FERC late last week affirmed that it has exclusive jurisdiction over Tri-State Generation and Transmission Association’s rates and member exit charges, one in a flurry of orders Friday related to the Colorado-based cooperative (EL20-16).

The order pre-empts the Colorado Public Utilities Commission’s jurisdiction over Tri-State and would negate an exit-fee methodology proposed by co-op members United Power and La Plata Electric Association (LPEA). FERC in June accepted Tri-State’s proposed contract-termination payment methodology and set hearing and settlement judge procedures, but a Colorado administrative law judge in July Colo. ALJ Proposes $235M Exit Fee for United Power.)

Tri-State became FERC-jurisdictional in March, when the commission recognized its status following last year’s addition of MIECO, a wholesale energy services company that provides natural gas to the co-op, as its first non-utility member. (See “Ruling Permits Tri-State to Become FERC Jurisdictional,” SPP FERC Briefs: Week of March 16, 2020.)

In its order last week, the commission said that, after “further consideration,” it was modifying the March order to find that Tri-State’s assessment of an exit charge “constitutes a commission-jurisdictional rate subject to our exclusive jurisdiction.”

FERC concluded that, as a result, the Colorado PUC’s jurisdiction over complaints regarding Tri-State’s exit charges “is pre-empted as of Sept. 3, 2019,” the date the co-op admitted MIECO.

“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,” Tri-State CEO Duane Highley said in a statement.

Highley said FERC was the “appropriate regulatory commission to consider these important issues.”

“At the FERC,” he said, “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.”

The commission also reaffirmed that Tri-State’s addition of new members was lawful under the Federal Power Act. It rejected United’s and LPEA’s claims that adding MIECO violated the law.

In a separate order, FERC also dismissed the members’ rehearing requests (ER20-1559). It also sustained Tri-State’s filed rate schedules in additional rehearing requests by United and the Sierra Club (ER20-689, et al. and ER20-676, et al.).

FERC to Investigate Tri-State Policies

FERC also found that Tri-State’s use of fixed-cost equalization in its policy and rate is consistent with federal law and agreed with the cooperative’s use of net metering for energy storage projects, rejecting United’s and Sierra’s claims and setting the matters for hearing (EL20-66).

The commission said Tri-State’s policy reflects “the cost consequences that follow from the choice made by [qualified-facility] sellers to sell their power directly to Tri-State’s utility members rather than to Tri-State under the transmission option.” Referring to precedent set by Order 69, FERC said fixed-cost equalization “is simply a billing mechanism for implementing the avoided-cost pricing for full-requirements contracts.”

While FERC held the settlement judge procedures in abeyance, it also opened FPA Section 206 investigations into whether two Tri-State board policies, a rate schedule and the member project contracts are just and reasonable. It said the policies, rate schedule and contracts raised issues of material fact that cannot be resolved based on the record before it.

One policy describes each member’s option under its wholesale electric service contract to use self-owned or -controlled distributed or renewable generation resources to serve up to 5% of its annual requirement. The second addresses Tri-State’s purchases of power from QFs and sets the terms for Tri-State’s recovery of lost revenue (fixed-cost equalization) when a utility member’s QF power purchases and its non-QF self-supply power exceed the 5% threshold.

The rate schedule in question sets forth the methodology for calculating billing adjustments due to Tri-State under the two board policies.