A federal agency has ruled that a complaint filed by La Plata Electric Association against its power provider, Tri-State Generation and Transmission, can proceed at the Colorado Public Utilities Commission.
LPEA’s complaint seeks an accurate estimate about how much it would cost to buy out of its contract with Tri-State.
In November, LPEA filed a formal complaint with the PUC because Tri-State failed to provide an exit charge from its contract with Tri-State, which provides LPEA with 95% of its electricity under a contract that runs through 2050.
LPEA is looking at the possibility of breaking from Tri-State, which limits the amount of clean, renewable power LPEA can generate locally to 5%. LPEA says opportunities exist to generate far more of its electricity from local renewable sources, but that is now blocked by its Tri-State contract.
Tri-State had filed a motion with the PUC to dismiss the complaint, arguing that the Federal Energy Regulatory Commission has jurisdiction over the matter, not the PUC. The PUC already has ruled that it does have jurisdiction over the complaint, denying Tri-State’s motion to dismiss the case before the state agency.
But Tri-State also went directly to FERC, seeking to preempt the state PUC’s jurisdiction over the complaint. On Friday, FERC sided with La Plata Electric and the Public Utilities Commission, ruling that the PUC’s jurisdiction is not preempted, and the complaint can proceed to a hearing before the state commission.
“We are thrilled our complaint against Tri-State can proceed to a formal hearing, so we can obtain a just, fair and reasonable exit charge,” said Jessica Matlock, LPEA CEO. “Since we don’t have an exit number, we can’t determine the best course of action for our members. LPEA has a strategic goal to reduce carbon 50% by 2030 while remaining cheaper than 70% of our Colorado cooperative peers, and to achieve this we have to explore every option available.”
Tri-State is grateful to FERC for its actions and looks forward to working with the federal agency in a “constructive manner for the benefit of Tri-State’s members,” said Duane Highley, Tri-State’s CEO, in a news release on the ruling.
Lee Boughey, a spokesman for Tri-State, added that in January Tri-State adopted a Responsible Energy Plan to increase contract flexibility for members like LPEA that want to explore more renewable options above the 5% limit set historically in Tri-State’s contracts with members.
As part of Tri-State’s Responsible Energy Plan, Tri-State’s members have additional flexibility for the self-supply of power and more local renewable energy development, Boughey said.
He added that a new partial requirements membership option recommended by Tri-State’s members was approved by Tri-State’s board of directors at its March 2020 meeting.
The partial requirements contracts address the concerns of some members that desire to self-supply electricity above the 5% provisions in their current contracts, he said.
Tri-State has 46 members, including 43 electric distribution cooperatives including LPEA. Tri-State’s members are in Colorado, New Mexico, Nebraska, Wyoming and Kansas.
In 2018, more than half of Tri-State’s power – roughly 56% – came from coal, a higher percentage than other electricity providers in Colorado.
“Our current contract ties us to Tri-State’s generation portfolio, and caps the amount of cheap, clean power we can generate locally to just 5% of our total energy demand,” Matlock said. “This denies us a massive opportunity to create jobs, boost the local economy, partner with education institutions on developing clean energy and become more resilient in case of future emergencies.
“The ongoing COVID-19 pandemic is only serving to highlight how important those things are. We have a dedicated community of people and organizations eager to invest, innovate and generate much more electricity than we are currently allowed. We would love to partner with them to grow this local industry, but until we have an unbiased exit number developed by a regulatory body, we cannot evaluate our future and what is in the best interests of our members.”
Following the FERC decision, La Plata Electric anticipates direction from the PUC soon regarding next steps and an evidentiary hearing concerning how the state commission will move forward with LPEA’s complaint against Tri-State.
It remains unclear how much it would cost for LPEA to buyout of its contract from Tri-State.
Kit Carson Electric Cooperative in Taos, New Mexico, switched its power provider to Guzman Energy from Tri-State in 2016. As part of that switch, Guzman agreed to pay Tri-State $37 million to allow Kit Carson to exit its contract and provide Kit Carson with electricity from the open market.
Kit Carson members are paying off the Tri-State exit fee through increased rates; once the exit fee is paid off, members’ rates will drop.
LPEA is a member-owned, nonprofit electric distribution cooperative serving La Plata and Archuleta counties, with segments of Hinsdale, Mineral and San Juan counties. It has about 34,000 members.