Tri-State Map

Tri-State Generation and Transmission Association has 43 small rural electric-distribution member cooperatives in four states. It has been exempt from federal regulation but recently added MIECO, a wholesale natural gas supplier, as a member.

Tri-State Generation and Transmission Association of Westminster, Colorado, on Sept. 3 announced the identity of the new member that will bring the wholesale power provider under Federal Energy Regulatory Commission jurisdiction for the first time in its history. In a filing to FERC, Tri-State also requested that its initial filings become effective early to coincide with the admission of the new member.

MIECO, which trades refined petroleum products and natural gas in North America and the Pacific Rim, is the wholesale cooperative's newest member. It is also one of approximately 40 North American subsidiaries of the multinational Japanese Marubeni Corp., according to the MIECO website. The company, wholly owned by Marubeni, is headquartered in Long Beach, California, with additional offices in Westlake, California; Houston, Texas; Newark, New Jersey; and Denver. MIECO's Denver office focuses on "the physical energy marketplace" with a "core competency" in transporting and storing natural gas, according to the website.

"We have been working with MIECO for years, and today we are further aligning our interests to the benefit of all our cooperative's members," Tri-State Chairman Rick Gordon said in a release announcing the new member and Tri-State's transition to federal rate regulation. MIECO will be eligible for patronage capital allocations and have voting rights at membership meetings, but it will not have a seat on the Tri-State board of directors, Gordon said in the release.

"Natural gas generation helps us reliably integrate renewables," Tri-State CEO Duane Highley said in the release. "Adding MIECO to our membership helps ensure that we have enough firm natural gas pipeline transportation capacity and fuel to supply our existing and any new natural gas-fired power plants," he said. MIECO supplies natural gas services to Tri-State power plants and serves purchasers throughout the U.S., according to the release.

Under the Federal Power Act, FERC regulates rates of wholesale electric service and transmission providers, but Tri-State had previously been exempt as a Rural Utilities Service borrower (until 2014) and because it was wholly owned by the small rural co-ops and public power districts that made up its membership. The admission of MIECO, Tri-State's first member that is neither a small electric cooperative nor a public power district since the company was formed in 1952, removes this exemption.

Tri-State insists rate regulation by FERC will not affect the company's compliance with resource-planning, carbon-reduction and renewable-energy regulations in the states in which it operates, but both the Colorado Public Utilities Commission and the New Mexico Public Regulation Commission filed protests to FERC in August regarding Tri-State's change in regulatory status. Among the regulators' concerns is the challenge of enforcing state rules for a member under federal regulation (see CEM No. 1554).

Tri-State on Sept. 3 filed to FERC a notice of new member and request for a partial waiver "of its 60-day prior notice requirement." If granted, the partial waiver would allow Tri-State's initial FERC tariff filings of July 23 and July 26 to become effective Sept. 3 instead of Sept. 22, to coincide with its admission of MIECO.

The initial filings concern new, FERC-jurisdictional services Tri-State will provide as a public utility subject to the FPA [ER19-2440, -2441, -2442, -2443, -2444, -2470 and -2474].

"Tri-State has been compelled to accelerate the identification and admission of MIECO as a member of Tri-State due to certain parties' unwarranted concerns regarding the identity and impact of Tri-State's new member and their unsupported challenges to the commission's authority to act in these proceedings," the company said in its Sept. 3 filing. Adding MIECO "will dispose of a central issue raised in several protests and facilitate the commission's consideration of other contested issues," the filing says.

Colorado PUC spokesman Terry Bote said in an email that legal counsel is reviewing Tri-State's notice.

Tri-State, in an issue brief circulated to its members in June, said Colorado and New Mexico's exercise of rate regulation in recent years "resulted in increased costs, unrecovered revenue and inconsistent rates to its members." It pursued FERC regulation in the interest of pre-empting increased rate regulation in the states it serves and to benefit from a "higher level of rate certainty" through FERC's formula rates. "Tri-State would always have the option of leaving FERC regulation," the brief says.

"Under FERC, Tri-State has consistent rate regulation and resolution, in one forum, of related wholesale power and transmissions matters," the company's release says. Participation opportunities in organized wholesale energy markets is another benefit of FERC regulation mentioned in the release.

FERC will oversee securities approvals, interlocking directorates, the sale of assets, and mergers and acquisitions in addition to generation and transmission rates, according to the issue brief. An annual fee of approximately $1.3 million, litigation costs, and increased staff are listed in the brief as concerns related to FERC regulation.

FERC regulates the wholesale rates of other utilities operating in multiple states in the western U.S. and across the nation.