Does the new federal payout formula for Tri-State mean members will leave?

In an ongoing battle between the Tri-State Generation and Transmission Association and its members in Colorado and other states, a federal agency has issued an order with the potential to reshape a significant portion of the region’s energy landscape.

The Federal Energy Regulatory Commission has adopted a formula to determine the cost for electric cooperatives to end their contracts with Tri-State, a wholesale power provider. This week’s 247-page order is being carefully examined by all parties involved.

Tri-State has until Jan. 19 to submit exit fee amounts for all 42 member cooperatives, 17 of which are in Colorado. United Power, the largest member of Tri-State, has already announced its decision to leave and has signed an agreement to purchase electricity from Guzman Energy, a wholesale supplier with contracts from other former Tri-State members.

Mark Gabriel, United Power’s president and CEO, expressed satisfaction with FERC’s order, stating that the agency supports a variation of an exit-fee formula proposed by the cooperative.

Tri-State’s initial plan to calculate exit fees based on lost revenue over the life of the contract was deemed “unjust and unreasonable” by a federal administrative law judge in 2022. FERC has now adopted a modified payout plan that looks at Tri-State’s balance sheet and assigns proportional shares of debt to each cooperative.

The ongoing disputes between Tri-State and its members stem from concerns over rates, overreliance on coal, and a 5% cap on the amount of power individual cooperatives can generate or purchase from other sources. Several electric cooperatives have already paid substantial amounts to break their contracts with Tri-State.

While Tri-State has plans to close coal-fired plants earlier than scheduled and has set goals for increasing renewable energy sources and cutting greenhouse gas emissions, disagreements persist between the company and some members. Mountain Parks Electric in Granby and the Northwest Rural Public Power District in Nebraska are among those who have filed notices to end their electric service contracts with Tri-State.

The recent lawsuit filed by the La Plata Electric Association against Tri-State accuses the power supplier of breach of contract, alleging bad faith in failing to offer a fair and just exit plan.

Tri-State’s announcement of a proposal to add 1,250 megawatts of additional renewables and battery storage through 2031 has been overshadowed by the ongoing conflicts with its members.

Overall, the impact of FERC’s order on Tri-State’s membership remains to be seen, but it provides transparency to distribution utilities, enabling them to make informed decisions regarding their energy sources.

The historic background of this topic includes electric cooperatives leaving Tri-State due to concerns over rates and an overreliance on coal, while also highlighting Tri-State’s efforts to transition to renewable energy sources and reduce greenhouse gas emissions. The ongoing disputes and lawsuits from various member cooperatives demonstrate the depth of conflict between the parties involved, pointing to a significant shift in the region’s energy landscape.

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