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Our View: LPEA win

Federal commission rules on Tri-State complaint

Remember when you were a kid, and learned how to manipulate your parents? Or as a parent, how you’ve been manipulated by your own little darlings?

Say Joey wants some cookies, but he knows his healthy-minded mom will say no, so, “Daddy, can I have some cookies?” he wheedles. Understanding the kid rules of manipulative engagement, Sensible Dad says, “What did your mother say, hmmm?”

That’s a rudimentary way of understanding some of the dynamics at play in the conflict between Tri-State Generation and Transmission and La Plata Electric Association and other electric co-ops.

But first, the good news: The Federal Energy Regulatory Commission last week issued a ruling saying that Tri-State has been behaving in an “unjust and unreasonable” manner in dealing with its member co-ops (including LPEA) who are exploring exiting or partially exiting their long-term contracts with Tri-State.

In simple terms, Tri-State has refused for two years to provide buyout costs to LPEA. Nine rural co-ops, including LPEA, have asked for those figures. Tri-State has said that LPEA would have to pay a minimum fee of $75,000 and up to $200,000 – just to get the buyout cost. (This after Tri-State somehow finally managed to provide figures to two other co-ops, which already have exited their contracts.) Tri-State also has said it won’t provide a buyout figure unless a co-op actually decides to leave.

The Mommy-Daddy aspect is this: Tri-State previously was under the jurisdiction of state public regulatory agencies; in Colorado, that’s the Public Utilities Commission (Mommy, in our allegory). Last year, Tri-State added to its membership three companies that are not electric co-ops, boosting its membership to be large enough for it to qualify to transfer jurisdiction over it to the FERC (Daddy).

Tri-State’s reasoning was that it’s too hard to deal with regulators in the multiple state in which it does business. While that makes sense, others say the move was intended to take its regulatory issues out of the hands of regional experts at the state PUCs in hopes that federal regulators would be more favorable to Tri-State.

The recent ruling shows FERC, like Sensible Dad, was not fooled. The commission has ordered Tri-State to prove why its procedures for providing a buyout figure are just and reasonable and in line with the Federal Power Act – or come up with a better, fairer procedure.

The issue of whether LPEA should consider a buyout of its long-term contract with Tri-State has been contentious. Those who think LPEA should stay with Tri-State cite reliability and the expected high cost of buying out the contract. Those who think LPEA should consider leaving cite high rates (Tri-State has agreed to reductions recently), restrictions on how much outside energy LPEA can buy, concerns about carbon emissions from fossil-fuel sources, and the desire to buy more renewable energy, possibly from local sources.

No one on the staff or the board of LPEA is promoting a buyout – yet. The idea is to explore whether any buyout (total or partial) would benefit LPEA members in the long haul. CEO Jessica Matlock and LPEA board members say that keeping rates low and ensuring reliability are their top priorities. If it doesn’t make fiscal sense, they’re not going to do it, they say. Matlock said the July LPEA newsletter will address members’ concerns about the process, and a series of town halls to discuss them will take place.

The issue facing generation and transmission associations nationwide is to find their way forward into a new energy future. Attempting to thwart rather than embrace inevitable changes is bad for business in the long term. Tri-State should come up with a fair game plan and provide the buyout numbers.

Hats off to FERC for holding Tri-State’s feet to the fire of fairness, and to LPEA for its leadership and persistence in getting the information it needs to best serve its members.