FERC issues order providing direction and clarity on Tri-State's wholesale rates and a long-standing issue regarding battery storage

• Federal regulator agreed with Tri-State's treatment of battery storage, including a battery owned by United Power.
• Provides some direction and clarity on two components of Tri-State's future wholesale rates.
• Addresses Tri-State’s member-developed Community Solar Program.
• Tri-State is still awaiting order from FERC on its wholesale rate filing to be effective Jan. 1, 2024.   

(August 17, 2023 – Westminster, Colo.) The Federal Energy Regulatory Commission has issued an order addressing four issues affecting the rates and terms of the wholesale power service Tri-State provides to its 42 utility members. The most immediate impact of the Aug. 15 order will come from the Commission’s finding that Tri-State member United Power is required to pay transmission demand charges for its battery storage devices. The other issues addressed by FERC inform Tri-State rate filings.

The four issues under FERC consideration arose as part of an uncontested settlement approved by FERC in August 2021, which sought to advance Tri-State’s first wholesale rate filing under FERC’s jurisdiction. The settlement resolved key issues in Tri-State’s FERC filings in 2019 and 2020, and included a 4% wholesale rate reduction for Tri-State's utility members that was fully implemented in March 2022. As part of the settlement, the parties agreed to refer four discrete or “reserved” issues to FERC for resolution. Those issues were set for an evidentiary hearing. On May 27, 2022, following the hearing, an administrative law judge (ALJ) issued an initial decision on the four reserved issues. The Aug. 15 order sets forth the Commission’s findings on the issues following the evidentiary hearing.

“Working with our members, we reached consensus on our rate filings and reduced our wholesale rates,” said Duane Highley, Tri-State CEO. “We are grateful for the FERC Commissioners and staff for their efforts to provide clarity on four issues where there was disagreement between our members.

“Our focus now is to ensure the wholesale rate we filed in June addresses FERC’s concerns, which we think it does, and it can go into effect in January 2024,” added Highley. “The formulary rate will provide the rate certainty Tri-State and its members need to continue our energy transition.”

FERC affirms that United Power must pay transmission demand charges for battery storage devices 

FERC’s order affirms the ALJ’s initial decision that definitively rejected United Power’s arguments and confirmed Tri-State’s position that United Power must pay transmission demand charges associated with its battery projects. United Power’s previous challenge to this issue was rejected by FERC in 2020. 

After United Power’s 4.5 megawatts in battery storage capacity was installed, it refused to pay Tri-State transmission demand charges related to its battery projects and refused to provide Tri-State with metered data on the operation of its battery storage devices, preventing Tri-State from accurately billing United Power for transmission demand.

In the absence of metered data, Tri-State calculated United Power’s transmission demand based on the assumption that its battery storage devices discharged at nameplate capacity during peak periods each month. Tri-State had earlier acknowledged this method over-recovered costs and proposed a method to refund charges to United. FERC ordered that Tri-State refund United Power for overcollection of transmission demand charges caused by the lack of data from United Power, and that United Power pay Tri-State the late charges and interest on the charges it refused to pay.

Commission discussion of unbundling and direct assignment inform Tri-State’s rate filings 

Two of the reserved issues involved guidance on rate design and cost allocation. FERC affirmed the ALJ’s initial decision that Tri-State is subject to FERC Order. No. 888 functional unbundling requirements. Tri-State already proposed unbundling generation and transmission rate components in its most recent rate filing made on June 16, 2023, and will further unbundle its services if required. Unbundling rate components does not affect the wholesale rate to members or revenue to Tri-State.

The Aug. 15 order also discussed the direct assignment of non-networked radial transmission lines owned by Tri-State in the transmission charge for wholesale power service. FERC rejected efforts to require Tri-State to use a specific test for determining whether individual transmission facilities are integrated, and thus required to have their costs rolled-in to a broader transmission charge, or non-integrated and thus required to have their costs direct assigned to the members served by the facilities.

Instead, the Commission provided Tri-State flexibility in how it may justify that such costs should be allocated. In the order, FERC noted that Tri-State should perform an assessment of non-networked transmission facilities and demonstrate that these facilities are eligible to be rolled into the transmission rate or should be direct assigned to Tri-State members. FERC was not prescriptive with respect to the type of analyses that could be performed by Tri-State.

Order addresses United Power’s challenge to Tri-State’s member-developed Community Solar Program   

The fourth reserved issue was United Power’s challenge to Tri-State’s Community Solar Program. The member-developed program was designed to promote community solar participation by all members, especially smaller members in rural communities. FERC ordered that a portion of the rate is not just and reasonable, but that finding was without prejudice to further justification by Tri-State. Tri-State is reviewing the order and the potential impact on members with community solar enrolled in the program.

Tri-State has filed with FERC a new rate design to be effective Jan. 1, 2024. Tri-State expects an order on the filing shortly.

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About Tri-State

Tri-State is a wholesale power supply cooperative, operating on a not-for-profit basis, with 45 members, 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.

Contact:

Lee Boughey, 303-254-3555, lboughey@tristategt.org

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.