La Plata Electric Association has yet to be formally added as a plaintiff to a lawsuit brought by United Power of Brighton that claims Tri-State Generation and Transmission illegally added three nonutility members so it would become federally regulated instead of regulated by the state.
“It is often a slow process in state court. This is not atypical, and I would not read anything into the delay,” Matthew Larson, a lawyer representing LPEA in its effort to buyout a long-term contract with its electric power supplier, Tri-State, told LPEA’s board of directors Tuesday.
The lawsuit is related to LPEA’s effort to determine if it is economically feasible to buyout its power-supply contract with Tri-State, which currently provides the local electric cooperative with about 95% of its electricity.
LPEA wants to determine if buying out the contract, which runs through 2050, would allow it to develop more local renewable projects as well as buy electricity cheaper on the open market, something United Power is also exploring.
The lawsuit, filed by United Power against Tri-State in November 2020 in state District Court of Adams County, claims the three nonutility members were added illegally under Colorado law with the purpose of bringing Tri-State under the regulatory umbrella of the Federal Energy Regulatory Commission.
Tri-State, LPEA and United have traditionally been regulated by the Colorado Public Utilities Commission, which is the agency LPEA and United would prefer to have determine the formula for contract-termination costs of their power-supply contracts with Tri-State.
In 2019, Tri-State added a ranch, a greenhouse and a California natural gas supplier to its membership. The addition of those members resulted in FERC, the preferred regulatory body of Tri-State, assuming jurisdiction in determining the contract-termination formula.
If United Power’s lawsuit succeeds, jurisdiction for writing the contract-termination formula would return to the state’s PUC.
United Power, with 49,945 customers, is Tri-State’s largest member. Tri-State has 43 rural electric cooperative members, including LPEA with about 34,500 customers.
Whether Colorado or federal regulators oversee Tri-State could change the cost of LPEA’s and United Power’s contract exit fee by tens of millions of dollars, possibly hundreds of millions of dollars.
Tri-State maintains it has loosened rules to allow member cooperatives to buy more renewable power, and LPEA’s effort to end long-term contracts will hurt other Tri-State rural cooperative members that have all agreed to share costs of power generation.
Besides examining a complete buyout of its power supply contract with Tri-State, LPEA is also looking at gaining more flexibility within the contract to purchase more renewable power generated locally and is looking at negotiating a partial contract with Tri-State.
Larson also informed LPEA’s board of directors that a settlement conference on disagreements over the contract-termination methodology between LPEA and Tri-State will be held by FERC on March 22.
In November 2020, the PUC ruled that it did not have jurisdiction to determine the contract-termination formula. At that time, the PUC also determined that state courts should decide United Power’s complaint that the three nonutility members were added illegally.
In 2016, a smaller Tri-State member, Kit Carson Electric Cooperative in Taos, New Mexico, bought out its contract with Tri-State for $37 million.
In April, Delta-Montrose Electric Association agreed to pay $62.5 million to leave Tri-State. In addition, in a related contract, it agreed to purchase Tri-State transmission assets for $26 million and forfeit $48 million in capital credits. The related contract brought the overall buyout cost to $88.5 million.
parmijo@durangoherald.com
