Tri-State Generation and Transmission, the wholesale electric supplier for Southwest Colorado, is pursuing federal regulation of its rates, a change that could make it more difficult for electrical co-ops like La Plata Electric Association to buy out of their decadeslong contracts.
It is also a move that raised the suspicion of clean-energy advocates and left them questioning the long-term environmental consequences of the shift.
“It’s not in Tri-State’s nature to ask for the heavy hand of federal regulation,” said Mark Pearson, executive director of San Juan Citizens Alliance.
Tri-State, which operates across four states, is interested in the federal government overseeing its rate structure, saying it would provide a single set of rules instead of the inconsistent regulations it must adhere to by working across multiple states, said Tri-State CEO Duane Highley, in an email to The Durango Herald. Tri-State operates in Colorado, New Mexico, Wyoming and Nebraska.
But electrical co-ops that receive power from Tri-State – including La Plata Electric Association – and clean-energy advocates are concerned Tri-State is not taking enough time with the decision and that the long-term implications are not well-understood.
Green energy supporters are concerned federal oversight could make it harder to hold Tri-State accountable to state standards aimed at curbing emissions.
Tri-State may ask its board of directors to approve pursing federal regulations as soon as July, said Ron Meier, LPEA’s manager of engineering and member services. The Tri-State board includes representatives from 43 electrical co-op members, including LPEA.
LPEA and other electrical co-ops sent a letter this month to Tri-State asking the power supplier to take more time with the decision and address numerous questions about the potential regulations and Tri-State’s interest in them. The co-ops were informed about the decision to pursue federal regulation three weeks ago, Meier said.
“Until we have satisfactory answers to these questions, we believe it is inappropriate to vote for this change,” the letter says.
Some of the more pointed questions in the joint letter to Tri-State include:
“What are the actual costs of becoming FERC (Federal Energy Regulatory Commission) regulated, in addition to the $1.3 million annual fee?”“Why weren’t members consulted earlier? How much information does Tri-State even plan to provide to member-owners about this plan?”LPEA has not received answers to the questions, and it has not been told when to expect a response, Meier said.
Kirsten Skeehan, who is LPEA’s representative to Tri-State, said Tri-State started discussing the new federal regulations last year. But she said she is supportive of Tri-State delaying a vote about whether to apply for regulation to allow for co-ops to understand the issue better.
“I think asking to delay is fair,” she said.
Tri-State could benefit from operating under one rate structure versus navigating multiple rate structures set by different states, Skeehan said.
Tri-State sent a document to member co-ops explaining how federal regulations would affect Tri-State and its member co-ops. One impact would be removing Colorado co-ops’ ability to take rate complaints against Tri-State to the Colorado Public Utilities Commission.
A copy of the document was provided to the Herald by cleancooperative.com.
Emissions standards accountabilityFederal regulation over rates could make it harder to hold Tri-State accountable to adopting renewable energy generation because it would split oversight of the co-op between the state and the federal government, advocates said.
This spring, the state Legislature approved a measure aimed at cutting emissions 26% by 2025, 50% by 2030 and 90% by 2050 from 2005 statewide pollution levels to help address climate change.
As part of the state’s efforts to cut carbon, Tri-State will be required to submit plans for future electrical generation to the state Public Utilities Commission for approval by state law.
Submitting plans to the state is a requirement that other electrical generators, such as Xcel Energy, must abide by, said Erin Overturf, deputy director of the Clean Energy Program for Western Resource Advocates.
Investor-owned utilities like Xcel must also submit their rates to the state for approval.
By overseeing how electrical utilities generate their power and their rates, it allows the state to hold companies accountable, Overturf said.
If Tri-State’s rates are regulated at the federal level and its electrical generation standards are regulated at the state level, it could make holding the co-op accountable to its approved power-generation plan harder, she said.
For example, Tri-State customers, such as LPEA, could not challenge what they are being charged for a new energy generation facility at the state level, she said.
In recent years, Tri-State has purchased coal-powered assets that it didn’t disclose in plans submitted to the state, so accountability is important, she said.
New rules for buyoutsFederal regulation would also eliminate state jurisdiction over co-ops interested in buying out of their contracts with Tri-State, according to an “overview” Tri-State provided to its co-ops.
LPEA has been exploring a buyout of its Tri-State contract, in part because Tri-State caps how much renewable power LPEA can purchase from outside sources at 5%. Some members would like LPEA to have the freedom to develop renewable energy locally to help cut carbon.
Delta-Montrose Electric Association is interested in buying out of its contract with Tri-State for similar reasons and was expected to set a precedent for how other co-ops could part ways with Tri-State.
DMEA has filed a case against Tri-State disputing the cost of a buyout that is expected to be heard in July in front of the Public Utilities Commission.
The Tri-State board could vote on whether to pursue federal oversight before the PUC hearing, Skeehan said.
Green energy advocates find the timing highly suspect.
“It seems to be entirely motivated by trying to sabotage DMEA’s complaint at the Colorado utility commission,” Pearson said.
Skeehan said she is not supportive of taking a vote that could preempt a decision or settlement in the DMEA case because moving the case to a federal venue would be a “waste” of all the effort put into the state case.
In the long term, federal regulation over rate disputes or buyouts involving Tri-State and its co-ops could be more time-consuming and expensive than state cases, Overturf said.
Next stepDespite Tri-State’s history, the organization is changing, Skeehan said.
“I thoroughly believe that Tri-State is on the right path,” she said.
Tri-State’s board formally supported a resolution in June to “pursue options to develop the ability to provide solar, storage and other renewable opportunities and energy solutions,” according to a copy of the resolution provided by Skeehan.
The LPEA board will discuss Tri-State’s plan to apply for federal regulation Tuesday in a meeting that is closed to the public. The board could take a more formal position on the issue during a vote after the meeting. In the meantime, LPEA wants Tri-State to delay a decision and share more information about the new rules, Meier said.
“I believe that Tri-State is not taking this lightly at all,” he said.