and Colorado passed laws with clean energy goals and more oversight of the association.
“There is political pressure in New Mexico and Colorado for additional Tri-State regulation on facilities and rates,” a Tri-State briefing paper for members said. “At some point, Wyoming and Nebraska could also assert jurisdiction.”
Tri-State said it made sense to seek uniform state regulation across the states in which it operates.
The move also came as one co-op had bought out its contract and left Tri-State, another was in negotiations to leave, and a third had asked for an estimated exit fee. The co-ops had complained about Tri-State’s heavy dependence on coal-fired generation and the limits on local renewable generation in the contracts.
If FERC accepts Tri-State’s filing, future contract disputes between the association and its co-ops would be regulated at the federal level.
To be eligible for FERC oversight, Tri-State had to retire its federal Rural Utilities Service loans and add a member that is not a rural electric cooperative.
California-based MIECO is a wholesale energy services company, supplying natural gas to customers across the country, including Tri-State.
“Natural gas generation helps us reliably integrate renewables,” Tri-State CEO Duane Highley said in a statement. “Adding MIECO to our membership helps ensure that we have enough firm natural gas pipeline transportation capacity and fuel to supply our existing and any new natural gas-fired power plants.”
MEICO will be eligible for patronage capital allocations – distributions to members and have voting rights at membership meetings, but will not have a seat on the Tri-State board of directors, according to the association.
The CPUC filed a protest with FERC in August arguing that the proposed switch to federal oversight from state regulation was “procedurally unsound” and “jurisdictionally problematic.”
The Colorado legislature this spring also gave the CPUC clear approval power over Tri-State’s planning for new generation and transmission projects with an eye to promote renewable energy and meet the goal of a 90 percent reduction of carbon emissions from 2005 levels by 2050.
In its protest, the CPUC 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?”
Tri-State said it will abide by the state planning process and emission goals. “Tri-State has and will continue to comply with state environmental, renewable energy and resource planning requirements, and will continue to do so under FERC rate regulation,” Highley said. “The issue of FERC rate regulation is unrelated to those areas regulated by the states.”