Two of Tri-State’s biggest co-ops file complaints with the Colorado PUC seeking to leave

Energize Weekly, November 13, 2019

Tri-State Generation and Transmission Association continues to face pressure from some of its members as two of its largest electric cooperatives last week filed complaints with the Colorado Public Utilities Commission (CPUC) seeking reasonable exit fees from the association.

Brighton, Colo.-based United Power, the largest of Tri-State members, and Durango-based La Plata Electric Association (LPEA), the third largest, said in filings to the CPUC that they have been stymied in efforts to negotiate an exit with Tri-State.

Two co-ops have already paid exit fees, and Fort Collins, Colo.-based Poudre Valley Rural Electric Association, the association’s second largest co-op, has set a goal of 80 percent carbon emission-free electricity by 2030. Tri-State gets about 50 percent of its electricity from coal-fired power plants.

Tri-State is a wholesale power provider for 43 rural electric cooperatives in Wyoming, Nebraska, Colorado and New Mexico. It sells about 65 percent of its electricity in Colorado.

United Power and LPEA are seeking to add their own cleaner and cheaper generation and get out of Tri-State’s long-term contracts, which require co-ops to buy 95 percent of their power from the association.

United Power, which serves about 92,000 homes and businesses on Colorado’s Front Range, has hit its 5 percent cap on local generation and is adding battery storage.

LPEA, which has 37,000 members, has also reached the 5 percent cap on local renewable generation and was rebuffed in an effort to get the cap raised.

“Conversations regarding our power agreement with Tri-State have stalled and the cooperative is seeking out all possible alternatives to build in rate reductions and offer more renewable options to our energy mix,” United Power CEO John Parker said in a statement.

LPEA said in a statement that it asked Tri-State for an exit charge more than four months ago, but Tri-State has not responded to the request.

Tri-State is also seeking the goal of cleaner and lower cost power, CEO Duane Highley said in a statement. 

The association is considering changes to its wholesale power contracts, including a United Power proposal for a more flexible contract allowing co-ops to buy more power outside Tri-State, the association said.

“Tri-State’s members are diligently working with United Power to understand and address their concerns,” Tri-State board chairman Rick Gordon said in a statement.

There is also a process underway to develop a methodology to value the long-term power contracts, a key factor in setting an exit fee. The goal is to have the work completed in early 2020, Highley said.

United Power and LPEA, however, are pressing for speedy CPUC rulings because Tri-State, facing increased oversight in Colorado and New Mexico, is planning to move its rate and contract regulation to the Federal Energy Regulatory Commission (FERC). The association said this will unify rate regulation for the interstate operation.

Tri-State filed for FERC oversight in July, but the commission rejected the application, citing insufficient data and failure to comply with commission rate scheduling requirements.

FERC rejected the application without prejudice, and so Tri-State can resubmit its request.

“We have run out of options to obtain a fair exit charge from Tri-State,” LPEA CEO Jessica Matlock said. “Particularly in light of Tri-State’s exit-charge moratorium, combined with its efforts to circumvent CPUC jurisdiction over exit charges, we needed to act now.”

In its CPUC filing, LPEA asked the regulators to fast track the case and have the proceedings begin in December with the goal of setting a “just, reasonable and nondiscriminatory exit charge.”

United Power, Parker said, is seeking either a more flexible contract, so it can buy more of its power elsewhere, or to buy out its long-term contract.

“By not allowing United Power to move forward in a timely manner to seek additional energy sources, Tri-State is effectively holding this cooperative and our members hostage,” Parker said.

United Power and LPEA are following the path of the Kit Carson Electric Cooperative, in Taos, N.M., and the Delta-Montrose Electric Association, in Montrose, Colo., which both paid exit fees to leave Tri-State.

Kit Carson left in 2016 paying Tri-State $37 million. DMEA will leave in 2020 for an undisclosed sum.

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