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A Tri-State Generation and Transmission Association board vote late Tuesday threw into doubt Delta-Montrose Electric Association’s request for a “non-discriminatory” buy-out figure that’s pending before a state body.

Tri-State, the power wholesaler for DMEA and more than 40 other cooperatives, voted to add a membership class beyond the small rural co-ops or public power district classes that currently exist. The move subjects it to federal rate-regulation and it will file a wholesale rate tariff with the Federal Energy Regulatory Commission that takes effect 60 days after that.

“We look forward to continued engagement with the governors, legislative leadership, commissions and stakeholders to achieve our shared goals,” said Tri-State CEO Duane Highley in a press release sent late Tuesday evening.

“Tri-State is committed to reducing emissions, expanding renewables, lowering costs to our members and creating opportunities in all the states we serve.”

DMEA had no immediate comment, having just learned of the decision. Its representatives previously said the co-op would probably have to start its contract buy-out attempts anew, at significant cost.

In June, with La Plata Electric Association in Durango and United Power in Brighton, DMEA issued a letter asking other member co-ops to support their request for Tri-State to delay its membership class vote and pursuit of FERC rate-regulation until more questions could be answered.

Last week, DMEA filed for an injunction and, on July 1, neighboring co-op San Miguel Power Association wrote a letter calling for a postponement of the Tri-State board’s vote in order to “allow adequate time for a more complete understanding of this process by the membership.”

United and LPEA also issued their own letters seeking a delay.

Tuesday’s vote came before a court ruling on DMEA’s bid for an injunction. It stands to complicate the local cooperative’s efforts to buy its way out of its Tri-State contract, which expires in 2040.

The co-op’s representatives previously accused Tri-State of “forum shopping” to undermine the exit fee matter now pending before the Colorado Public Utilities Commission. Becoming federally regulated would end the PUC’s jurisdiction.

The PUC previously ruled, over Tri-State’s objections, that it could hear DMEA’s request for help in having a “just and non-discriminatory” exit fee set. A New Mexico member, Kit Carson Electric, was able to buy out its contract by paying $37 million; Tri-State reportedly wants much more from DMEA.

“We’re hoping we can keep it in the PUC and get a (buy-out) decision we can live with,” DMEA board president Bill Patterson said Monday, before the Tri-State board FERC vote. “But at this point, we’re nowhere near close.”

Tri-State’s Tuesday decision also could affect LPEA, which in June indicated it wanted Tri-State to provide an exit fee amount so it can explore how leaving the association would affect LPEA customers.

Tri-State has maintained throughout the legal battle with DMEA that cooperatives’ terms of membership do not furnish an absolute right to have a buy-out figure set. The association also denied seeking FERC regulation to undermine DMEA’s case before the PUC, saying this had long been under consideration.

United Power’s John D. Parker in a June 27 letter to Tri-State said it had presented compelling reasons for pursuing FERC rate-regulation, and although United was “not asking to stop the process,” its leaders had enough concerns to request a slowdown.

Parker said Tri-State should have allowed more time for its members to perform due diligence for such a decision.

Parker also said questions remained about how FERC rate-regulation would affect costs, member systems, contracts and ongoing PUC proceedings, among other matters.

In a Sunday letter, DMEA’s CEO Jasen Bronec and LPEA’s CEO Mike Dreyspring acknowledged “the view we’re expressing clearly does not appear to be popular,” as only United and SMPA sent separate letters of concern.

“But that’s OK; we’re willing to stand on the merits of our position. To us … that the Tri-State board may be ready to take such a big step so quickly — without meaningful input, discussion with the member-owners, analysis, without proceeding through the contract committee and without even first identifying the new proposed member — reflects a problematic approach to decision-making and governance,” the men wrote.

Their letter reiterated the co-ops’ specific concerns over timing; the costs; how FERC regulation would affect the cooperative governance model and what decisions would be under federal control — and just how moving in and out of FERC regulation would increase rate certainty.

Prior to learning of the vote, Bronec and Dreyspring acknowledged neither they nor anyone else who may be opposed had the power to stop it.

“But at the end of the day, we believe power has the second to last word. Ideas have the last word,” they wrote.

Tri-State in its Tuesday announcement said a single rate-regulator benefits its members and the pursuit of renewable energy, plus aligns the association with the rate regulation of other wholesale providers.

It will, for the first time, be fully rate-regulated by a governmental entity — and it will continue to work with states to comply with resource planning, renewable energy and environmental issues, the announcement says.

“Public utilities subject to FERC regulation must charge rates that are ‘just and reasonable’ and ‘not unduly discriminatory or preferential,” Tri-State said. “FERC regulation of Tri-State would eliminate inconsistent rate treatment across the states.”

All Tri-state members have the right to participate in the FERC rate-setting process and to file a complaint with FERC over Tri-State rates and proposed rates.

Katharhynn Heidelberg is the Montrose Daily Press assistant editor and senior writer. Follow her on Twitter, @kathMDP.


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