Colorado expedites Tri-State member exit charge case, as power supplier gets 'split decision' on FERC jurisdiction

Dive Brief:

The Federal Energy Regulatory Commission (FERC) on March 20 accepted tariffs filed by Tri-State Generation and Transmission, meaning the agency will now have authority over wholesale rates for the cooperative’s member distribution utilities in New Mexico, Colorado, Wyoming and Nebraska.
In a separate order, FERC determined it does not have exclusive jurisdiction over member exit charges, allowing complaints by La Plata Electric Association (LPEA) and United Power pending before the Colorado Public Utilities Commission (COPUC) to move forward. State regulators have ordered an expedited pre-hearing conference on the exit charge requests.
The PUC will determine the appropriate cost for the rural providers to leave Tri-State's service. The member cooperatives have been critical of the utility's coal-heavy generation mix and agreements requiring them to purchase 95% of their power from Tri-State through 2050.

Dive Insight:

Tri-State is moving forward with efforts to add more renewable energy and give member companies greater control over their own supply, but FERC's decision opens a route for LPEA and United to go their own way.

"Even though it's a split decision, I'd call it a big victory for the two co-ops," Eric Frankowski, executive director of Western Clean Energy Campaign, said in an email to Utility Dive.

Tri-State says it is in the process of eliminating 100% of coal emissions in New Mexico by the end of 2020, and 100% of coal emissions in Colorado by 2030. The G&T provider is adding more than 1,000 MW of new wind and solar resources, and says by 2024, 50% of the energy consumed through Tri-State’s members will come from emissions-free renewable energy.

Tri-State also says it is working to expand flexibility for members to self-supply power and develop more local renewable energy. The utility says its members will be able to express their intent to transition to partial requirements contracts by participating in an upcoming open season, to allocate an aggregate 300 MW of system-wide member self-supply capacity.

The open season capacity is 10% of Tri-State’s system peak demand. A date has not been set for the open season, but Tri-State says it will be held later this year.

"We value all of our members. The significant changes at Tri-State are closely aligned with our members’ desires," Tri-State spokesman Mark Stutz said in an email. "The changes at Tri-State are member-driven.

According to LPEA CEO Jessica Matlock, the changes do not go far enough.

"This is a step in the right direction but in order to fully evaluate all of its options LPEA needs an exit charge to be set by the COPUC," Matlock said in an email. "Even though Tri-State has proposed methodologies around an open season (or partial requirements), without understanding what a full exit looks like from a financial perspective, LPEA cannot compare the relative costs and benefits of increased self-supply with a complete exit and a contract with a new wholesale provider."

United Power said much the same in a statement.

“United Power has been very methodical in our approach to determining our course forward in regard to wholesale power,” said Chief Energy Resource Officer Dean Hubbuck. “We are weighing the cost and mix of power we receive from Tri-State with other options in the energy marketplace, and we need the PUC to provide an accurate and fair exit charge so we can make good decisions for our Cooperative’s future on behalf of our membership.”

Colorado regulators ruled Wednesday that an Administrative Law Judge will preside over a hearing and ordered an expedited pre-hearing conference on the exit charge requests. According to Matlock, "all that remains in the case is the evidentiary hearing and final briefing." Pre-filed testimony has already been submitted.

Tri-State says its members believe, however, that they should make decisions about their contracts with Tri-State, according to Stutz. "Our board of directors has asked the membership’s Contract Committee to develop a uniform contract termination fee methodology," he said.

Tri-State says its FERC tariff filing, which brings it under federal jurisdiction, was designed to provide consistent rates across all of its four-state territory. "The orders recognize that Tri-State became jurisdictional to the FERC on Sept. 3, 2019, when we added our first non-utility member," Stutz said.

California-based MIECO, Tri-State's new member, is a subsidiary of Marubeni Corp. and supplies gas to Tri-State power plants.

Matlock sees things differently.

"The primary reason Tri-State sought to eliminate its FERC exemption was to preempt the Colorado PUC’s jurisdiction over exit charges," Matlock said. "Here is the outcome of Tri-State’s FERC strategy: a two-fer of a far-reaching and expensive federal regulatory regime, and continued oversight at the state level involving exit charge litigation. In other words, it did not accomplish what it was intended to achieve."