LPEA and Empire

Wednesday, an administrative law judge for the state’s Public Utilities Commission denied a motion to dismiss a complaint lodged by La Plata Electric Association, Empire Electric and others against Tri-State Generation and Transmission. It was only one step in a convoluted process, but for rate payers in Southwest Colorado it was a win nonetheless.

Reversing Tri-State’s rate change that set all this in motion will take at least two more moves, including hearings before the three-member Public Utilities Commission. The judge’s decision, however, at least had the effect of taking Tri-State down a peg by saying, in essence, that it is not a law unto itself.

After looking at what it charges co-ops such as LPEA and Empire for electricity, in January Tri-State set new rates. That move had the effect of significantly raising rates for industrial users and households signed up for time-of-use programs that offer discounts to customers who can shift their use of electricity more to off-peak hours. The change affected about 5,000 households and large industrial users in Southwest Colorado such as BP, Kinder Morgan and ExxonMobile.

Tri-State’s action is hard to understand. One would think it would like to encourage off-peak usage for its own benefit.

For a company that generates electricity, the ideal situation would be a steady level of demand. With that, the power supply could be easily matched to usage.

But people do not live like that. Offices are lighted, heated and cooled mostly during the day. So are most stores, factories, warehouses and such. And with that, power companies have to be able to meet peak demand, which leaves their systems partly idle during off hours and hence less efficient.

Offering a discount to users who can, to one extent or another, shift their highest usage to off hours therefore makes sense all around. Big power users – gas companies in this area – and households with that flexibility get a break on their electric bill for doing something that should help the power company.

Why Tri-State does not think like that is unclear. Instead, the coalition of rural electric co-ops and industrial users who have complained to the PUC say its rates discriminate against the very people working to help boost its efficiency.

The judge’s ruling did not speak to that. What it did was to deny Tri-State’s claim that it is not subject to PUC oversight. It has made that claim based on the dubious assertions that it is not subject to PUC regulation because its service areas cross state lines and because it is not an investor-owned utility. Tri-State had claimed that it answers only to the 44 rural electric cooperatives – including Empire and LPEA – that are its owners.

But trucking companies routinely cross state lines and are still required to obey Colorado speed limits. The PUC regulates the phone company and CenturyLink’s wire cross state lines. And while Tri-State is owned by the co-ops, not by typical investors, it is nonetheless a utility. Although a first, the ruling that the PUC does have authority over Tri-State should stand.

The next step is Tri-State’s. It can accept the judge’s ruling or appeal it to the three-member PUC. If it appeals, the commission will rule on whether it has jurisdiction over Tri-State. If it says it does, the same board will then hear and ultimately rule on the actual merits of the complaint. Depending, of course, on how things play out, that process could take months.

Tri-State’s rate change was costly for consumers and a step in the wrong direction. The Public Utilities Commission should take note and restore off-peak rates.

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