Complaints dismissed: Tri-State wins a legal decision by the PUC regarding pricey exit fees

In a short notice released on Oct. 23, the Colorado Public Utilities Commission (PUC) announced that it has dismissed the formal complaints over exit fees filed by La Plata Electric Association and United Power against Tri-State Generation and Transmission Association.

Citing recent orders that gave the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction over these disputes, the Colorado PUC found it lacked legal jurisdiction to resolve these complaints.

In addition, the remaining issue of whether Tri-State’s addition of a non-utility company to its membership was proper under Colorado law was deferred by the PUC to the Colorado district court where United Power filed a case in May 2020.

With this decision, the Colorado PUC bowed out of disputes between Tri-State and its member cooperatives, although not forever, as explained in the notice, “Because the Commission dismissed the formal complaints without prejudice, the PUC will be ready to adjudicate the exit fee questions if United Power prevails in district court.”

“We are pleased that the Colorado Public Utilities Commission agrees that the Federal Energy Regulatory Commission has exclusive jurisdiction over member withdrawal charges, and that questions of Colorado corporate law are a matter for the state courts,” said Tri-State CEO Duane Highley in a press release posted on Oct. 22.

Highley also acknowledged that Tri-State will have future dealings with the PUC. “We look forward to fully engaging the Colorado Public Utilities Commission in the electric resource planning process, and we remain deeply committed to helping meet Colorado’s energy and environmental goals.”

Despite Tri-State’s commitment to work with the PUC, Colorado’s state legislators continue to express concern for member cooperatives. In an opinion letter published in the Denver Post on Oct. 8, Jeni Arndt, Colorado State Representative for House District 53, and Don Coram, Colorado State Senator for Senate District 6, said, “The addition of these [non-utility] companies is a thinly veiled threat meant to squelch dissent; if you mess with Tri-State, you will pay the price. Like it did previously, Tri-State is seeking vastly inflated and discriminatory exit fees for La Plata and United, requiring them to pay a combined amount in excess of $1.5 billion to leave the fold.”

In a related opinion piece, the leaders of two Tri-State member co-ops in Colorado justified their move to FERC regulation.

Jack Johnston, CEO of Southeast Colorado Power Association, and Dennis Herman, general manager of Highline Electric Association, said, “We sought federal rate regulation to ensure that we will always have a voice with Tri-State’s regulators on the issues that have a financial impact on our distribution cooperative and the members we serve, no matter which state we reside in. Seeking federal rate regulation wasn’t something we took lightly. Electric cooperatives like ours value democratic governance as we make decisions that collectively benefit our communities.”

Empire Electric Association also supported the move to federal oversight.

The PUC’s decision leaves La Plata Electric Association in a difficult negotiating position, as it has lost its appeal to use an alternative exit-fee calculation and must accept FERC’s decision. CEO Jessica Matlock said in a statement to Utility Dive that LPEA will continue to seek a more flexible arrangement with Tri-State, and that the electric association is “hopeful we can get there working with Tri-State.”

Hope springs eternal as Tri-State solidifies its partnership with the FERC and shrugs off past state control. It is not clear who the winner will eventually be or what a winner even looks like. Hopefully, it will be Tri- State’s member-owner co-operatives, such as Empire Electric.

From November 2020.