Dive Brief:

• Colorado regulators are sounding the alarm over Tri-State Generation & Transmission's (G&T) request to have its rates regulated at the federal level, arguing that the cooperative's "hasty" addition of a new member looks like an attempt to restrict the Public Utility Commission's (PUC) oversight.
• Earlier this month Tri-State added MIECO to its membership, and announced that it is now subject to regulation by the Federal Energy Regulatory Commission (FERC). The utility's tariff filing with the commission has not been approved yet, however.
• Tri-State provides transmission and a coal-heavy mix of generation to cooperative electric utilities in four states, but has lost some members seeking a cleaner mix of energy. Colorado has taken steps to regulate Tri-State's electric resource planning, and worries the utility views federal regulation as an escape hatch.   

Dive Insight:

Neither Tri-State nor the Colorado PUC would comment on the record, but recent regulatory filings paint a contentious picture. Observers say the proceeding is potentially significant for other G&T utilities regulated at the state level who may see FERC regulation as a way out, because its federal rate decisions would trump state authority.

Colorado regulators told FERC in a Sept. 12 filing. that the utility's approach is "an extraordinarily poor start to Tri-State's relationship with its regulator, and it should not be condoned, let alone rewarded."

Tri-State has historically been exempt from FERC oversight — initially as a Rural Utilities Service borrower, though more recently it has maintained its exemption because it is wholly owned by small cooperatives or public power districts, which the federal commission does not regulate. At the same time, the states where it serves members have varying degrees of oversight.

Tri-State has been wary of state regulation in the past and in an issue brief noted "there is political pressure in New Mexico and Colorado for additional Tri-State regulation on facilities and rates. At some point, Wyoming and Nebraska could also assert jurisdiction."

Tri-State says its move to be federally regulated would help keep rates consistent. But the Colorado PUC fears an end-around, despite Tri-State's promises that it will abide by state resource planning decisions.

In response to Tri-State's filing with FERC on Sept. 3, asserting that it would become a FERC-jurisdictional public utility subject to the filing requirements of Federal Power Act, Colorado regulators asked that all of the filings be dismissed.

FERC "should not reward Tri-State's behavior by accepting its filings," the PUC told the federal commission. "Its hasty admission of a new member appears to be an attempt to restrict the Commission's options in dealing with Tri-State's filings."

California-based MIECO, a subsidiary of Marubeni Corp, supplies gas to Tri-State power plants. The Colorado PUC has suggested adding the new member could have required FERC approval.

"Although Tri-State intimates that the admission of the new member resolves the myriad legal issues presented by its filings, that simply is not the case," said regulators. "If anything, the admission of Mieco only increases the legal jeopardy Tri-State's filings are in."

Tri-State says it is planning to file a response with FERC later this week. In a Sept. 11 filing with the Colorado PUC, the company told state regulators it "does not believe that FERC's regulation of Tri-State's wholesale rates will interfere with or preempt the Commission's ability to engage in legitimate resource planning activities within the state of Colorado."