State administrative judge recommends United Power, LPEA be allowed to split from Tri-State

DENVER — A state administrative law judge recommended that utility co-ops United Power Inc. and La Plata Electric Association Inc. be freed from contracts with power wholesaler Tri-State Generation and Transmission Association Inc., setting another turn in the multi-jurisdictional divorce battle.

In a decision filed last week, administrative law judge Robert Garvey said Tri-State’s ongoing refusal to issue exit fees to the two co-ops is unjust and unreasonable, and he urges the Colorado Public Utilities Commission to adopt an exit fee formula proposed by United as the de facto formula for any Tri-State wantaway to use.

If the decision is not challenged by any party or taken up by the CPUC within 20 days, it would take immediate effect.

In a statement, Tri-State CEO Duane Highley said if the decision stands, it would shift more than $1 billion in costs to the remaining Tri-State members in Colorado, Wyoming, Nebraska and New Mexico.

“In an effort to save money for themselves, United Power and LPEA are a step closer to forcing costs they agreed to pay onto smaller, less wealthy utilities and their rural consumers,” he said.

The three companies have been in a bitter legal fight since November. LPEA and United have accused Tri-State of holding them hostage ever since they both asked to leave the Westminster-based power wholesaler in the summer of 2018 so they can source more of their power from renewable sources.

“This is a momentous decision in United Power’s effort to have more control over our power mix while keeping costs down,” said United Chief Energy Resource Officer Dean Hubbuck in a statement.

Every co-op belonging to Tri-State must purchase 95 percent of its power mix from the wholesaler. The two co-ops made up just over 20 percent of Tri-State’s revenue in 2019, and both are contracted until 2050.

United in particular is suing Tri-State in Adams County District Court, alleging it was deceived by the wholesaler for years. Tri-State has broadly denied those claims.

Tri-State has repeatedly argued that the litigation by United and LPEA is trying to strengthen its bargaining position as Tri-State’s members develop a new procedure for leaving the power supplier.

The Federal Energy Regulatory Commission declared limited jurisdiction over Tri-State in March, potentially overruling any Colorado decisions and prolonging any rulings from Washington that would require Tri-State to allow United and LPEA to leave.

However, FERC left the door open for state regulators to declare violations of Colorado law.

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