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.
