Tri-State Generation and Transmission Association and its largest member, United Power, are closer to agreeing on a fee for the co-op to exit the association, but are still battling even after federal regulators set a formula for calculating the payment.
Using the formula, Tri-State set United Power’s fee to buyout its long-term contract for wholesale power at $696 million with a credit of $82 million for member equity.
But Mark Gabriel, CEO of Brighton-based United Power, said in an email, “we believe Tri-State has not properly applied the formula.” The co-op accounts for about 20% of Tri-State’s revenue.
Tri-State “believes that it has correctly and to the best of its ability” followed the formula laid out by the Federal Energy Regulatory Commission, Lee Boughey, a Tri-State spokesman, said in an email.
United has done its own calculations, which are more than $150 million lower, the co-op said. It will be filing those figures with the FERC, which has been adjudicating the dispute.
Still, the current battle does narrow the gap. When United sought to leave Tri-State four years ago it calculated the exit fee at $150 million to $200 million. Tri-State set sum at $1.6 billion.
Others are anxious to know the cost of breaking up
Exit fees from Tri-State have been a source of controversy for several years as cooperatives have sought to leave the wholesale power supplier seeking more renewable power, lower rates or more local control. Tri-State serves 42 member cooperatives in Nebraska, Wyoming, New Mexico and Colorado.
Under Tri-State’s 50-year contracts, member cooperatives must buy 95% of their power from the association.
Two cooperatives — Kit Carson Electric Cooperative in Taos, New Mexico, and Delta-Montrose Electric Association — have already left Tri-State. Two more — Mountain Parks Electric in Granby and Northwest Rural Public Power District in Hay Springs, Nebraska — are set to leave along with United Power.
United and Northwest Rural will leave in May. Mountain Parks, which has about 22,000 customers, departs next year. Tri-State has calculated the Mountain Parks exit fee at nearly $75 million.
In its filing to FERC, United Power is also seeking a rehearing on a commission decision requiring prepayment of transmission fees for the life of a long-term contract, with deductions made over time for the use of Tri-State’s system.
As a Tri-State member, United Power, which has around 107,000 customers, did not have to pay to use the association’s nearly 5,800 miles of high-voltage lines. Nonmembers pay a tariff set by FERC.
United Power questioned Tri-State holding all that money for years saying that it had not been one of the exit items discussed before the FERC ruling.
“The commission’s record did not contemplate the administrative or financial complexities of requiring a departing member to become Tri-State’s bank as a condition of its exit,” United Power said in a statement.
Not requiring committed transmission funds would shift risk and obligation onto the remaining members of the association, Tri-State said in a statement.
“To suggest that the commission’s decision would force United Power to serve as Tri-State’s bank, because United Power would pay the transmission debt incurred on its behalf upon withdrawal from the membership, is nonsensical,” Tri-State said.
Type of Story: News
Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.