Tri-State G&T asked FERC to cancel the proposed formula for deciding what it will cost member coops to move to partial requirements. Why—and what comes next?
by Allen Best
How much will it cost San Miguel Power and Poudre Valley Rural Electric Association and several other electrical cooperates to be able to generate a significantly larger portion of their own electricity?
That remains in question. Tri-State Generation and Transmission on June 29 filed a request with the Federal Energy Regulatory Commission to cancel its proposed consideration of the buy-down payment methodology.
In 2020, Tri-State and its members agreed to a flexible partial requirements membership option of up to 50%. Three Colorado members (Durango-based La Plata Electric, Fort Collins-based Poudre Valley, and Ridgway based San Miguel) expressed interest in this “open season.”
In 2022, three more members (High Plains Power of Riverton, Wyo., Jemez Mountain Electric of Espanola, N.M., and Mountain Parks Electric in Granby, Colo.) also showed interest.
Altogether, Tri-State allocated 300 megawatts of self-supply capacity among these members. Mountain Parks in January, however, announced its plans to leave altogether.
But if they’re buying less power from Tri-State, how does that leave other members? Obviously, they must pay something to break their full-requirements contracts. They intend to remain with Tri-State, but get larger amounts of their electricity from other source. FERC must rule on the buy-out methodologies for both full and partial exits.
In April 2022, agreement was reached with several members. However, United Power opposed that requirement, and the settlement was scuttled in December 2022.
The filing by Tri-State says it has been “continuously engaged with its members” during the last three years to “reach a better methodology to implement partial requirements service.” Tri-State has concluded that the proposed methodology falls short of what is needed, and it says it filed this request without support or at least without opposition of the members who are engaged in this proceeding. That includes United.
Lee Boughey, vice president for communications at Tri-State, said in an e-mail that United Power’s opposition and FERC’s subsequent rejection of the settlement “had the effect of delaying the shift to partial requirements by our members and returned the matter to hearing procedures scheduled for later this year.” United, he added, was alone in its challenge.
“Rather than continue to litigate the tariffs, which results in continued uncertainty for members seeking partial requirements membership, we recently asked FERC to cancel the tariffs.”
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Further clarification was provided via the report by Duane Highley, chief executive of Tri-State, in a June summary filed with the La Plata Electric board documents. See here.
“We discussed a new approach to partial requirements memberships that utilizes an annual equalization payment, rather than an upfront buy-down payment. This approach is cost based, not forecast based, and trued up annually. Tri-State would utilize its scale and skills to market power to cover the fixed and stranded costs the members’ partial requirements membership created. In a strong market, there would potentially be a credit to the partial requirements member, and in a soft market, the member would make an equalization payment. We are working on the concept with the members that participated in the open season, and we are engaged with ACES to assist with technical requirements for marketing power. A white paper on the concept was provided to the membership this week, and if the board approves the approach, we have targeted a FERC filing in August.”
Asked for comment, Jeff Wadsworth, the chief executive of Poudre Valley Electric, offered this:
“Tri-State leadership committed to us that they would develop an updated partial requirements formula in short order to allow for the consideration of self-generation. Unfortunately, the original filing and resulting settlement encountered protests within the FERC process. We are hopeful a new filing will allow for the continued consideration of meaningful self-generation that both meets FERC requirements and is fair and reasonable. We are cautiously optimistic that a new filing will be made by Tri-State in the coming months.”
Poudre Valley is considering up to 117 megawatts of renewable resources from among Tri-State’s 300 available pool. This could constitutes anywhere from 7% to 15% of the cooperative’s total energy needs, Wadsworth added.