By - Jim Vess

Tri-State seeks FERC regulation to avoid Colorado and New Mexico oversight on rates

Energize Weekly, June 26, 2019

After Colorado and New Mexico passed clean energy laws giving them more oversight of the Tri-State Generation and Transmission Association, the wholesale power provider is considering seeking federal regulation to blunt the state initiatives.

Westminster, Colo.-based Tri-State provides 95 percent of the electricity to 43 rural electric cooperatives in four states – Nebraska, Wyoming, Colorado and New Mexico. The bulk of the people served by the association are in Colorado.

This past legislative session New Mexico passed a 100 percent clean energy law and Colorado passed clean energy plan aimed at reaching net-zero carbon emissions by 2050.The laws puts Tri-State, which generates about half its electricity from coal, under state scrutiny.

The Colorado Public Utilities Commission (PUC) has already ruled that it has jurisdiction in a dispute between the Delta-Montrose Electric Association (DMEA) and Tri-State. DMEA is seeking to buy-out its 40-year contract with Tri-State.

“If a wholesale power provider operating in Instate Commerce is to be regulated, it makes sense for it to be regulated by a single regulatory body,” a Tri-State position paper said. “FERC would be a single decision maker with respect to rates and would apply consistent rates to Tri-State’s members in each of its four states.”

Tri-State would still have to submit its resource plans – which project electricity demands and the resources the association proposes to build to meet that demand – to the states. But rates and contract disputes, such as the one with DMEA, would fall under FERC jurisdiction.

“Tri-State has fought hard to prevent the PUC from ever deciding the issue,” DMEA said in a statement. “Tri-State tried to dismiss DMEA’s complaint before the PUC, but failed. Tri-State sued DMEA in Adams County, but the judge dismissed the lawsuit. Now, with testimony already submitted and with a scheduled PUC hearing in August, Tri-State has a new plan to avoid Colorado law and PUC oversight.”

The Kit Carson Electric Cooperative, in Taos, N.M, bought-out its long-term contract with Tri-State in 2016 for $37 million. DMEA is looking to do the same but the co-op says that the undisclosed exit fee Tri-State is demanding is “discriminatory.”

This led DMEA to seek PUC intervention. Several other co-ops have looked at exiting Tri-State or changing their contracts. Tri-State’s largest co-op – United Power, based in Brighton, Colo. –has complained about Tri-State rates, which are higher than those of Xcel Energy, which serves neighboring areas.

Getting FERC jurisdiction will not be easy. At the moment, Tri-State isn’t eligible for federal oversight because it is wholly-owned by rural electric cooperatives and public power districts. It would have to add a new member outside this group.

“The board would need to establish a new class of membership and define its voting rights, ownership rights and patronage rights,” the position paper said.

There also would be new costs, including an annual fee estimated at $1.3 million and increased staff. “The future nature of FERC regulation is uncertain,” the paper said.

But the Tri-State position paper also said that the association would always have the option of opting out of FERC regulation in the future.

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