A for-profit wholesale energy services company has become the first non-utility member of the Tri-State Generation and Transmission Association Inc., a not-for-profit regional wholesale power supply association that serves more than 40 rural electric distribution cooperatives and public power districts.
The move by MIECO Inc., a subsidiary of Japanese conglomerate Marubeni Corp., to join Tri-State will bolster the association's ongoing effort to come under the jurisdiction of the Federal Energy Regulatory Commission instead of potentially being regulated by the state utility commissions of Colorado, Wyoming, Nebraska and New Mexico.
Tri-State announced that with MIECO's membership, the association's rates will be regulated under the Federal Power Act just like those of other regional wholesale power providers.
"The admission of MIECO, Tri-State's first member that is neither a small electric cooperative nor a government entity, results in Tri-State becoming subject to rate regulation by FERC," the association said.
However, that is highly unlikely to be the last word on the subject. Some state regulators have objected to Tri-State's effort to come under FERC's jurisdiction and out from under theirs.
The Colorado Public Utilities Commission on Sept. 3 asked FERC to reject Tri-State's request to be declared a federal jurisdictional entity, insisting that the association's filings contain "numerous legal flaws."
By granting Tri-State's request, FERC would risk upending judicial and regulatory proceedings that are ongoing in Colorado and New Mexico, the Colorado commission continued. For example, Tri-State has asked the U.S. District Court for the District of New Mexico for a permanent injunction prohibiting the New Mexico Public Regulation Commission from asserting jurisdiction over Tri-State's rates and wholesale contracts after the association's members complained to that state agency of unfair rate increases. The case continues to be litigated.
Tri-State said MIECO's membership will assist in positioning the association for a transition to cleaner generating resources because natural gas generation supports the reliable integration of renewables. MIECO will help provide firm natural gas pipeline capacity and fuel to supply gas-fired plants, Tri-State said.
Tri-State's push to become subject to the regulation of FERC alone rather than having to contend with four state regulatory commissions comes at a time when two of those states are increasingly pressuring the association to replace its coal- and gas-fired generation with renewable energy.
New Mexico earlier in 2019 passed a 50% by 2030 renewables standard and became the third U.S. state to target complete decarbonization of its power system with a goal of being carbon-free by 2045. Colorado passed legislation in May to require power companies to consider the social costs of carbon and established statewide goals to reduce carbon emissions from 2005 levels 26% by 2025, 50% by 2030 and 90% by 2050.
In its Sept. 3 filing, the Colorado PUC told FERC that Colorado law requires Tri-State to ensure that costs attributable to compliance with the state's renewable portfolio standard are recovered from its Colorado members.
While Tri-State is gaining a non-utility member, it has begun losing traditional member cooperatives. For instance, Delta Montrose Electric Association will leave in 2020 because it wants cheaper, greener power.
