The July 19 filing by Tri-State Generation and Transmission marked another turning point in the ongoing saga of its refusal to deal openly and fairly with its electric cooperative members, including La Plata Electric Association.
To review, LPEA and some other electric co-ops that are members of Tri-State – a cooperative of 42 electric co-ops – have asked Tri-State to tell them how much it would cost them to buy out their long-term contracts to purchase power from Tri-State. LPEA first made this request formally in 2019. Its contract goes to 2050.
The reason they want buyout numbers? Most want to have the option to buy more renewable energy, such as solar and wind power, and maybe even invest in some of their own power production. But under their current contracts, they are required to buy almost all of their energy from Tri-State, which relies primarily on fossil fuel-generated power.
Tri-State has essentially refused to give the co-ops buyout numbers and instead used all kinds of shrewd maneuvers, including manipulating its regulatory status so that it could avoid dealing with the Colorado Public Utilities Commission and instead be under the purview of the Federal Energy Regulatory Commission.
But since that shift, FERC has not indicated it’s going to be anything other than the impartial commission it’s intended to be. Commissioners gave Tri-State 30 days to come up with a methodology for calculating the buyout numbers – and guess what? That oh-so-complicated formula was suddenly forthcoming.
Which doesn’t mean the buyout numbers calculated using the new methodology are appropriate or reasonable. Tri-State estimated LPEA’s full buyout at $449 million. By comparison, a Colorado administrative law judge for the state Public Utilities Commission previously suggested that $97 million – about 78% less than Tri-State’s proposal – would have been a fair figure.
The formula, which can be seen online in the filing, includes estimating the share of Tri-State’s debt for each co-op member and the value of lost revenue (for power not purchased) less what it can sell the excess power for. (For a detailed explanation of the numbers, see Allen Best’s July 22 blog on his Big Pivots website.)
Tri-State has stuck stubbornly to its traditional plan of relying primarily on fossil fuels. Only recently has it begun to catch up with wholesale providers around the country who have moved faster to embrace renewables – which have surprised everyone by becoming less expensive and more reliable faster than was anticipated.
In other words, Tri-State has painted itself into a corner and now wants to enforce fealty. It is a form of hostage-taking.
Here’s the kicker: LPEA’s board has never voted to leave Tri-State. They’ve just asked for a buyout number, and a partial buyout number.
We trust that FERC will see through Tri-State’s game-playing and straighten all this out, eventually. That LPEA (and other co-ops) will get appropriate full buyout and partial buyout figures. And that our locally elected LPEA board of directors then will be able to make wise decisions about whether to exercise those options.
Of course, Tri-State has an obligation to the collective of co-ops it represents. It can’t just wave bye-bye to member co-ops without some compensation, to be sure. But its intractable modus operandi was never wise or necessary. Its actions – and failures to act – have understandably generated suspicion and resentment among its members.
But perhaps it’s not too late to resurrect some trust and regain some loyalty among member co-ops. If Tri-State makes an about-turn and begins realistic negotiations through FERC, some member co-ops considering buyouts might be far less likely to depart, or perhaps will ask only for partial buyouts.
At the very least, it would certainly make for better relationships. Tri-State is supposed to be a “cooperative of cooperatives.” Let’s hope it starts acting like it.