Guest commentary: Tri-State leaders pulled a sneaky move; the PUC should stop them

Many of our constituents have been customers of Poudre Valley Rural Electric Association, La Plata Electric Association and Delta-Montrose Electric Association for many years, far too many of which have been filled with higher-than-necessary bills, largely a result of suspect decisions out of Tri-State Generation and Transmission’s metro-Denver corporate offices.

Tri-State is supposed to operate in service to its 42 rural electric cooperative members, independent power distributors who are primarily supplied by Tri-State electricity, but its executives consistently seem to ignore how their business plans harm us. Its latest machinations are a prime example, and we encourage the Colorado Public Utilities Commission (PUC) to rein in this runaway beast.

The issue first bubbled up four years ago when New Mexico-based Kit Carson Electric had had enough of high rates and Tri-State’s inflexibility in allowing co-ops to develop local renewable energy projects. Tri-State tried to extort $137 million from Kit Carson to buy out its contract but eventually settled on a $37 million exit fee. Three years later, Colorado-based Delta-Montrose Electric went through a similar wringer, negotiating an agreement to end its contract for $62.5 million after a nasty legal battle, less than a quarter of the $322 million Tri-State tried to squeeze from it.

Now, two more co-ops want out. Durango-based La Plata Electric and Brighton-based United Power have decided it’s time to escape from Tri-State’s grip and lopsided contracts that require them to buy 95% of their power from Tri-State through 2050 – the majority of it generated at distant and increasingly inefficient coal plants. They have the right under Tri-State by-laws to seek this separation, but rather than doing what’s right by rural Colorado, Tri-State’s sneaky corporate heads have cooked up a scheme to force them to stay.

Tri-State’s entire existence is built on the premise of being a wholesale power provider to its member co-ops, but last year it decided to suddenly add non-coop “members.” Here’s why that is so deceptively oppressive. La Plata and United are seeking their exits through PUC proceedings, where Colorado utility matters are settled. Under federal energy rules, however, Tri-State’s addition of a small gas company, a greenhouse and a cattle ranch moved jurisdiction for rates – and exit fees – to Washington, D.C. and the Federal Energy Regulatory Commission (FERC).

Other cooperatives are also mulling potential exits from Tri-State. Ridgway-based San Miguel Power says it’s considering alternatives to Tri-State. The board for Jemez Electric in New Mexico has authorized expenses on a possible exit analysis. And others are looking enviously at the benefits Kit Carson and Delta-Montrose are enjoying since their departures: lower rates and free rein to develop local renewable projects that create jobs and community economic development.

The addition of these companies is a thinly veiled threat meant to squelch dissent; if you mess with Tri-State, you will pay the price. Like it did previously, Tri-State is seeking vastly inflated and discriminatory exit fees for La Plata and United, requiring them to pay a combined amount in excess of $1.5 billion to leave the fold. There is no methodology justifying this bloated figure – Tri-State couldn’t even come up with one other than to tell the PUC it flatly made it up. The fee is so big that if it were hypothetically applied to all 42 co-ops, it would leave Tri-State with a surplus to the tune of nearly $6 billion, a number so appallingly large it would be laughable … if it weren’t so seriously stifling.

If Tri-State prevails in hoodwinking FERC to approve this draconian exit fee proposal, any co-op that has a rate issue to settle in the future would face the hugely expensive prospect of having to do so 2,000 miles away in the D.C. swamp.

The premise of adding non-coop members is on highly suspect legal ground. It’s clear from the record that Tri-State brought them on to intentionally escape state jurisdiction – and punish co-ops looking to leave. Tri-State seems to believe that Beltway bureaucrats somehow have a better sense of what is good for rural Colorado than the three-commissioner PUC, two of whom come from Western Slope communities and co-op backgrounds. That’s arrogance at its worst.

There is a solution to this mean-spirited and manipulated mess.

The PUC can rule that Tri-State’s sketchy addition of new “members” was in fact not legal. Doing so would void federal jurisdiction and put the matter back where it belongs, in the sensible hands of Coloradans.

 Jeni Arndt is a Colorado State Representative of House District 53, which includes parts of Tri-State co-op Poudre Valley Rural Electric Association. Don Coram is a Colorado State Senator representing Senate District 6, which includes much of Tri-State co-op La Plata Electric Association.

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