Two Colorado electric cooperatives filed complaints this week at the Colorado Public Utilities Commission seeking regulatory intervention in their efforts to obtain acceptable exit charges from their wholesale power supplier, Westminster, Colorado-based Tri-State Generation and Transmission Association.
La Plata Electric Association of Durango on Nov. 5 filed a formal complaint at the Colorado PUC against Tri-State, itself a 44-member, nonprofit cooperative. LPEA asked the commission to intervene regarding Tri-State's refusal to provide an exit charge amount, and asked the commission to establish such a charge for LPEA [19F-0620E].
United Power of Brighton, a 90,000-member cooperative that serves parts of suburban Denver and Boulder, on Nov. 6 followed LPEA in filing a complaint. United asked the commission to find Tri-State's proposed exit charge unjust, unreasonable and discriminatory, and also to establish a fair charge for United [19F-0621E].
LPEA and United previously approached Tri-State in efforts to resolve issues they found problematic. LPEA said its members wanted more local, renewable generation than Tri-State's full-requirements contracts allowed. United sought to negotiate a partial-requirements contract with Tri-State, and in a November 2018 letter to fellow Tri-State members, United Board Chairman James Vigesaa asked them to join with United in an effort to amend the Tri-State bylaws to allow such contracts. The board concurred in a 42-1 vote in favor of increasing contract flexibility at Tri-State's annual meeting in April.
United Power says it delivered to Tri-State on Aug. 2 a notice of intent to become a partial-requirements contract member and received a "shopping letter" authorizing it to investigate costs for alternative power. United on Sept. 12 delivered a draft partial-requirements contract to Tri-State, and on Oct. 22 provided the wholesale supplier with an analysis of its partial-requirements proposal on Tri-State revenue.
Tri-State had not responded to United's proposal as agreed by Nov. 2, the complaint says. Tri-State did eventually respond to United's request for an exit charge by suggesting an amount that according to the complaint "would result in a massive windfall to Tri-State and non-withdrawing members."
Tri-State appears to be trying to develop a justification for imposing punitive exit charges "that helps Tri-State imprison its member-owners to the detriment of Colorado's environment and ratepayers," United says in its complaint.
Tri-State's board of directors on Sept. 4 adopted a resolution that implemented "an indefinite moratorium" preventing members from withdrawing or transitioning to partial-requirements contracts, the United complaint says, adding that "this action was in direct contravention of the Tri-State membership as expressed by the 42-1 vote on changes to the bylaws at the April 3, 2019 annual meeting."
Scott Wolfe, vice chairman of Tri-State's board of directors and chairman of the contract committee, called United's complaint "immensely disappointing," and in a statement accused the co-op of "thwarting an ongoing process that they are actively involved in."
"As part of the review of contracts, [Tri-State]'s board of directors has asked its members to review the methodology for calculating the value of their wholesale power contracts before the board provides figures to requesting members," the statement says.
Tri-State earlier this year agreed on an undisclosed exit charge allowing Delta Montrose Electric Association in western Colorado to leave in May 2020 [18F-0866E] (see CEM No. 1549). In 2016, Tri-State and Kit Carson Electric Cooperative of New Mexico negotiated a $37-million exit fee allowing KCEC to leave. DMEA, like United and LPEA, sought intervention from the Colorado PUC, alleging the confidential exit charge proposed by Tri-State was "unjust, unreasonable and discriminatory."
LPEA's complaint characterizes Tri-State as having "a troubling history of impeding its members' rights to withdraw by prescribing outsized exit charges." In its case, "Tri-State has refused to provide LPEA an exit charge at all," the complaint says.
LPEA's complaint also refers to an "exit charge moratorium" enacted in September that it says is designed to hold members captive while the wholesale organization "attempts to overhaul its regulatory status to become Federal Energy Regulatory Commission rate-jurisdictional." LPEA suggests the "moratorium" is an effort to avoid state regulatory involvement in member withdrawals. LPEA says it received a shopping letter from Tri-State that expires at the end of December, making a timely response from the PUC more critical.
"As a result of member requests, including LPEA's, regarding the value of their wholesale power contracts with the association, Tri-State has begun a . . . process to reach agreement on a methodology for determining that value," Tri-State CEO Duane Highley said in a statement responding to the LPEA complaint. The goal is to complete that work in early 2020, he said.
In an Oct. 30 presentation to the New Mexico Public Regulation Commission, Highley said the organization is working to address the 5-percent self-generation limit for members, and that the board would soon vote on whether to increase options for local, renewable generation rather than centralized projects.
Highley told the New Mexico regulators about Tri-State's efforts to join regional markets to boost the benefits of additional renewables integration (see CEM No. 1556). He said the company seeks to "make the grid as green as we can without sacrificing reliability or affordability." Tri-State expects renewable resources to go from about a third of its portfolio to 50 percent by 2023, Highley said. He also referenced the contract committee working to increase flexibility in wholesale power management and increase opportunities for local renewable generation. Highley said during the presentation that he was giving commissioners "a preview of the press release that we expect to come in December."
United, however, asked the Colorado PUC to set a procedural schedule that begins in December, allowing it to put forth "expert testimony for a just, reasonable, and non-discriminatory exit charge for commission adjudication." The commission on Nov. 7 scheduled a hearing for Jan. 22.