Tri-State responds in Contract Termination Payment dockets pending before FERC
- Filings highlight importance of upholding long-term full requirements power contracts for G&Ts and their members.
- Member-developed CTP ensures members remain unharmed by a fellow member’s early termination of its power contract.
(October 5, 2021 – Westminster, Colo.) The majority of Tri-State Generation and Transmission Association’s members support contract flexibility without increasing costs to their consumer members. Today, Tri-State made filings in support of the majority of its rural member electric utilities in the Contract Termination Payment (CTP) dockets pending before the Federal Energy Regulatory Commission (FERC).
Tri-State's filings are in response to efforts primarily led by United Power to undermine typical FERC procedures and deny Tri-State and its members their rights under the Federal Power Act, and to question the continued importance of a generation and transmission’s (G&T) wholesale, long-term full requirements contracts with its members.
“United Power’s actions questioning the continued importance of long-term, full requirements power contracts undermine their value, and threaten the nation’s generation and transmission cooperative model. At its inception, the cooperative model was crucial to the electrification of rural America and while we are evolving, we are still the key to reliable and affordable electric service. Our model serves tens of millions of mostly rural customers across vast regions of the United States with reliable and affordable power, and efforts to diminish our collective success should be challenged,” said Duane Highley, Tri-State’s Chief Executive Officer.
As a G&T cooperative, representatives of Tri-State's member electric distribution cooperative and public power districts worked together to develop the CTP methodology, which ensures a clear and transparent path for any Tri-State utility member to terminate its long-term full requirements contract early, before the end of the contract’s 2050 term.
“Our filings represent our members’ collaborative work to ensure that if one member desires to terminate its contract early, it has the flexibility to do so while the other members remain unharmed,” said Tim Rabon, chairman of Tri-State's Board of Directors and Trustee at Otero County Electric Cooperative in Cloudcroft, N.M. “Increased contract flexibility, along with lower wholesale rates, cleaner energy and reduced emissions, are central to delivering value to our members and their rural consumers through our Responsible Energy Plan. But flexibility can’t mean that the rest of the members, and ultimately their customers, are left holding the bag.”
In September 2021, Tri-State filed modifications to its CTP tariff that comport with the cooperative’s bylaws, FERC regulations and precedent, and that fully and fairly address the concerns raised by FERC and certain Tri-State members in filed protests and comments.
In its filings, Tri-State argues that FERC should reject efforts by certain parties, particularly United Power, to hijack customary FERC filing and ratemaking procedures, and short-circuit Tri-State’s rights under the Federal Power Act, in order to advance United Power’s own interests of exiting its long-term full-requirements contracts for the lowest possible price, consequently harming Tri-State's other members.
“Contrary to United Power’s arguments, there is no reasonable basis for FERC to abandon the 'make whole/hold harmless' standard for determining contract termination payments,” said Highley. “That standard is the core principle underlying Tri-State’s initial and modified CTP rate filing, is supported by an overwhelming majority of Tri-State’s membership, and has been accepted by FERC and federal courts.”
On behalf of the majority of its members, Tri-State’s filings argue that FERC should reject alternative CTP proposals, including a flawed “balance sheet” approach proposed by United Power, which has already been rejected by the other cooperative members of Tri-State. This approach ignores and would abrogate the long-term, full-requirements contracts, and would saddle remaining cooperative members and their consumers with potentially billions of dollars of costs.
Tri-State notes in its filings that, contrary to other parties’ arguments, prior settlement agreements with withdrawing members Kit Carson Electric Cooperative and Delta Montrose Electric Association are not controlling or relevant to the CTP methodology Tri-State and its members seek to apply universally to future member contract terminations. In its filings, Tri-State noted that these withdrawals were negotiated at arms’ length under specific facts and circumstances before Tri-State became FERC jurisdictional, and involved contracts that were ten years shorter in length to the existing member contracts.
“United Power continues to misrepresent two previous member withdrawal settlements, each of which were based on different circumstances and came prior to Tri-State’s regulation under FERC,” said Highley.
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.