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Tri-State’s bid to move to federal regulation and sidestep increased Colorado scrutiny is rejected

Westminster-based electricity giant wanted out of the scrutiny of Colorado’s PUC and had said FERC would give a united approach to rate setting in four states

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Tri-State Generation and Transmission Association’s effort to move from state rate regulation to federal oversight was rejected Friday by the Federal Energy Regulatory Commission.

Facing increased oversight in Colorado and New Mexico, Tri-State had sought FERC oversight as a way to unify rate regulation for its 43 rural electric cooperative members in four states. The association also serves co-ops in Nebraska and Wyoming.

MORE: Fearing Tri-State could duck clean-energy goals, Colorado utilities commission files unprecedented protest

FERC rejected the Tri-State application citing insufficient data and failure comply with commission rate scheduling requirements. The commission rejected the application without prejudice so Tri-State can resubmit its request.

The Colorado Public Utilities Commission had filed a protest with FERC seeking the dismissal of the application, arguing some of the same rate issues with which FERC found fault.

The PUC voiced concerns that split oversight of Tri-State between state and federal regulators could undermine state goals. Tri-State has 18 member co-ops and the bulk of its customers in Colorado.

Tri-State’s FERC application came as Colorado adopted laws giving the PUC more oversight of Tri-State’s facility planning and requiring utilities to reduce their greenhouse gas emissions 90% from 2005 levels by 2050. Tri-State gets almost half its electricity by burning coal.

MORE: Colorado coal-fired power plants could be closing, but the timing depends on some complex deals

New Mexico also passed carbon reduction targets this past spring require investor-owned utilities and cooperatives to get 30% of their electricity from renewable sources by 2030 and 80% by 2040.

Tri-State said that the move to FERC for rate and contract regulation would not affect state oversight of resource plans for new power plants and lines and clean air emissions.

But Anna McDevitt, a Sierra Club “Beyond Coal Campaign, representative said, “this was essentially an attempt by Tri-State to shop around for regulators that will allow it to hold onto a costly coal fleet and ignore demand from members for local, low-cost clean energy. We’re glad FERC saw through Tri-State’s rushed and shoddy effort to cut corners at the expense of its customers.” 

In its protest, the PUC said, “There are jurisdictional issues created if the state has jurisdiction over resource plans, which Tri-State admits, and the FERC has jurisdiction over rates. Will FERC honor state decisions?”

In its ruling, FERC faulted Tri-State’s application for providing “insufficient cost support” and failing to comply with the commission rate schedule filing requirements.

The association also did not provide estimates of the transactions and revenues for October 2019 to September 2020 as required or sufficient explanation of its rate design.

Lee Boughey, a Tri-State spokesman, said in an email that while the order addresses the form and content of the application, the FERC did not rule on its merits.

“First-time FERC filings are complex, especially for a wholesale power supply cooperative like Tri-State. “We are reviewing the order and will move expeditiously to address the issues raised by FERC.”