Tri-State Generation and Transmission Association of Colorado will revise and resubmit its July rate and tariff filings to the Federal Energy Regulatory Commission "as quickly and expeditiously as possible," a company spokesman said [ER19- 2440, -2441, -2442, -2443, -2444, -2470 and -2474].
Mark Stutz of Tri-State underscored that FERC's Oct. 4 rejection of the company's tariff-filing package and wholesale rates "explicitly states that its decision does not address the merits of our filings nor the merits of any protests." The issue is "not one of FERC jurisdiction over Tri-State," Stutz said. "We are FERC jurisdictional."
Tri-State, a not-for-profit cooperative serving rural distribution co-ops and public-power districts in four states, had been exempt from FERC jurisdiction until it added natural gas and petroleum products trader MIECO, headquartered in Long Beach, California, as a member on Sept. 3. Prior to MIECO's membership, Tri-State's status as a cooperative consisting of member-owners who were themselves small co-ops or public-power districts exempted the company from FERC regulation (see CEM No. 1554).
Utility regulators in Colorado and New Mexico recently began exerting rate jurisdiction over Tri-State, prompting the company's decision to put itself under the rate-regulating authority of FERC. Tri-State said state regulatory involvement led to unfair and inconsistent rates among its members. Tri-State serves members in Wyoming and Nebraska, but the bulk of its membership is in Colorado and New Mexico.
The Colorado Public Utilities Commission, which gained the authority to regulate Tri-State earlier this year from the Colorado Legislature, protested Tri-State's FERC filings along with the New Mexico Public Regulation Commission, a few Tri-State members and some environmental organizations, including the Sierra Club. Tri-State maintains it will remain subject to state authorities for purposes of resource planning, carbon-reduction goals, renewables standards and other state laws and regulations. The FERC issue is separate from those at the state levels, Stutz said.
The Colorado PUC, in an emailed statement, said it "is still reviewing the FERC decision and meeting with its attorneys regarding the implications for state and federal jurisdiction" concerning Tri-State. The commission has argued, among other things, that without the authority to approve rates, it will lack enforcement power over Tri-State in other areas of its jurisdiction. The PUC will hold hearings on electric resource planning rules for Tri-State Oct. 15.
"First-time [FERC] filings are complex, especially with a large wholesale power supply cooperative like Tri-State," Stutz said in response to FERC's order rejecting the filings. "We are reviewing the FERC order and will move expeditiously to address the issues raised by FERC, and refile."
To bring the filings into compliance, Tri-State must submit estimates of transactions and revenues under a rate schedule that includes the 12 months immediately following the month in which services will begin, FERC's order said. The company must also explain its method for arriving at cost-of-service allocations for its proposed rates. Tri-State gave insufficient explanation of its rate design and calculations in its original filing, such that interested parties could not determine how proposed rates might affect them, the order said. FERC's mandate to assess whether proposed rate tariffs are just and reasonable is also compromised by these deficiencies, according to the order.
"FERC determines whether wholesale rates are 'just and reasonable' and 'not unduly discriminatory or preferential,' and approves those rates based on the actual costs of providing service," FERC spokesman Craig Cano explained in an email.
"Since Tri-State's wholesale rate has remained unchanged for three years and is equal for all of our 43 cooperative members and public-power districts, we believe Tri-State is likely to meet these requirements at the FERC," Stutz said.
Tri-State in a Sept. 11 news release announced that its wholesale rates would remain flat for the third consecutive year based on the 2020 budget and rates set by its board. Stutz said the company does not anticipate revising that budget based on FERC's order. "Technically we don't know until FERC issues an order on our wholesale rates" whether 2020 rates will be affected by FERC's decision, he said.
Tri-State's 43 wholesale service contracts with current members, also submitted to FERC for approval, depend on the stated rate tariff, which was rejected. Tri-State must revise the rate-relevant aspects of the contracts when it refiles.
Tri-State and its wholly owned subsidiary Thermo Cogen also filed applications at FERC in July for market-based rate authority. FERC rejected these because the entities "failed to demonstrate a lack of vertical market power" as required for such authority under FERC regulations [ER19-2474-000 and ER19-2443-000].