Two of the largest electric cooperatives in the Tri-State Generation and Transmission Association, frustrated in their negotiations with the power wholesaler, are asking the Colorado Public Utilities Commission to set reasonable fees for them to exit Tri-State.
Two other co-ops have already negotiated exit fees — the Delta-Montrose Electric Association and the Kit Carson Electric Cooperative in Taos, N.M.
But Brighton-based United Power and Durango-based La Plata Electric Association said in prepared statements that their efforts to follow Delta-Montrose and Kit Carson have been stymied.
Long-term contracts with Tri-State require the co-ops to buy 95% of their electricity from the association, which gets almost half its power from coal-fired generation. The two co-ops want more control over their power supplies to add lower cost renewable generation and battery storage.
“LPEA asked Tri-State for an exit charge over four months ago, but Tri-State has yet to respond to that request,” the Durango co-op said.
United Power CEO Jon Parker said in a statement that “by not allowing United Power to move forward in a timely manner to seek additional energy sources, Tri-State is effectively holding this cooperative and our members hostage.”
United is the largest co-op in the association serving 92,000 homes and businesses in Front Range communities. La Plata is the third largest co-op, with about 37,000 members. Together they account for about 20% of Tri-State’s sales.
Tri-State is a power wholesaler serving 43 rural electric cooperatives in four states — Nebraska, Wyoming, Colorado and New Mexico. Colorado accounts for 65% of all Tri-State electricity sales.
Tri-State also is trying to develop cleaner and lower-cost power, CEO Duane Highley said in a statement.
The association is also “actively considering changes to its wholesale power contracts, including a United Power proposal for a more flexible contract allowing co-ops to buy more power outside Tri-State,” Tri-State Board Chairman Rick Gordon said in a statement.
“Tri-State’s members are diligently working with United Power to understand and address their concerns,” he wrote.
There is also work underway to develop a method for valuing the long-term power contracts, a key factor in setting an exit fee. The goal is to have the work completed in early 2020, Highley said.
United and La Plata, however, are pressing for PUC rulings because Tri-State, facing increased oversight in Colorado and New Mexico, is also seeking to move its rate and contract regulation to the Federal Energy Regulatory Commission. The association said this will unify rate regulation for the interstate operation.
Tri-State filed for FERC oversight in July, but the commission rejected the application citing insufficient data and a failure to comply with commission rate scheduling requirements.
FERC rejected the application without prejudice, meaning Tri-State can resubmit its request.
“We have run out of options to obtain a fair exit charge from Tri-State,” La Plata CEO Jessica Matlock said. “Particularly in light of Tri-State’s exit-charge moratorium, combined with its efforts to circumvent PUC jurisdiction over exit charges, we needed to act now.”
In its PUC filing La Plata asked the regulators to fast-track the case and have the proceedings begin in December with the goal of setting a “just, reasonable and nondiscriminatory exit charge.”
United Power, Parker said, it is seeking either a more flexible contract, so it can buy more of its power elsewhere, or to buy out its long-term contract.
“A full disclosure of a fair and just exit package is the information United Power needs to evaluate and ultimately make effective choices for our members,” Parker said.
Kit Carson left Tri-State in 2016 paying a $37 million exit fee. After failing to reach an exit price, Delta-Montrose in December filed a complaint with the PUC asking it to set an exit fee. In July, on the weekend before the PUC was set to hear the case, Delta-Montrose and Tri-State struck a deal for an undisclosed amount.
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