Power supplier Tri-State’s largest member announces departure plan

After filing lawsuits and submitting complaints to state and federal regulators, United Power, a Brighton-based electric cooperative, has given notice that it intends to leave the Tri-State Generation and Transmission Association.

United Power, Tri-State’s largest member, filed a notice Tuesday with federal regulators that it intends to leave Jan. 1, 2024. The move follows a series of disagreements with Tri-State, which provides power to 42 electric cooperatives in Colorado and four other states.

The disagreements over how quickly Tri-State is moving from coal-generated power, its rates and caps on how much power member cooperatives can generate on their own are similar to those that led to the exit of a New Mexico electric cooperative in 2016 and the Delta-Montrose Electric Association in 2020.

Both cooperatives that left Tri-State had to pay multimillion-dollar fees to end their contracts. Tri-State has put United Power’s exit fee at $1.6 billion, which the electric cooperative has called highly inflated.

The issue of Tri-State’s method for deciding what members should pay to break their contracts is before the Federal Energy Regulatory Commission, or FERC.

“Tri-State will work with United Power, as it would with any other member, through the contract termination process to support an orderly withdrawal,” Duane Highley, CEO of Tri-State, said in a statement.

The termination process filed with FERC ensures that any member’s withdrawal does not harm the remaining members of our cooperative or Tri-State, Highley said.

United Power CEO and President Mark Gabriel said Wednesday he thinks the cooperative will end up paying “substantially less” than $1.6 billion. He said United Power filed a notice of intent to withdraw from Tri-State after several months of fruitless efforts to change its contract in a way that meets its members’ needs.

“At some point, you have to realize the strategy that Tri-State may be pursuing is not in alignment with where United Power and others are going,” Gabriel said.

While Tri-State has increased its use of renewable energy and has closed coal plants and plans to close more, Gabriel said the utility isn’t moving quickly enough.

“Constraints under the current Tri-State agreement, which of course was signed years ago and under a different technical regime, are just too tight for where the industry is going and where our members expect us to go,” Gabriel said.

United Power, which has about 300,000 customers, pays Tri-State roughly $75 per megawatt hour for electricity, Gabriel said. “Without working hard, we can get power in the high $40 range.”

United Power is among members who have complained about the caps Tri-State puts on the amount of power members can produce on their own or buy from other suppliers. At the urging of United Power and others, the utility eased the limits on locally generated power.

However, Gabriel said the cap is still too stringent.