Tri-State looking at asking federal energy agency to set its electric rates

Helen H. Richardson, The Denver PostThree large chimneys release steam from Craig Station Power Plant in Craig, Colorado on June 10, 2015. The plant is operated by Tri-State Generation and Transmission Association based in Westminster, Colorado. No steam is coming out of the 3rd chimney on the right because the temperature is above saturation for that chimney. The plant is operated by Tri-State Generation and Transmission Association based in Westminster, Colorado.

By JUDITH KOHLER | | The Denver Post, June 14, 2019

Less than a month after a new law took effect that requires state approval of Tri-State’s plans, a utility that delivers wholesale electricity to rural cooperatives across Colorado is looking at placing itself under federal regulation.

Westminster-based Tri State Generation and Transmission Association is talking with its board of directors about having its rates regulated by the Federal Energy Regulatory Commission. The federal agency regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce.

Tri-State spokesman Lee Boughey said in an email Friday that FERC would regulate only the association’s rates. State regulation of the utility’s resource plans and other requirements wouldn’t be affected, he said.

“As Tri-State is rapidly transitioning to become increasingly flexible and increasingly clean in our vision for a 21st Century generation and transmission cooperative, it benefits our membership to have a consistent environment for rate regulation,” Boughey said.

However, House Speaker KC Becker of Boulder, one of the sponsors of the legislation requiring more state oversight of Tri-State, said being regulated by FERC would be a big change for Tri-State’s member rural electric associations operating in Colorado and three other states. Participating in FERC proceedings “is neither quick, nor inexpensive nor clear.”

Placing Tri-State under FERC’s regulation would leave it up to a federal agency in Washington, D.C., to set rates for rural communities in Colorado and elsewhere, Becker said. “I think it’s interesting that that seems to be the preferred alternative right now,” she said.

Although Tri-State said FERC would deal only with the utility’s rates, Becker said rate-making and natural resource planning are connected.

Tri-State’s board of directors, made up of members from rural electric associations across four states, would have to approve submitting to FERC’s jurisdiction. The board now oversees regular rate matters.

But Tri-State pointed out in a memo to its members on the FERC proposal that the Colorado Public Utilities Commission can get involved when a Tri-State member files a rate complaint. A New Mexico law says state regulators have jurisdiction if three Tri-State members protest rates.

“There is political pressure in New Mexico and Colorado for additional Tri-State regulation on facilities and rates. At some point, Wyoming and Nebraska could also assert jurisdiction,” the memo said. “If a wholesale power provider operating in Interstate Commerce is to be rate regulated, it makes sense for it to be regulated by a single regulatory body.”

The Delta-Montrose Electric Association has asked the Colorado PUC to intervene in its effort to get out of its contract with Tri-State. Virginia Harman, the cooperative’s chief operating officer, said Tri-State is trying to “forum shop” in the middle of the case, which is set to be heard by Colorado regulators later this summer.

“We believe Tri-State didn’t want to be brought before the PUC. They lost in court, now they’re taking it to FERC,” Harman said.

In January, Tri-State filed a complaint in Adams County District Court,asking the court to determine whether the Colorado Public Utilities Commission has the authority to intervene in its dispute with Delta-Montrose. The case was dismissed on procedural grounds.

Tri-State serves 43 member electric cooperatives over 200,000 square miles and four states — Wyoming, Colorado, New Mexico and Nebraska. It is a not-for-profit governed by an elected board.

A new law reauthorizing the Colorado Public Utilities Commission requires Tri-State to get the PUC’s approval for its resource plan, which details how a utility will meet the needs and future capacity of its system. The PUC regulates Xcel Energy-Colorado, an investor-owned utility, but previously had an agreement with Tri-State under which the utility shares its plans but didn’t need approval. However, as the costs of renewable energy have dropped and efforts to cut climate-changing carbon emissions have grown, calls have grown for the PUC to exercise more authority over Tri-State.

The Delta-Montrose Electric Association has said it wants to end its contract with wholesale power provider to take better advantage of the falling costs of renewable sources. Its complaint with the PUC says the fee Tri-State wants for letting the cooperative out of its contract is unreasonable and discriminatory.

The city of Boulder, Colorado has made a final offer of $82 million to Xcel Energy to buy its own assets in its bid to create its own municipal electric utility. (Denver Post)