Tri-State to file simpler, more transparent Contract Termination Payment with the FERC
- Wholesale power supply cooperative responding to federal regulator’s and members’ concerns.
- Contract Termination Payment will ensure remaining members are held harmless if a member terminates its power supply contract early.
(July 19, 2021 – Westminster, Colo.) Tri-State Generation and Transmission Association will file a simpler and more transparent Contract Termination Payment (CTP) methodology with the Federal Energy Regulatory Commission (FERC) in the coming weeks.
Tri-State responded today to a show cause order from the FERC and described its plans to file the revised CTP methodology approved by its board of directors, which includes a representative from each of its utility members. The CTP methodology calculates the cost for the early termination of a utility member’s power supply contract with the wholesale power supply cooperative, without financially harming other members.
“Tri-State will file a modified CTP that is fair to both the member considering early termination of its power supply contract and to the remaining members that will fulfill the full term of their contracts to 2050,” said Duane Highley, Tri-State CEO. “With payment of the CTP, a member may terminate its power supply contract early, while the remaining members are held harmless and remain financially whole.”
As part of the upcoming filing, Tri-State will provide a modified CTP calculation for each of its 42 utility member. Several Tri-State utility members have requested a CTP; none of these members has asked to terminate its contract. The modified CTP methodology does not require Tri-State’s Board of Directors to approve a member’s contract termination if the CTP is paid.
The modified CTP includes transparent and easily obtainable public data to ensure calculations can be quicky performed at minimal cost, which allows all Tri-State utility members to annually obtain CTP calculations, with no specific charge to the member.
“The modified CTP is responsive to the FERC and our members by establishing a clear formula to determine each member’s cost to terminate its contract and creating a clear, predictable path for any member that ultimately decides to withdraw,” said Highley.
The modified CTP methodology responds to two recent FERC orders in which the federal regulator expressed concerns about the previously filed CTP, including the methodology used to calculate the payment, and a utility member’s ability to easily access and replicate calculations. The modified CTP methodology is also responsive to various member concerns expressed in pleadings filed before FERC.
In June 2021, FERC issued a show cause order expressing these concerns about the CTP. The order followed the FERC’s rejection, without prejudice, of Tri-State’s proposed CTP implementation policy. In response to the FERC orders, Tri-State’s Board of Directors, representing each utility member, directed staff to modify the CTP and refile the methodology.
Tri-State is 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.
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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.