Tri-State files revisions to its Contact Termination Payment methodology tariff

• Withdrawal Agreement will create certainty for departing and remaining members, and Tri-State.
• Filing establishes needed procedures to facilitate member withdrawals while protecting remaining members and Tri-State if a withdrawing member does not withdraw, despite providing an unconditional notice.

(February 14, 2023 – Westminster, Colo.) To establish procedures to facilitate member withdrawal and provide greater certainty for its withdrawing and remaining members, not-for-profit power supply cooperative Tri-State Generation and Transmission Association today filed with the Federal Energy Regulatory Commission (Commission) amendments to its Contract Termination Payment (CTP) tariff, under which members may terminate their wholesale electric service contracts and withdraw from 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.

Today’s filing, if accepted, would ensure the orderly and timely withdrawal of a member under the CTP tariff. The filing primarily includes a proposed Withdrawal Agreement, as well as ancillary agreements, to be executed between Tri-State and each withdrawing member to set out the steps, timelines and responsibilities of each party to effectuate a member's withdrawal. The filing provides each party the certainty to undertake the necessary tasks, which have significant consequences for the withdrawing member and Tri-State.

“Tri-State and our member distribution systems have complex and intertwined transmission and distribution systems, as well as power supply arrangements, that require significant planning to reliably and cost-effectively separate,” said Tri-State CEO Duane Highley. “Our filing provides certainty on the complex, costly and time-consuming activities necessary for a member to withdraw and terminate its all-requirements contract, so we can reliably and cost-effectively operate our respective electric systems.”

Filing protects remaining members and Tri-State if a withdrawing member does not withdraw

The filing also provides certainty for Tri-State and its remaining members, in the form of limited protections, including cost reimbursement, in the event a withdrawing member is unwilling or unable to complete its withdrawal from Tri-State.

Three Tri-State members have provided withdrawal notices to Tri-State, and Tri-State and these members are presently taking steps to separate the withdrawing members from the Tri-State system, make alternative power supply and transmission service arrangements, and otherwise plan for cost-effective, reliable service to each party’s respective members post-withdrawal.

United Power and Northwest Rural Public Power District (NRPPD) separately submitted notices of their intent to withdraw from Tri-State and terminate their wholesale electric service contracts effective May 1, 2024. United Power and NRPPD expressly subject their withdrawal notices to a Commission order that states Tri-State’s only current recourse if a member fails to pay its CTP is to prevent the member from terminating its membership. Mountain Parks Electric, Inc. (MPEI) submitted a withdrawal notice effective Feb. 1, 2025.

“Tri-State and our remaining members cannot simultaneously plan for our future with the uncertainty that a member may not withdraw,” Highley said. “To mitigate the impacts of any member’s withdrawal from Tri-State, we must evaluate whether to market power and plan transmission services to other customers, knowing Tri-State and our remaining members would be harmed if a withdrawing member does not withdraw, despite providing an unconditional notice. The tariff amendments protect our remaining members and Tri-State from this uncertainty, without unnecessarily discouraging member withdrawals.”

The Commission previously recognized that Tri-State requires certainty to undertake various resource planning, power supply and transmission changes relevant to mitigating the impacts of a member’s withdrawal. The filing addresses that, under the current tariff, Tri-State is in the untenable position of having to plan for member withdrawals with no corresponding protection in the event the member does not withdraw.              

If approved by the Commission, the filing creates the option for a member that has already provided Tri-State a withdrawal notice the opportunity to withdraw its notice.

Tri-State’s members developed the CTP tariff, which was accepted by the Commission and became effective Nov. 1, 2021. The CTP tariff includes requirements for a two-year notice and a contract termination payment. Tri-State’s CTP tariff has been accepted by the FERC, subject to refund, and following hearings on the tariff, an initial decision was issued from the administrative law judge hearing the case. The Commission has yet to issue an order on the tariff, and a decision is expected later this year.

“The contract termination payment tariff on file with FERC ensures that any utility member’s withdrawal does not harm the remaining members of our cooperative or Tri-State,” Highley said. “Tri-State will continue to work through the FERC process to ensure the CTP tariff protects remaining members from harm if a member desires to terminate its contract early.”

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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.