FERC accepts Tri-State’s modified Contract Termination Payment (CTP) Tariff filing
- Advances contract flexibility, key component of Tri-State’s transformative Responsible Energy Plan.
- CTP ensures remaining members held harmless if another member terminates contract early.
- FERC order rejects protests, sets matter for hearing, institutes parallel proceeding.
(November 2, 2021 – Westminster, Colo.) The Federal Energy Regulatory Commission (FERC) has accepted Tri-State’s filing of revisions to its Contract Termination Payment (CTP) tariff, which sets forth the terms and conditions under which Tri-State members may terminate their Wholesale Electric Service Contracts (WESC) and membership in Tri-State. The Modified CTP tariff, which ensures remaining Tri-State members are held harmless if another member decides to terminate its contract early, is effective Nov. 1, 2021, subject to refund and hearing procedures as established in FERC’s order.
“We are pleased that FERC accepted our Modified CTP tariff and acknowledged the improvements we made,” said Duane Highley, Tri-State’s CEO. “As the Commission noted in its order, the Modified CTP tariff includes clear, transparent, and objective procedures, and readily available CTP calculations that rely on publicly available data that can be updated annually for all utility members. At the same time, we are mindful of the questions and concerns expressed by the Commission in the order, and will do our best to address them through the hearing process.”
The CTP reflects the cost a utility member of Tri-State would pay to ensure remaining members are financially unharmed should the utility member seek early termination of its long-term, full-requirements power supply contract.
Under its member-driven Responsible Energy Plan, Tri-State is rapidly transitioning its power generation resources to cleaner energy, while lowering wholesale rates for its members. As part of the plan, Tri-State’s members are working together to increase flexibility and allow for greater member self-supply of power through certain renewable member self-supply tariffs, partial requirements power supply contracts, and by allowing the early termination of long-term, full-requirements power supply contracts through the CTP tariff.
CTP ensures remaining members held harmless if another member terminates contract early
Tri-State’s CTP is intended to ensure that its remaining members are held harmless and made whole financially for the continuing costs of servicing outstanding debt, and operating and maintaining the entire Tri-State generation and transmission system, without the revenues that were expected over the remaining term of a withdrawing member’s long-term contract with Tri-State.
“Tri-State’s members and board of directors continue to work together to ensure fairness to both a member considering early termination of its long-term, full-requirements power supply contract and the remaining members that will fulfill their obligations,” said Highley.
Following approval by its board of directors, Tri-State filed the modified CTP tariff with FERC on Sept. 1, 2021. The CTP calculation is based on the projected revenues the withdrawing member contractually agreed to pay over the remaining term of its contract, less other revenues Tri-State would receive from offsetting power sales, transmission revenues from the withdrawing member after termination, and the return of the net present value of the withdrawing member’s patronage capital balance.
FERC order rejects protests, sets matter for hearing, institutes parallel proceeding
In the CTP order, FERC rejected protests of certain parties, including United Power and Basin Electric. United Power, a Tri-State member, sought rejection of the Modified CTP filing, without a hearing, and with replacement of its own proposed CTP methodology. Basin Electric, a non-member party, argued that approval of the Modified CTP methodology would trigger a breach of certain agreements between Tri-State and Basin.
Numerous Tri-State utility members who were granted intervention in the case filed supportive comments and responses. After noting the opposition of certain parties to settlement and the importance of timely resolution, FERC ordered the matter to be set directly for hearing, and declined to consolidate the ongoing CTP case (Docket No. ER20- 1559-000, et al) and show cause proceeding concerning Tri-State's initial CTP filing (Docket No. EL21-75-00)). It also instituted a parallel 206 proceeding as part of the case, an action it also took in Tri-State’s recently-settled member wholesale rate and Open Access Transmission Tariff cases.
“While we disagree with some of the positions being taken by select parties, we appreciate FERC providing the opportunity for broader participation by all interested members in the case,” said Highley. “We welcome the continued engagement of our membership, and we will continue to work to ensure that all members, large or small, have a voice that is heard on these important matters.”
“We greatly appreciate the FERC commissioners’ and staff’s work on these important issues and look forward to continued engagement with the Commission as we move forward,” Highley concluded.
Tri-State is a power supply cooperative of 45 members, operating on a not-for-profit basis, including 42 utility electric distribution cooperative and public power district members in four states that together deliver reliable, affordable and responsible power to more than a million electricity consumers across nearly 200,000 square miles of the West. For more information about Tri-State, visit www.tristate.coop.
Certain information contained in this press statement are forward-looking statements including statements concerning Tri-State’s plans, future events, and other information that is not historical information. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described from time to time in Tri-State’s filings with the Securities and Exchange Commission. Tri-State’s expectations and beliefs are expressed in good faith, and Tri-State believes there is a reasonable basis for them. However, Tri-State cannot assure you that management’s expectations and beliefs will be achieved. There are a number of risks, uncertainties and other important factors that could cause actual results to differ materially from the forward-looking statements contained herein.