ORIGINAL REPORTING: Colorado Tri-State ruling on co-op exit template stirs controversy

Colorado Tri-State ruling could provide co-op exit template amid rising tensions with G&T providers; Tri-State wants a ruling by FERC, but two Colorado co-ops asked state regulators to decide on a fair cost of moving to local renewables.

Herman K. Trabish, May 13, 2020 (Utility Dive)

Editor’s note: In early July, the CO commission ruled in favor of Tri-State’s member co-ops and Tri-State announced its intention to appeal the decision to federal regulators.

Distribution electric cooperatives that supply 13% of U.S. electricity are increasingly demanding their generation and transmission (G&T) suppliers offer them the new opportunities emerging in low-cost renewables or let them exit to independent energy suppliers.

Colorado G&T Tri-State and many others are bound by long term investments in uneconomic fossil fuel generation and struggling to respond to co-op demands. The tension could have implications that drive an energy transition — or tear the electric cooperative (co-op) system apart.

click to enlarge

There is a "general dissatisfaction" in member co-ops with G&T investment decisions "that have kept rates artificially high compared to low-cost renewables now available in the market," Jason Johns, a partner with law firm Stoel Rives, which represents distribution co-ops, told Utility Dive. "There is little precedent for how to reconcile the differences."

One avenue is to allow co-op members to leave their G&T provider in a way that minimizes impacts on remaining members. "If members want to exit their G&T, they should, but an exit charge should keep remaining members whole," Tri-State CEO Duane Highley told Utility Dive.

click to enlarge

But how should the amount of such a charge be determined? Two Tri-State co-ops have negotiated exits, and two others, United Power (UP) and La Plata Electric Association (LPEA), are asking Colorado regulators for an affordable alternative to Tri-State's exit charge. Battles between G&Ts and members over exits have also emerged in Indiana and North Dakota. Colorado's May 18 hearing could produce a template for a co-op transformation — or cascading G&T bankruptcies.

In addition to Tri-State's disputes, Indiana's Tipmont REMC is seeking an exit from G&T Wabash Valley Power Alliance and North Dakota's Mckenzie Electric Cooperative is demanding better rates from G&Ts Basin Electric and Upper Missouri. Each dispute revolves around what cost the contract termination should impose on the exiting co-op and the G&T's remaining members. Colorado members LPEA and UP asked the co-ops appealed to the Colorado Public Utilities Commission (CPUC) for a methodology for calculating an acceptable exit cost… click here for more

click to enlarge

Tweet