La Plata Electric Association will submit its proposal to determine a methodology to buy out its 30-year contract with its electricity supplier, Tri-State Generation and Transmission Association, by Jan. 29.
LPEA will give its plan to the Federal Energy Regulatory Commission, which currently is in receipt of Tri-State’s proposal for the formula under consideration by the agency to set the methodology to find the exit cost for the contract, which runs through 2050.
At LPEA’s board of director’s meeting Wednesday on Zoom, Matt Larson, LPEA’s attorney on matters related to the contract buyout, said under Tri-State’s proposed methodology, LPEA would have to pay a $250,000 fee to start the exit process and wait three years after the start of buyout proceedings before leaving.
LPEA’s counterproposal could provide an entirely new methodology for the buyout or it could offer modifications to aspects of Tri-State’s proposed exit cost methodology for FERC’s consideration, Larson said.
Earlier this year, FERC originally ruled that Colorado Public Utilities Commission had joint jurisdiction in determining a buyout methodology.
But on a challenge initiated by Tri-State, FERC reversed itself and determined it had sole jurisdiction in determining the buyout methodology.
The state PUC voted 3-0 in October that, based on FERC’s latest ruling, it lacked jurisdiction to rule on a buyout methodology.
LPEA believes leaving Tri-State, which currently provides it with 95% of its power, would allow it to find cheaper electricity on the open market while increasing the amount of locally produced renewable power it can buy, an amount now capped at just above 5% of LPEA’s electrical load.
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 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 said LPEA has begun taking the first steps of establishing a partial buyout with Tri-State under a new program Tri-State recently adopted to allow members to move to partial contracts.
While LPEA has begun working with Tri-State on a partial contract, Larson told the board it is not committed to go through with a partial buyout and other options, such as a full buyout, remain on the table.
In addition, Larson informed the board that the Colorado Public Utilities Commission had rejected LPEA’s request that the state commission reconsider another October decision that state courts, not the PUC, had jurisdiction to rule on whether Tri-State illegally added three nonutility members.
LPEA maintains that the three nonutility members were added by Tri-State simply to escape jurisdiction under the Colorado Public Utilities Commission, LPEA’s preferred regulatory body, and to move jurisdiction to FERC, Tri-State’s preferred regulatory body.
In July 2019, a smaller Tri-State member, Kit Carson Electric Cooperative in 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.
Finally, after a four-hour closed session, the board of directors approved a Christmas bonus for LPEA CEO Jessica Matlock. Five board members objected to the bonus, Dan Huntington, John Lee, Joe Lewandowski, Kohler McInnis and Sue McWilliams.
The amount of the bonus was not disclosed. Matlock’s annual salary is $285,000.
In an email, LPEA board president Britt Bassett said LPEA considers bonuses a personnel matter and does not disclose the dollar amount.
“The non-unanimous vote to award a CEO bonus reflects the fact that we are aware many in our community are struggling, so to give any bonus seems unfair,” Bassett said in the email. “But, the board also wanted to do what it could for its only employee, the CEO, to acknowledge the successes achieved in a difficult year and encourage her to continue such efforts.”
LPEA provides electricity to 34,200 members in La Plata and Archuleta counties as well as parts of San Juan, Hinsdale and Mineral counties.
parmijo@durangoherald.com
