Get Big Pivots

Wholesale supplier scores small gains in effort to retain key ‘family’ members

by Allen Best

Tri-State Generation and Transmission won two minor victories this week in its effort to keep its “family” of electrical cooperatives intact. One was at the Colorado Public Utilities Commission, and the other at the monthly meeting of La Plata Electric.

Brighton-based United Power and Durango-based La Plata Energy have asked the wholesale supplier what it will cost to exit from their full-requirements contracts with Tri-State. In both cases, those contracts are to expire in 2050.

Losing these two members would likely damage Tri-State’s business model, which is already struggling to pivot to cleaner, lower-cost energy after years of clinging to a portfolio heavy in coal generation. United and La Plata together are responsible for roughly 23% of wholesale power purchases by its 42 utility members across a four-state area. About two-thirds of its sales are to Colorado coops.

At issue is how much it would cost to get out of their contracts. United has negotiated with Tri-State but complained that Tri-State wanted an exorbitant fee. Tri-State declined to give La Plata a figure. Both utilities want to explore their options in obtaining lower-cost electricity and, particularly in the case of La Plata, developing local sources.

The two utilities a year ago appealed to the PUC to be the mediator in the dispute. But despite almost a week of testimony before a PUC administrative law judge last summer, the PUC commissioners declined to take the case pending clear jurisdiction.

United Power challenged Tri-State in 2018 when it created  battery storage near Firestone. Photo/Allen Best

Right now, the Federal Energy Regulatory Commission has jurisdiction of determining what constitutes a fair exit fee. But that jurisdiction is provisional. To get FERC jurisdiction, Tri-State added several non-utility members:  a natural-gas trading firm in metro Denver, a greenhouse in Fort Lupton, and a ranch/guide and outfitter in Craig.

United Power filed a lawsuit arguing that Tri-State added the non-utility members in a way that violated Colorado law. That case is in Adams County District Court.

Pending resolution of that lawsuit, the PUC doesn’t want to attempt to rule in the disputes between Tri-State and its two members. The federal supremacy clause of the Constitution makes it clear that federal agencies have jurisdiction in such cases.

PUC commissioners made that decision Wednesday morning from their dispersed home offices in Denver, Edwards, and Paonia. That afternoon directors of La Plata Electric were gathered virtually in southwestern Colorado to determine the pathway forward for their cooperative.

La Plata hasn’t abandoned its attempt to explore options for getting out of Tri-State, but in an important move, directors agreed to explore the olive leaf that Tri-State offered earlier this year in the form of a contract that would allow La Plata the ability to self-supply 50% of its power supply needs.

“Preliminary analysis shows this option would deliver significant – and immediate – benefits to LPEA’s membership in terms of reliability of power, cost of power, and carbon reductions.”

La Plata said board members will not make a final decision on future power supply until more details are available about the benefits and risks of its various options. At least some details will be available in February.

Allen Best
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