Tri-State News: Federal Energy Regulatory Commission takes exclusive jurisdiction over Tri-State rates and exit charges
August 31, 2020 – Westminster, CO – The Federal Energy Regulatory Commission (FERC) affirmed that it has exclusive jurisdiction over Tri-State Generation and Transmission Association’s rates and member system exit charges, as part of several orders issues by the federal agency late Friday.
One of the FERC orders was in response to Tri-State’s motion to reconsider the power supplier’s Petition for Declaratory Order with the agency, in which Tri-State sought confirmation that the FERC had exclusive jurisdiction over member system rates and exit charges. The FERC decision preempts Colorado Public Utilities Commission (CPUC) jurisdiction on these issues.
“This is a monumental decision for our members and Tri-State, and allows us all to move forward in our clean energy transition with much more certainty,” said Duane Highley, CEO of Tri-State. “We appreciate the careful consideration given to these issues by the FERC commissioners and staff.”
In the order, FERC held that “after further consideration we are modifying the discussion of the Declaratory Order to find that Tri-State’s assessment of an exit charge constitutes a Commission-jurisdictional rate subject to our exclusive jurisdiction. As a result, we also conclude that the Colorado PUC’s jurisdiction over the complaints regarding Tri-State’s exit charges is preempted as of September 3, 2019, the date that Tri-State became a public utility subject to the Commission’s ratemaking jurisdiction.”
“Member exits charges are now firmly in the jurisdiction of the FERC, which is the appropriate regulatory commission to consider these important issues,” Highley said. “At the FERC, each of our members, no matter in which state they are located, can participate fully, have a voice and be treated equally on wholesale contract and rate matters.”
On June 12, 2020, the FERC accepted Tri-State’s filing of a contract termination payment methodology. The methodology, which was developed by Tri-State’s members and approved by Tri-State’s board in April 2020, is in effect, subject to refund, and was referred to FERC’s hearing and settlement procedures.
In September 2019, Tri-State’s Board of Directors directed a Contract Committee of the cooperative’s membership to develop the contract termination payment methodology. In November 2019, United Power and La Plata Electric Association filed a complaint asking the CPUC to set an exit charge.
The FERC also reaffirmed that Tri-State’s addition of new members was lawful under the Federal Power Act. It rejected United Power’s and La Plata Electric Association’s claims that the addition of a new member to Tri-State violated federal law. Tri-State became jurisdictional to the FERC on Sept. 3, 2019, when it added its first non-utility member.
FERC regulates the rates of almost all wholesale electric service and transmission providers, including Xcel Energy and Public Service Company of New Mexico (PNM). Tri-State is required to file proposed rates with the FERC, which will establish just and reasonable rates through its regular rate setting process. On March 20, 2020, FERC accepted Tri-State’s rate filings.
In addition to FERC’s order preempting the CPUC’s jurisdiction, the federal regulator issued two additional orders. The FERC held that Tri-State’s use of fixed cost equalization in its policy and rate is consistent with federal law, and agreed with Tri-State’s use of net metering for energy storage projects, rejecting United Power’s claims and setting the matters for hearing. In another order on Tri-State’s contract termination payment filing, the FERC dismissed United Power and La Plata Electric Association’s rehearing requests. Tri-State continues to review the FERC orders.
About Tri-State
Tri-State is a not-for-profit cooperative of 45 members, including 42 member utility electric distribution cooperatives and public power districts 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 and our Responsible Energy Plan, visit www.tristate.coop.