By Joe Smyth | email@example.com | @joesmyth
The Colorado Public Utilities Commission will now require Tri-State Generation and Transmission Association to submit its resource plan for Commission approval, a major shift that followed growing calls from Colorado communities and co-op members for more regulatory oversight of Tri-State, negotiations between new Tri-State CEO Duane Highley and the Colorado Energy Office, and an amendment to a bill that was passed on the final day of the Colorado legislature's 2019 session. Along with a separate climate bill that also passed the Colorado legislature last week, the changes mean that Tri-State will now be required to develop a plan to significantly reduce the carbon pollution of its coal-heavy energy mix.
The deal also came after the Colorado Public Utilities Commission (PUC) made clear early last week that it would begin using its existing authority to more closely regulate Tri-State's resource planning process, with or without new legislation.
By the end of last week, the Colorado legislature included an amendment to a bill reauthorizing the PUC (SB19-236), which states: "The Commission shall promulgate rules that require each wholesale electric cooperative to submit to the Commission an application for approval of an integrated or electric resource plan."
In a press release, new Tri-State CEO Duane Highley signaled support for the amendment:
"We appreciate the active engagement and understanding of Governor Polis and Colorado Energy Office Executive Director Toor, as well as the work of the legislative leadership, to ensure regulatory requirements support our vision and recognize the uniqueness of Tri-State’s cooperative model, the nature of our wholesale business and the values of our democratic self-governance."
In the same press release, Colorado Energy Office executive director Will Toor said:
“We appreciate the collaboration exhibited by Tri-State's leadership and new CEO Duane Highley on Senate Bill 236, and we look forward to continued engagement to advance the state's clean energy goals and ensure low long-term costs for their members."
Colorado PUC made clear it would oversee Tri-State resource planning "whether or not the legislature gives us that task"
In addition to clarifying that Tri-State must seek approval of its resource plan from the PUC, the legislation establishes criteria that the PUC will use to evaluate resource plans developed by a "wholesale electric cooperative" - of which there is only one in Colorado, Tri-State.
Those criteria acknowledge some of the points that an attorney for Tri-State made to the PUC during a hearing on April 29 - that unlike the two investor-owned utilities regulated by the PUC, Tri-State sells wholesale power in states other than Colorado, and doesn't generate profits for shareholders.
Tom Dougherty, an attorney who represents Tri-State before the PUC, pointed to those differences as part of his argument that the process Tri-State has used for resource planning did not need to be changed. In the past, Tri-State filed its resource plan with the PUC, but had not been required to obtain approval by the PUC for the plan. Dougherty also argued that the PUC should pursue a new rulemaking related to its oversight of Tri-State's resource planning.
But Commissioner Frances Koncilja made clear that she did not think a new rulemaking would be required for the PUC to tighten its oversight of Tri-State: "We could certainly pick certain things that apply to you, your client, and not others, without noticing a new rulemaking. But would prefer not to fight about it."
"As would Tri-State," Dougherty replied.
At another point in the hearing. Koncilja asked "if somebody’s going to drop a new bill in the next three or four days that’s going to resolve any of this?"
In a hint at the negotiations between Tri-State, the Colorado Energy Office, and legislators, Dougherty responded: "I’m not at liberty to speak on that."
During the hearing, PUC Chairman Jeff Ackermann also said that "the future seems to compel some engagement at Tri-State differently, under that public interest requirement, whether or not the legislature gives us that task."
Ackermann noted that while Tri-State doesn't have shareholders, the Commission's oversight was still needed to protect the public interest:
"Even with Tri-State, there are incentives and motivations that may not always pursue the public interest. And how do we bring the scrutiny in to say: “What are those processes going at Tri-State? How are those decisions being made? Why did they decide on Holcomb in 2012? Why are they deciding x in 2020? And how do we make sure to be that outside push against whatever can be internal motivations and incentives that may or may not align with the public interest?"
Commissioner John Gavan also expressed concerns with Tri-State's current resource planning process:
We are operating in a very different environment now. I look at the level of member unrest, how the issue of the carbon-heavy portfolio that Tri-State is operating keeps coming up over and over, and that issue is not going to go away. So with that, I think we have some really hard thinking to do here.
During the hearing, Western Resource Advocates Clean Energy Program deputy director Erin Overturf provided a history of PUC oversight of Tri-State's resource planning , and noted the public comments to the PUC urging stronger oversight:
"You heard public comment this morning, and WRA has been very interested to review the public comment that has come forward in this proceeding, from all over the state of Colorado, from individuals who are asking this Commission to exercise its existing authority and jurisdiction to require Tri-State undergo a more thorough and robust resource planning process."
Tri-State resource planning will now need to reduce carbon pollution 80% by 2030
Perhaps the most significant impact of the legislation is that the PUC will now evaluate whether Tri-State "has a resource plan that meets the energy policy goals of the state."
Those state energy policy goals now include an expectation that electric utilities in Colorado will develop plans to reduce carbon pollution 80% below 2005 levels by 2030, thanks to another bill that was also approved by the Colorado legislature last week, the Climate Action Plan to Reduce Pollution (HB19-1261). In addition to setting economy-wide emissions reduction goals, the legislation highlights the opportunity for more rapid reductions in the electric utility sector:
The bill also specifies that resource plans filed by electric cooperatives and municipal utilities "shall be deemed approved by the Public Utilities Commission" if they "achieve at least an eighty percent reduction in greenhouse gas emissions caused by the entity's Colorado retail electricity sales relative to 2005 levels, and the clean energy plan has previously been approved by a vote of the entity's governing body."
The climate legislation directs the Colorado Air Quality Control Commission (AQCC) to develop regulations to reduce statewide greenhouse gas emissions at least 26% by 2025, 50% by 2030, and 90% by 2050, from 2005 levels. The legislation also specifies that AQCC "will consult with the public utilities commission with regard to rules that affect the providers of retail electricity in Colorado."
During the April 29 hearing, Tri-State's attorney Tom Dougherty also noted that the climate bill would apply to Tri-State:
"Many of the things that Tri-State has historically said, leave that to us we’ll take care that, those are being decided for Tri-State, just as they are being decided for Public Service and Black Hills. If 1261 passes, it will apply to Tri-State. If that is signed into law, those carbon reductions as determined by the AQCC and this Commission will apply to Tri-State."
In response to the Colorado legislature's approval of the SB236, Sierra Club Beyond Coal Senior Campaign Representative Anna McDevitt said:
“Tri-State’s mismanagement and coal-heavy energy portfolio has hurt its customers, blocking rural Colorado from building low-cost renewable energy that creates jobs and generates new revenue. It’s a relief to have state leaders looking out for electricity consumers all across the state.”
This post was updated on May 8.
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Response from Tri-State CEO Duane Highley and Colorado Energy Office Executive Director Will Toor
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