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Colo. cooperative files complaint with state regulators to quit Tri-State

One of Colorado's many small electric distribution cooperative members of Tri-State Generation and Transmission Association Inc. filed a complaint with state regulators in an effort to quit its membership so it can pursue cheaper, cleaner energy resources.

The Delta-Montrose Electric Association in western Colorado, which buys bulk power from Tri-State, asserts that the interstate generation and transmission provider is attempting to keep it from leaving by setting a "punitive exit charge that is unjust, unreasonable and discriminatory," in violation of Colorado law.

In 2016, a New Mexico Tri-State member, Kit Carson Electric Cooperative Inc., withdrew from Tri-State after paying a $37 million exit charge. Delta-Montrose, or DMEA, said Tri-State has prohibited it from disclosing the size of the charge it wants, but it is "vastly disproportionate" to Kit Carson's charge.

"DMEA is willing to pay an exit charge fair to Tri-State's remaining members, but cannot ask its own member-owners to pay an exorbitant exit charge," the distribution cooperative said in its complaint to the Colorado Public Utilities Commission.

DMEA, which has 28,000 member-owners in Montrose, Delta and Gunnison counties, has a wholesale electric service contract with Tri-State that runs through 2040. DMEA said it could buy significantly less expensive and environmentally cleaner power from other sources, but for the restrictions Tri-State has placed on it.

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The complaint hints that this case has implications for other cooperatives across the state.

"DMEA's request to the commission is narrow. But the long-term economic and environmental benefits to DMEA's rural member-owners and other rural citizens across the state would be significant," the cooperative asserted.

Tri-State said Dec. 18 that it was "disappointed" by DMEA's move to litigate instead of negotiate a withdrawal and declined to comment further on its member's complaint.

Tri-State serves 43 distribution cooperatives across Colorado, New Mexico, Wyoming and western Nebraska. According to S&P Global Market Intelligence data, it owns about 3,150 MW of operating nameplate generation capacity, almost all of which is coal- or gas-fired.

For more than 10 years, DMEA has sought to develop more local, cost-effective renewable resources, but Tri-State restricts rural cooperatives to a 5% limit on the amount of energy they can produce on their own.

The average price Tri-State has charged for its own power has increased by 56% since 2005, while other Colorado utilities have moved to cheaper, cleaner sources, DMEA said.

"DMEA's wholesale power costs from Tri-State have been escalating at an unsustainable rate," DMEA CEO Jasen Bronec said in a news release.

Tri-State said its wholesale rates have remained stable four of the past five years and will not increase in 2019.

The distribution cooperative said it participated in a lengthy dispute and appeal process with Tri-State, but the latter refused to provide any meaningful information as to how it came up with the exit charge figure.

DMEA said the state commission has jurisdiction to decide the issue and pointed to a 2013 case in which three Tri-State members — La Plata Electric Association Inc., Empire Electric Association Inc and White River Electric Association Inc. — alleged Tri-State's rate was unlawful. Tri-State agreed to modify its rates, though it had earlier argued that its wholesale rates were not subject to state jurisdiction and that for the PUC to assert otherwise would impede interstate commerce.

Colorado's renewable portfolio standard has a provision applying to generation and transmission cooperatives such as Tri-State, requiring that by 2020, 20% of the wholesale energy they provide to their member-cooperatives come from renewable resources. For example, it has a purchase agreement for the output of a 75-MW wind facility in Colorado that began operating early in 2018, one of four wind purchase agreements. It also has purchase agreements for the output of three solar facilities, plus a few small hydro facilities.

Tri-State said that since 2008, it has added 470 MW of renewable energy resources to its system. "We continue to look at opportunities and are currently negotiating for additional renewable power supply," spokesperson Lee Boughey said in an emailed statement.

Other Colorado utilities have been moving more aggressively to adopt renewable energy resources. The Platte River Power Authority, which supplies three Colorado municipalities, earlier in December committed to achieving a 100% carbon-free resource mix by 2030, while the state's largest investor-owned electric utility, Xcel Energy Inc., has pledged to be carbon-free in its energy supply mix by 2050 across its eight-state service territory.