United Power and La Plata Electric explore ways to leave Tri-State, ask PUC for help
The two co-ops would be the third and fourth to leave Tri-State since 2016
Frustrated, and largely fed up with their negotiations with the Tri-State Generation and Transmission Association, United Power and La Plata Electric are asking the Colorado Public Utilities Commission to set reasonable fees for them to exit Tri-State in the near future.
The public call for help comes just a month after the Delta-Montrose Electric Association and the Kit Carson Electric Cooperative left the power wholesaler. DMEA co-op members voted in October on new incorporation articles enabling DMEA to use a limited stock issue to raise the cash needed to pay Tri-State an exit fee.
Now, United Power and La Plata want out, saying in prepared statements that their attempts at negotiating an exit fee are being stymied, according to a report from the Colorado Sun.
“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 in its prepared statement.
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, based in Brighton, is the largest co-op in the association serving 92,000 homes and businesses in Front Range communities, while 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 alone serves 43 rural electric cooperatives in four states — Colorado, Nebraska, New Mexico and Wyoming. Colorado alone accounts for 65% of all Tri-State electricity sales.
Losing the largest and third-largest co-ops in the association would be a big blow to Tri-State.
However, the association announced in July a new energy plan to reduce carbon emissions, increase renewable generation and lower rates. Tri-State’s newer, cleaner power portfolio will be a partnership with former Colorado Governor Bill Ritter and the Center for the New Energy Economy, which is a research initiative at Colorado State University seeking to help transition the country to a clean-energy economy.
Part of the United Power and La Plata Electric’s frustrations has to do with the long-term contracts with Tri-State that requires co-ops to buy 95% of their electricity from the association, which gets almost half its power from coal-fired generation. That means co-ops can produce just 5% of their own power.
Meanwhile, studies by environmental groups contended there are big savings in Tri-State shutting its coal plants. In a study completed by the Rocky Mountain Institute, an energy consulting group, the institute’s study calculated Tri-State could save consumers $600 million or more by 2030 if it shut down its coal-fired units and replaced them with low cost wind and solar generation.
Tri-State disputed the study saying it is based on incomplete numbers. The association gets nearly 50% of its electricity from coal-fired power plants, including the Craig Station, which is powered by Trapper Mine.
That cap on self-power has caused frustration, pushing the co-ops to seek more control over their power supplies to add lower cost renewable generation and battery storage, while also pushing for new ways to accommodate more local initiatives, which has led to the frustrating negotiating process with the power wholesaler.
The association is, “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,” Gordon wrote.
Additionally, work is underway to develop a method for valuing the long-term power contracts, a key factor in setting an exit fee for any co-op wanting to buy its way out. The goal is to have the work completed in early 2020, according to a statement from Tri-State Chief Executive Officer Duane Highley.
The United and La Plata co-ops are quickly pressing for PUC rulings, however, because the association, facing an increased oversight in Colorado and New Mexico, seeks to move its rate and contract regulation to the Federal Energy Regulatory Commission, having applied for FERC oversight in July.
The association said this will unify rate regulation for the interstate operation.
Tri-State’s application for FERC oversight was rejected by FERC’s commission, citing insufficient data and a failure to comply with commission rate scheduling requirements. FERC rejected the application without prejudice, however, meaning Tri-State can resubmit its request.
La Plata Electric feels like its run out of options though with the association though.
“We have run out of options to obtain a fair exit charge from Tri-State,” La Plata CEO Jessica Matlock said in a statement. “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 initial proceedings begin in December with the goal of setting a, “just, reasonable and nondiscriminatory exit charge.”
United Power, Parker said, seeks either a more flexible contract with Tri-State so it can buy more of its power elsewhere, or to buy out its long-term contract and leave the association all together.
“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.
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