Residents have filed a class-action lawsuit against La Plata Electric Association over the co-op’s decision to exit its contract with energy wholesaler Tri-State Generation and Transmission Association.
LPEA’s 12-member board voted in March 2024 to terminate the contract with Tri-State in order to diversify its energy portfolio. Under the Tri-State contract, LPEA was obligated to buy no less than 95% of its power from the wholesaler through 2050.
The electrical co-op will be required to pay an estimated $210 million exit fee.
The plaintiffs allege that LPEA violated its own bylaws by failing to put the Tri-State exit to a vote of its members, according to the lawsuit obtained by The Durango Herald.
“This is all about LPEA members’ rights; that’s what it boils down too,” said Dave Peters, one of the eight plaintiffs.
Peters, who ran unsuccessfully for a seat on the LPEA board in May, declined to answer additional questions about the case because it is pending. He directed the Herald to the plaintiffs’ attorney, Benjamin Wegener, who did not immediately respond to a request for comment.
The lawsuit centers on whether the exit from Tri-State amounted to “disposing of more than 10% of assets,” which would require a member vote under Article IX of LPEA’s bylaws.
According to court documents, LPEA owned roughly $71 million in Tri-State’s excess profit margins at the end of 2024. The plaintiffs argue that this represents LPEA’s ownership interest in Tri-State – making it an asset. They contend that because LPEA’s total assets were about $288 million at the end of 2024, the $71 million exceeds the 10% threshold.
As a result, the plaintiffs claim LPEA’s decision to take a lump-sum payment of the excess capital as part of the Tri-State exit violated the bylaws.
The plaintiffs – Peters, Audrey Sue McWilliams, J Paul Brown, Thomas and Lorene Bonds, Dale Ruggles, Heath Roa and Seana Lazar – filed a complaint for declaratory relief on Sept. 16. They are asking the court to determine whether LPEA’s actions were consistent with its governing documents and to clarify the rights and responsibilities of LPEA and its members.
The lawsuit also asks the court to order LPEA to comply with its bylaws, pay the plaintiffs’ legal fees and grant any other relief the court deems appropriate.
John Purser, an LPEA member who has also run unsuccessfully for a seat on the co-op board, said the lawsuit raises issues he and others have voiced for years about transparency and member oversight.
“I’ve read the bylaws over and certainly the intent is that major financial decisions require a membership vote,” Purser said. “Accountants can argue about the money – have we reached the 10% threshold? It’s a $210 million exit fee, and that should require a member vote.
“I’m really glad somebody brought this suit,” he said. “If you go back four years ago, our tax returns and fiscal reports were available on the website. To avoid these questions, I believe our board has hidden as much of the financials as possible. I’m very glad someone is pursuing this class-action suit.”
In a written statement to the Herald, LPEA CEO Chris Hansen confirmed the co-op had received the complaint.
“Our outside counsel believe these claims have no legal merit, and will file a motion to dismiss,” Hansen wrote. “We believe this dispute could have been avoided if the members had reached out to us directly to seek understanding of the withdrawal agreement with Tri-State before taking this step.”
jbowman@durangoherald.com
