Executives at two Colorado distribution cooperatives, in their effort to secure lower exit charges to dissolve their membership in a wholesale generation and transmission cooperative, offered remote testimony May 18 to 20 in an evidentiary hearing via videoconference before a Colorado Public Utilities Commission administrative law judge.
Statements of position from the co-ops—Durango's La Plata Electric Association and United Power of Brighton, near Denver—and Tri-State Generation and Transmission Association are due May 28, with a recommended decision from ALJ Robert Garvey to follow soon after. The commission will consider Garvey's recommendation at a subsequent meeting.
The co-ops first filed complaints to the Colorado PUC in early November after communications broke down over what United deemed an unreasonable exit charge amount from Tri-State and the wholesale co-op's refusal to offer LPEA any exit charge at all [19F-0620E, 19F-0621E] (see CEM No. 1564). Kit Carson Electric Cooperative of Taos, New Mexico, and Delta-Montrose Electric Association, another Colorado co-op, both exited Tri-State membership in recent years after lengthy negotiations and eventual regulatory intervention.
United and LPEA both want to provide their members with more clean, local and low-cost renewable generation than is allowed by Tri-State's full-requirements contracts, which expire in 2050. Tri-State members in April approved a partial-requirements contract option and customer class that allows members to self-supply up to 50 percent of their generation needs, subject to availability of an aggregate 300 MW of systemwide capacity representing 10 percent of Tri-State's system peak demand. The current full-requirements contracts limit self-generation to 5 percent of a member's load, and Tri-State rates are as much as 20 percent higher than the Colorado average, according to a May 2020 newsletter from LPEA to its members.
"We have a strategic goal to reduce carbon 50 percent by 2030 while remaining cheaper than 70 percent of our Colorado cooperative peers, and to achieve this we must explore every option available," LPEA CEO Jessica Matlock said in the newsletter.
A May 4 suit filed against Tri-State by United Power in District Court in Adams County alleges the power provider engaged in fraud by enticing United to support a bylaws amendment that created the new membership classes. The methodology for transitioning to partial-requirements membership, United says in its court filing, is "so punitive that no member can achieve a reasonable financial benefit" from doing so. The new membership classes, United says, provided the structure for Tri-State to add members that are not small co-ops or public power districts, thereby removing its previous exemption from regulation by the Federal Energy Regulatory Commission. This was merely an effort to circumvent intervention by state utility regulators, the suit says (see CEM No. 1589).
Garvey in a May 15 interim decision granted LPEA and United's motion for summary judgment, saying Tri-State is subject to the state commission's authority under Colorado law. Moreover, Garvey quoted a recent FERC decision that specifically denies the federal agency has exclusive jurisdiction over Tri-State's exit charges and asserts that FERC's authority does not pre-empt that of the PUC unless a state ruling conflicts with a FERC-approved tariff or agreement.
"Both the partial requirements contract option and the contract termination payment methodology approved by the board protect the interests of all Tri-State utility members by ensuring that one member's action does not unfairly shift costs to the other members," Tri-State CEO Duane Highley said in an April 9 release regarding approval of the new contracts and a methodology for calculating exit fees premised on a "make whole" concept. The release asserts that both developments are subject to FERC authority.
Tri-State plans to add eight renewable-energy projects in Colorado and New Mexico by 2024, at which point 50 percent of its wholesale power will come from renewable resources, the company said. Tri-State in January announced its Responsible Energy Plan involving new renewables projects, the early retirement of legacy coal plants, and a complete exit from coal in New Mexico and Colorado by 2030.