This blog series covers the monthly La Plata Electric Association (LPEA) Board of Directors meetings. We’re tracking the board for transparency and accountability, as well as to stay current on their renewable energy initiatives. Find past and future spotlights here.
The big news this month is that Tri-State is asking to be regulated federally by FERC rather than by the Colorado PUC.
This may not sound like a big deal, but could have huge implications for how Tri-State operates and it’s important to understand why they want this and what it might mean for rural electric cooperative members like LPEA.
Right now, the Colorado Public Utilities Commission (PUC) regulates Tri-State. In order to be eligible for Federal Energy Regulatory Commission (FERC) regulation, Tri-State would have to add a member that’s not a small electric cooperative.
For example, Tri-State has shown interest in acquiring the Arkansas River Power Authority (ARPA), a municipal utility distributing power to communities in Southeastern Colorado. Because ARPA is not a rural electric co-op, that acquisition would qualify Tri-State for federal regulation.
Tri-State is asking for a vote about FERC regulation at their July Board meeting, but this timeline does not give member co-ops like LPEA a chance to really understand what FERC regulation would mean and the implications it would have for our co-op.
There are so many questions behind this sudden push to be regulated by Tri-State that we still don’t have answers to:
What’s the rationale?
FERC regulation would limit state oversight for all issues concerning rates, including buyout disputes. Tri-State maintains that being regulated by FERC would eliminate inconsistent rate treatment across the states they operate in, thus providing a higher level of certainty for customers.
Tri-State has projected rate stability for the next three years – why are they rushing towards FERC regulation if that is their primary motivation? Wouldn’t it be better to wait for an actual rate inconsistency and scope the regulatory scene then? It seems more likely that this is an attempt to dodge regulatory accountability (see below).
What’s the rush?
Tri-State is asking for a vote on FERC regulation at their July Board meeting. That does not give member co-op Board and staff time to consider the implications of such a proposal and ask meaningful questions.
Adding a member that is not a small electric co-op would be a serious change in Tri-State’s business model: why is Tri-State rushing through this process before members even fully understand what FERC regulation would mean for them?
Where’s the transparency?
Tri-State has released almost zero information about who the new member would be, and has not provided a robust analysis for the financial benefits of adding a non-cooperative member. We just do not know how much this is going to cost members like LPEA and our community.
We also don’t know the full extent of what it means to be regulated by FERC, and how it will impact individual co-op members. FERC regulation will incur at least $1.3 million in annual legal fees. All filings would be more expensive, lengthy, and occur in Washington DC, thousands of miles away from member co-ops.
As Delta Montrose Electric Association (DMEA)’s CEO put it, “Participating in FERC proceedings ‘is neither quick, nor inexpensive nor clear.’”
Where is the analysis showing that all of this time and money to go under FERC regulation is worth it? Are we supposed to take Tri-State at their word that this is ultimately beneficial for members like us? After continuously undermining member’s trust , we deserve answers from Tri-State that show they are seriously considering our best interest here.
Who will have regulatory authority?
This spring, the Colorado PUC asserted jurisdiction over Tri-State both for Delta Montrose Electric Association (DMEA)’s buyout case and Tri-State’s resource planning process. Additionally, new laws passed at this year’s state legislative session will require Tri-State’s resource planning to reduce carbon pollution by 80% by 2030.
Though Tri-State maintains that FERC regulation would affect only the utility’s rates, rates and natural resource planning are connected. While Tri-State will still have to submit a resource plan to the PUC, enforcement of the plan would be uncertain, since rate regulation will happen at FERC.
Without rate regulation at the state level, the PUC probably won’t have the teeth to compel Tri-State to follow through with its resource planning processes. The only options for member co-ops will then be to file a complaint with FERC, which could take years to resolve.
What about a buyout?
Tri-State and DMEA are in the midst of a PUC case in order to determine a “fair and equitable” exit fee for the electric co-op. But if Tri-State starts being regulated under FERC, that case would most likely be scrapped and restarted at the federal level.
Under FERC jurisdiction, member co-ops who want to pursue a buyout option will have to hire expensive federal lawyers, travel to DC, and potentially wait years before their case is settled.
The PUC just asserted jurisdiction over Tri-State this spring, and by pursuing FERC regulation it appears that Tri-State is already trying to duck local accountability.
How are member co-ops responding to this?
DMEA, LPEA and United Power all signed onto a letter asking Tri-State to pause the FERC vote. They’re asking other member co-ops to sign on as well. LPEA is having a special executive session Board meeting on July 2nd to discuss potential actions related to the Tri-State’s application for FERC regulation.
San Miguel Power Association (SMPA) voted unanimously to send their own letter to Tri-State asking them to delay the FERC vote until local co-ops better understand what impacts that would have on rate issues and compliance with the new state legislation.
This is the time to call or email your LPEA Directors and tell them member co-ops deserve answers before Tri-State commits us to federal regulation! Get involved, ask questions, and help keep Tri-State accountable.
In Other News…
Guzman Energy proposed a deal with Tri-State to finance the retirements of two major coal plants, replacing the capacity with renewable energy. Guzman would provide the cash needed to retire both the Escalante coal plant in New Mexico and the last two units at the Craig plant in Colorado. Guzman would then sell Tri-State solar and wind replacement power. This would push Tri-State’s renewable generation portfolio to over 70%, which would help them reach the new statewide carbon-reduction mandates by 2030.
Tri-State announced they were not interested in the proposal, stating that it “lacked meaningful detail” and that they could accomplish their goals by working within their nonprofit cooperative model.
So then why are they trying to add a non-cooperative member to our “family”, if the cooperative model is best? And what are they doing to meet the new state energy goals?
Future of Our Power Supply Information Series
The Power Supply Committee has finished their work and LPEA is presenting on the results! Come ask questions and learn about the options on the table for an affordable, responsible energy future:
July 1st: Ross Aragon Center, Pagosa Springs
July 2nd: Forest Lakes Community Center, Bayfield
July 10th: LPEA Board Room, Durango
July 11th: Ignacio Community Library
All presentations start at 6:30. Reservations appreciated but not required (email@example.com). More information is here.
LPEA Board Meeting: Wednesday July 17th at LPEA Headquarters. Public comment is at 9am.
Call or email your LPEA Board Directors.
(Hover over your neighborhood for contact information!)