La Plata Electric Association and other electrical co-ops may gain insight about buying out of a contract with their wholesale electrical supplier after the Colorado Public Utilities Commission ruled this week it can oversee a dispute about the buyout fee.
LPEA is exploring a buyout from its contract with Tri-State Generation and Transmission, in part, because the wholesaler caps how much renewable power LPEA can purchase from outside sources at 5 percent as part of a contract that does not expire until 2050. Tri-State is a nonprofit of 43 member electric cooperatives, including LPEA and Delta-Montrose Electric Association.
DMEA is interested in buying out of its contract because Tri-State’s prices have been rising since 2005, and, at the same time, electricity costs in general have fallen, said Virginia Harman, DMEA’s chief operating officer.
DMEA is also interested in developing more local renewable energy than allowed under its contract with Tri-State, she said.
“We are not looking for a free exit; we are looking for fair exit,” she said.
DMEA brought a case to the Public Utilities Commission last year because it felt the fee Tri-State demanded to buy out of its contract is unreasonable.
DMEA is formally asking the PUC to establish an exit fee that is “just, reasonable and nondiscriminatory,” according to a news release.
Becky Mashburn, spokeswoman for DMEA, declined to name the amount Tri-State is asking for the co-op to leave its contract.
Colorado’s PUC ruled Thursday it has the authority to determine whether Tri-State is charging DMEA a just and reasonable price to buy out of its contract, said Terry Bote, spokesman for the Department of Regulatory Agencies. A hearing about the buyout charge will be held in June, he said.
Tri-State had filed a motion to dismiss the case brought by DMEA, arguing the dispute about the exit fee is a contractual dispute.
The PUC rejected Tri-State’s argument, ruling the commission has jurisdiction over the buyout charge dispute because it is a statutory issue, he said.
In a prepared statement, Tri-State Chairman and President Rick Gordon said DMEA was ramping up political pressure on the commission from elected officials and special interests that do not bear the financial risks of its members.
“A private contract dispute, even between utilities, does not belong at the commission. This matter appropriately belongs in the courts,” Gordon said.
More than 50 Colorado lawmakers, including Democrats and Republicans, signed a letter in January urging the PUC to make a decision on the case.
The ruling could lead to greater transparency about how buyout charges are determined for other co-ops that are members of Tri-State, said Ron Meier, LPEA’s manager of engineering and member relations.
“We believe it is good news, and we’re hopeful that leads to some clarity,” Meier said.
If the case leads to a “decent” buyout number for DMEA, that could establish a positive precedent for LPEA, said Guinn Unger, an LPEA board member.
“The best way to come out with a fair and reasonable number is the PUC,” he said.
LPEA’s power supply committee is studying alternatives to Tri-State and will likely present its findings to the entire board in April, he said.
Many LPEA customers are interested in pursuing greater renewable energy, and LPEA set ambitious goals in January to cut its carbon footprint 50 percent by 2030 while keeping costs lower than 70 percent of its peer cooperatives in Colorado.
However, it may be possible to achieve those goals without buying out of the Tri-State contract, in part, because Tri-State is pursing more renewable energy development, board members said shortly after voting on the goal.
The Tri-State board may also consider changes to its bylaws in the spring that could provide co-ops with greater flexibility to pursue local renewable energy.