FERC rejects United Power’s filings and nullifies conditional withdrawal notices
- Decision requires Tri-State members to provide firm, unconditional notices of withdrawal.
- Conditional withdrawal notices would have created uncertainty and risks for Tri-State, members.
- Commission order cites important consideration of cost impacts to Tri-State utility members.
- With proper notice required by FERC-accepted contract termination procedures, Tri-State can begin planning for member’s orderly withdrawal.
(April 21, 2022 – Westminster, Colo.) The Federal Energy Regulatory Commission (FERC) today rejected United Power’s attempt to provide Tri-State Generation and Transmission Association with a non-binding, conditional withdrawal notice. FERC agreed with Tri-State’s position that conditional withdrawal notices are not permitted under the contract termination payment (CTP) tariff that the federal regulator accepted in November 2021.
United Power provided a conditional withdrawal notice to Tri-State on Dec. 14, 2021. That same day, United Power filed a Request for Clarification with FERC, asking the federal regulator to confirm that the CTP tariff permitted conditional notices, such that the distribution cooperative could rescind its notice at any point up to its withdrawal date of Jan. 1, 2024. United Power later requested an alternative waiver of the CTP tariff should FERC reject the Request for Clarification. Today, FERC rejected both the requests for clarification and waiver, and determined that United Power’s conditional withdrawal notice, along with two other conditional withdrawal notices, are invalid.
Twenty-four Tri-State utility members filed comments supportive of Tri-State, which successfully argued that conditional, non-binding, or revocable notices of intent to withdraw were not valid under its CTP tariff. Tri-State argued that conditional notices would have created significant risk to remaining members and hamper Tri-State’s ability to plan for withdrawals. In its order, FERC noted that “as the all-requirements supplier to its utility members, Tri-State has an obligation to acquire sufficient capacity for all its utility members, and significant uncertainty regarding this amount could have cost impacts for all Tri-State utility members.”
“FERC’s order supports the important principles of fairness and equity for all of our cooperative members, ensuring remaining members are unharmed should another member pursue the early termination of its long-term, all-requirements power contract,” said Duane Highley, CEO of Tri-State. “We greatly appreciate FERC’s work to address this important issue.”
Tri-State’s member withdrawal procedures, accepted by FERC on Nov. 1, 2021, establish a clear, orderly, and equitable exit process for members to terminate their contracts and withdraw from Tri-State.
“Our members can provide an unconditional, two-year notice that they will terminate their wholesale electric service contract and membership in Tri-State, and then we will work amicably to process the withdrawal,” Highley said.
A two-year notice period is required to provide ample time and certainty for Tri-State to plan for a utility member’s contract termination and withdrawal from the cooperative. Upon receipt of a withdrawal notice, Tri-State must begin changing its Electric Resource Plan, financial planning and exploring other options in the power market. Tri-State and the withdrawing member must also negotiate complex transmission and power delivery issues.
Tri-State’s member-developed CTP tariff sets forth the terms and conditions under which Tri-State's utility members may terminate their Wholesale Electric Service Contracts and membership in Tri-State. The CTP tariff ensures that remaining Tri-State members and Tri-State are held harmless if another member decides to terminate its contract early. The FERC has scheduled a hearing on the CTP tariff for May 2022. The CTP tariff includes requirements for a two-year notice and remittance of a contract termination payment.
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.