Dive Brief:

• There are now at least seven rural electric cooperatives considering what it would cost to leave the service of Tri-State Generation and Transmission Association, a sign that the utility's efforts to reduce costs and carbon emissions have not appeased its membership.
• The cooperatives in a February filing asked the Federal Energy Regulatory Commission to quickly direct Tri-State to set an amount for each entity to buy out its contract because the utility is "stonewalling." On Friday, Tri-State asked the commission to dismiss the cooperatives' complaint.
• FERC accepted Tri-State's contract termination payment (CTP) methodology in June 2020, but the utility says it is still implementing a process for members to request a buy-out number.

Dive Insight:

Tri-State says it is still setting up the CTP process to allow members to exit its service. Until that is in place, the utility says cooperatives' request for FERC to fast-track the process is premature.

The cooperatives say they've asked for buy-out numbers and Tri-State's refusal to calculate CTP amounts "violates the filed rate doctrine and is patently unjust and unreasonable."

The cooperatives include Wheat Belt Public Power and Northwest Rural Public Power in Nebraska; La Plata Electric Association (LPEA), United Power, San Isabel Electric and San Miguel Power in Colorado; and Springer Electric in New Mexico.

The cooperatives have not formally indicated they intend to withdraw from Tri-State's service, and have instead requested the CTP for planning purposes.

LPEA and United have previously requested buy-out determinations from Tri-State, at the Colorado Public Utilities Commission. However, state regulators have concurred with FERC that the federal commission has exclusive jurisdiction over the exit fee agreement established by Tri-State and its members.

There is also a dispute over whether Tri-State must calculate a CTP before a member has indicated they intend to exit. The cooperatives say they don't need to indicate an intent to withdraw in order for Tri-State to make that calculation.

"No reasonable member could provide notice of its intention to withdraw without knowing the costs to withdraw," the cooperatives said in their February filing. 

"It is disingenuous, and unduly prejudicial, and unjust and unreasonable, for Tri-State to now argue that members must provide a binding notice of their intention to withdraw before Tri-State will calculate an exit-charge under the CTP Methodology," the cooperatives told FERC.

Tri-State responded last week that the cooperatives want FERC to read into its tariff "an unsupported obligation that requires Tri-State to perform unlimited 'informational' CTP calculations on demand."

"We disagree with the allegations in the complaint. The complaint is premature, given the current status of the case in FERC settlement negotiations, and attempts to eviscerate an orderly process by circumventing established Tri-State governance and FERC regulatory procedures," Tri-State spokesperson Lee Boughey said in a statement.

Tri-State has been working to cut its carbon emissions and reduce its costs. Last year, the utility announced a goal to cut Colorado greenhouse gas emissions 80% by 2030, relative to 2005 levels, and filed a preferred scenario with regulators that includes 1,850 MW of additional renewable generation and more than 200 MW of energy storage. Tri-State's Colorado coal units would also retire by 2030 , under the proposal.

The utility's plan calls for continuing to operate coal units in Arizona and Wyoming into the 2030s, and for 300 MW of new gas plants.

"I think a lot of this is a cost issue," said said Matthew Larson, an attorney at Wilkinson Barker Knauer which has represented LPEA in its bid to leave Tri-State's service. "It's also about local economic development," he said. The co-ops want to "harness resources in their own backyard."

Tri-State in October 2020 announced a plan to allow cooperative members to generate more of their own power, but there are still limits on how much they can produce.

"By my count, that now makes nine co-ops from three of the four states that Tri-State serves that are seeking a buy-out number – 11 if you count Kit Carson and Delta Montrose, which have already successfully jumped ship," Eric Frankowski, executive director of the Western Clean Energy Campaign, said in an email.

Tri-State is a cooperative of 45 members, including 42 electric distribution cooperatives and public power districts.

Delta Montrose Electric Association reached a settlement last year to leave Tri-State's service. Kit Carson Electric Cooperative left in 2016. Frankowski said Jemez Electric in New Mexico and Mountain Parks in Colorado have also considered the option.

Tri-State's Boughey said the new CTP policy, once implemented, will provide "an orderly process for members to request a CTP calculation and termination, and ensure that CTP calculations yield accurate results."