The Colorado Public Utility Commission has determined it has no jurisdiction to rule in La Plata Electric Association’s contract buyout dispute with its power supplier, Tri-State Generation and Transmission.
The state agency announced last week it has dismissed a complaint by LPEA against Tri-State that claimed Tri-State unfairly and unjustly failed to provide it with a fair price to buyout a contract that runs through 2050.
The contract requires LPEA to buy about 95% of its electricity from Tri-State.
The PUC has yet to issue a formal order dismissing the case, but it issued a news release Thursday saying it lacked jurisdiction to rule on the matter. The dismissal also included a similar contract buyout dispute complaint filed by United Power, an electric cooperative in Brighton.
According to the news release, “The PUC, in a 3-0 vote, determined that an order issued by the Federal Energy Regulatory Commission (FERC) in late August concluding it had exclusive jurisdiction over the exit fee disputes preempted the Colorado PUC from acting further on them.”
The PUC’s decision to drop LPEA’s and United’s complaints moves the dispute over to FERC.
Besides examining a complete buyout of its contract with Tri-State, LPEA is also looking at gaining more flexibility within the contract to purchase more renewable power generated locally and it is also looking at negotiating a partial contract with Tri-State.
Both LPEA and United Power have also objected to Tri-State adding several nonutility members, claiming the additions were illegal under Colorado law.
United Power has filed a lawsuit against Tri-State in Adams County Court over its addition of MEICO Inc., a wholesale energy service company that supplies natural gas to purchasers throughout the United States.
The Colorado PUC news release said it had no role to play in determining whether MEICO was added as a member by Tri-State illegally.
“As a result of the exit fee preemption, the only issue remaining in the PUC complaints is whether Tri-State’s admission of MEICO as a nonutility member was proper under Colorado law,” the PUC said in its news release. “Because this question is a matter of corporate law, not public utilities law, the PUC found it does not have the jurisdiction to decide that question.”
The PUC statement said Adams County District Court is “where the question of MEICO’s membership should be answered.”
LPEA CEO Jessica Matlock said, “LPEA continues to seek flexibility from Tri-State in our current 50-year contract to develop local, renewable generation and to reduce our power supply costs. We are hopeful we can get there working with Tri-State. Punting on the legality of the nonutility member additions just continues the uncertainty of Tri-State’s status of being FERC jurisdictional.”
LPEA executives are discussing internally its next steps, said Hillary Knox, LPEA vice president of communications.
LPEA provides electricity to 34,200 members in La Plata and Archuleta counties as well as parts of San Juan, Hinsdale and Mineral counties.
In July 2019, a smaller Tri-State member, Kit Carson Electric Cooperative in New Mexico, bought out its contract with Tri-State for $37 million.
In April, Delta-Montrose Electric Association agreed to pay $62.5 million to leave Tri-State Generation and Transmission Association. In addition, in a related contract, it agreed to purchase Tri-State transmission assets for $26 million and forfeit $48 million in capital credits. The related contract brought the overall buyout cost to $88.5 million.
A full order of LPEA/United Power dismissal is expected from the state PUC by Nov. 5.
Tri-State applauded the PUC’s decision.
“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,” Tri-State CEO Duane Highley said.
FERC has accepted a contract termination payment methodology developed by Tri-State’s utility members that determines the costs a Tri-State member would pay to withdraw from the generation and transmission cooperative.
FERC has ordered settlement talks for both LPEA and United Power with Tri-State to see if the parties can resolve the dispute themselves.
parmijo@durangoherald.com