Tri-State Board of Directors to place cooperative under FERC rate regulation
- Single rate regulator benefits members as Tri-State increases member flexibility, renewables
- FERC rate regulation aligns Tri-State with rate regulation of other wholesale power providers
- For the first time, Tri-State will be fully rate regulated by a government entity
- Tri-State will continue to work constructively with state leaders to comply with resource planning, renewable energy and environmental issues
(July 9, 2019 – Westminster, Colo.) The board of directors of Tri-State Generation and Transmission Association, a wholesale power supply cooperative serving wholesale power to member electric cooperatives and public power districts in four states, took action at its July meeting that will place the cooperative under wholesale rate regulation by the Federal Energy Regulatory Commission (FERC).
“Tri-State is rapidly changing to increase flexibility for our members and develop an ever cleaner and greener resource portfolio,” said Tri-State Chairman Rick Gordon. “As we transition, our cooperative will benefit from lower costs and greater efficiency by having a single, consistent rate regulator across all the states in which we operate.”
Public utilities subject to FERC regulation must charge rates that are “just and reasonable” and “not unduly discriminatory or preferential.” FERC regulation of Tri-State would eliminate inconsistent rate treatment across the states. Historically, Colorado, Nebraska, New Mexico and Wyoming did not exercise rate-regulation over Tri-State. In recent years both Colorado and New Mexico have exercised rate jurisdiction, which resulted in increased costs, unrecovered revenue and inconsistent rates to its members.
FERC regulates all wholesale electric service and transmission providers with few exceptions
Under the Federal Power Act, FERC regulates the rates of almost all wholesale electric service and transmission providers. The board’s action aligns the regulation of Tri-State’s wholesale rates with the rate regulation of other wholesale power suppliers.
Regionally, the FERC regulates the wholesale rates of Xcel Energy/Public Service Company of Colorado, Public Service of New Mexico, PacifiCorp/Rocky Mountain Power, Black Hills Energy, Southwestern Public Service and El Paso Energy. Across the nation, other generation and transmission cooperatives that are subject to active regulation in multiple states are also FERC regulated.
Under the Federal Power Act, Tri-State had been exempt from FERC rate regulation of its wholesale rates because it was previously a Rural Utilities Service (RUS) borrower or because it was wholly-owned by small electric cooperatives. In 2014, Tri-State repaid its RUS debt. At its July 2019 board meeting, Tri-State’s board voted to add new members to the wholesale cooperative, which eliminates the Federal Power Act exception.
Tri-State will become fully rate regulated for the first time
Following the board’s action, Tri-State will file a wholesale rate tariff with the FERC. The rate is expected to become effective sixty days after filing.
For the first time, Tri-State will be fully rate regulated. Tri-State would be required to file proposed rates with FERC, and FERC would establish just and reasonable rates through its regular rate setting process.
Any Tri-State member would have the right to participate in that process, including any hearings. In addition, any single member or customer would have the right to file a complaint at FERC over any Tri-State rate or proposed rate.
Tri-State will continue to work constructively with state leaders on resource planning, renewable energy and environmental issues
FERC regulation will not affect resource planning, carbon reduction or renewable energy regulation in the states in which Tri-State operates.
“We look forward to continued engagement with the Governors, legislative leadership, commissions and stakeholders to achieve our shared goals,” said Tri-State CEO Duane Highley. “Tri-State is committed to reducing emissions, expanding renewables, lowering costs to our members and creating opportunities in all the states we serve.”
Tri-State has long considered federal rate regulation
The board has discussed potential FERC jurisdiction for years, prompted by the assertion of rate regulation in New Mexico and Colorado. In 2012, the New Mexico Public Regulation Commission suspended Tri-State’s rates from going into effect, resulting in New Mexico members paying different rates than members in other states. In 2013, the Colorado Public Utilities Commission also asserted jurisdiction regarding a rate complaint from three members.