FERC last week approved a settlement in the first major rate case filed by Tri-State Generation and Transmission Association since the power supplier became subject to the commission’s jurisdiction (ER20-676).

The Aug. 2 letter order resolves several issues from regulatory filings that Colorado-based Tri-State made in 2019 and 2020 regarding rates and terms for wholesale power service to its 42 utility members in Colorado, Nebraska, New Mexico and Wyoming.

The uncontested settlement provides for an immediate reduction in members’ current wholesale rates, with a total decrease of 4% by March 1, 2022. It also establishes a rate moratorium through May 31, 2023, with Tri-State agreeing to file a new rate case no later than Sept. 1, 2023.

Tri-State has already implemented a 2% rate decrease that went into effect on March 1, and it will lower rates another 2% next March.

FERC found the settlement to be fair, reasonable and “in the public interest.”

“This is a crucial step forward to achieve our goal of making Tri-State the most competitive option to meet the power supply needs of our utility members,” Tri-State CEO Duane Highley said in a statement. “We also hope it paves the way to successful resolution of our other pending cases before FERC as we complete our transition to being a federally regulated public utility.”

Tri-State became FERC-jurisdictional last year. (See FERC Affirms its Jurisdiction over Tri-State G&T.) It and United Power, a member, have asked FERC to resolve four discrete, or “reserved,” issues that weren’t included in the settlement, the association said.

Two of the issues involve rate design and cost-allocation principles that will help Tri-State develop new wholesale power rates when it makes its rate-case filing in 2023. At issue is whether the cooperative is required to unbundle rates for wholesale service under its contracts and whether it must directly assign members costs associated with transmission services. Tri-State said it has used a rolled-in rate applicable to all members for nearly 70 years.

The others concern United Power’s challenge of a transmission demand charge for on-peak discharges from its battery storage devices and its protest of Tri-State’s Community Solar Program.

Rulings on the reserved issues will apply to Tri-State’s 2023 rate filing, except for that of the demand charge.

Tri-State has also said it would file by September with FERC a “simpler and more transparent” methodology for member’s exit fees, or contract termination payments (CTPs) (EL21-75).

The commission in June preliminarily found that Tri-State’s tariff was unjust and unreasonable in the barriers it imposes on utility members considering whether to terminate their memberships. It directed Tri-State to show cause as to why the tariff remains just and reasonable and to explain revisions the association believes would remedy the concerns.

“The lack of clear and transparent exit provisions has allowed Tri-State to impose substantial barriers for its utility members in evaluating whether to remain in Tri-State,” FERC, said.

Tri-State said that under its modified CTP methodology, a departing member’s exit fee would be the greater of the net present value of Tri-State’s estimated lost revenues resulting from the departure, minus the incremental revenues the association would receive from selling the departing member’s load into the wholesale market; any subsequent revenue Tri-State would receive if the member becomes a tariff customer; the present value of the member’s accrued, unpaid patronage capital balance; or the member’s pro rata share of Tri-State’s total debt and other obligations.

The association has shared a list of members’ CTPs, with United Power topping the list at $1.5 billion. Poudre Valley REA is next at almost $728 million, followed by Mountain View Electric Association and La Plata Electric Association (nearly $540 million and $450 million, respectively). Another 22 members have nine-figure CTPs.

Exit fees and the CTP methodology have long been bones of contention between Tri-State and its members, who are required to purchase 95% of their electricity from the association. Nine Tri-State members have asked for estimates of their exit fees. However, the association has argued that supplying the estimates would be premature, as the commission was still reviewing the tariff.

The commission in May rejected Tri-State’s proposed procedural requirements for members seeking to cancel their power contracts and leave the association, saying the proposal imposes “excessive and unjustified barriers” to members seeking information on their CTP costs. (See FERC Rejects Tri-State Exit Fee Proposal.)

The CTP methodology calculates the cost for early termination of a utility member’s power supply contract with Tri-State, “without financially harming other members,” the association said.