Power Play: Tri-State’s CEO says it is federally regulated, but the state disagrees

Duane Highley, the CEO of Tri-State Generation and Transmission Association set a positive tone at the monthly meeting of the Empire Electric Association Board of Directors Oct. 11 in Cortez.

Highley presented updates on a wide variety of topics that will affect how electric power is supplied Empire Electric in the future including:

  • Grid energy transition
  • Tri-State’s Responsible Energy Plan
  • Federal Energy Regulatory Commission (FERC) rate regulation

Highley highlighted how recent actions by legislators in Colorado and New Mexico have set new constraints on the regional grid and how Tri-State will be able to produce electric power in the future. In addition, he noted that recent market shifts have made utility-scale renewable power from wind and solar generators cheaper than fossil-fuel power.

Overall, these changes have created what Highley termed a “grid energy transition” where is it possible to purchase renewable energy cheaper than operating existing coal plants. Tri-State plans to exploit these market conditions to meet the new carbon emissions restrictions set by Colorado and New Mexico.

These strategies will be spelled out in Tri-State’s Responsible Energy Plan that is being developed in conjunction with the Center for a New Energy Economy, a think tank developed by former Colorado Gov. Bill Ritter.

Highley believes that Tri-State can transition to a new power-generation mix that meets the Colorado 50 percent renewable energy requirement by 2025 without raising current wholesale rates. He expects that the Responsible Energy Plan will be able to reach the goal of 80 percent renewables by 2030 with zero or nominal rate increases.

It is even possible that rates could decrease, though as he explained, Tri-State plans to use the cheap renewable energy prices being offered to Tri-State in its latest request for future power to offset the higher and stranded asset costs of Tri-State’s existing coal fleet. He is also sensitive to the potential job losses at Colorado coal mines and power plants and will leverage state funding and other sources to assist “coal-impacted” communities.

The first milestone of the Responsible Energy Plan was passed on Sept. 19, when Tri-State announced the official retirement of Nucla Station, a 100 MW coal-fired facility located in Nucla, Colo. The power plant was retired prior to its retirement date in 2022 to meet environmental regulations.

Tri-State’s press release said, “As part of the transition to closure, Tri-State is providing $500,000 over the next five years in community support during the retirement. ‘While our generating station has been a significant part of Nucla and Naturita communities for many years, it made the most sense to come offline at this time in a controlled fashion, while maintaining compliance with all of our federal and state environmental regulations,’ said Highley. ‘We will support the remaining employees at the plant and the community during this transitional period of decommissioning and dismantling the facility.’”

Highley also took the opportunity to clarify concerns regarding Tri-State’s application to the FERC, given that it released an order on Oct. 4 that “rejected [Tri-State’s] filings without prejudice.” Highley explained that the order identifies small technicalities that he expects to be remedied in the next 30 days.

In addition, he believes that Tri-State is currently regulated by the FERC because the commission responded with an order, rather than a letter or other form of communication.

He assumes that if they are being ordered by the FERC; they are regulated by the FERC. “We are FERC-regulated,” he said.

The Colorado Public Utility Commission (CoPUC) sees it a bit differently than Highley. In a hearing on Oct. 15, the commissioners heard testimony from a dozen different people representing Tri-State (including Highley), state and local government agencies, community and environmental groups, as well as individual members of Colorado cooperatives served by Tri-State.

The purpose of the hearing was to help the CoPUC determine the best course of action to ensure that Tri-State meets the new carbon-emissions requirements while providing its Colorado customers with reliable and affordable electric power. The CoPUC has determined that it holds regulatory authority over Tri-State’s electric resource plan and this plan is inextricably tied to its future rates and reliability.

The CoPUC filed a notice of intervention and protest with the FERC regarding Tri-State’s application. In the filing, the CoPUC, “respectfully requests that Commission dismiss the filings presented in the above-captioned dockets on account of their significant procedural, legal, and jurisdictional flaws. In the alternative, the CoPUC respectfully requests that the Commission issue a deficiency letter advising Tri-State of the material omissions in its seven filings.”

Was the FERC’s order a deficiency letter, dismissal, or request to clean up some small technicalities? Only the FERC lawyers can say. More will be known after Tri-State submits its response and the CoPUC moves forward with its regulatory proceedings.

In the meantime, Empire Electric and other Colorado co-ops can only sit back and watch the show that will determine their future power supply options and regulatory environment, as they have very little influence in these high-level proceedings and discussions.

From November 2019. Read similar stories about .