WESMINSTER and BRIGHTON — Local power cooperative United Power Inc. has turned to the state courts in its ongoing divorce battle against power wholesaler Tri-State Generation and Transmission Association Inc., alleging that Tri-State engaged in a multi-year fraud to prevent the co-op from leaving.
In a complaint filed in Adams County District Court Monday, the Brighton-based United alleges that Tri-State illegally added natural-gas broker MEICO Inc. and two other non-utility provider firms to its roster of 43 members as a way to avoid giving exit-fee quotes to want-away co-ops.
United, alongside Durango-based La Plata Electric Association Inc. (LPEA), has been in a months-long battle with Tri-State at the Colorado Public Utilities Commission over the latter’s refusal to allow the two co-ops to begin negotiations with other power wholesalers. Every member of Tri-State is required to buy 95% of its power mix from the wholesaler.
In its complaint, United said it spent years and hundreds of millions in legal costs in pressuring Tri-State to divert coal out of its power mix before petitioning the Colorado PUC to force Tri-State to give an exit quote last November.
Through discovery hearings in that proceeding, United claims that Tri-State deceived its members as it aimed to prevent them from leaving, saying a bylaw change made in 2019 would allow more flexibility in buying from renewable-power producers.
Instead, United alleges that Tri-State was secretly working on becoming federally regulated by allowing the non-utility companies to become customers.
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 MEICO’s inclusion in the group a violation of Colorado law.
As Tri-State’s largest customer, United alleges that it has been used to subsidize the rest of the co-ops without any benefit to itself.
“Tri-State needs United Power’s load, and its $50 plus million annual subsidy, to survive. So it has engaged in a multi-year fraud to prevent United Power from ever exercising its contractual right to withdraw,” the complaint reads.
United’s complaint does not ask courts to rule on the arguments in front of the state regulatory agency. Instead, it asks for a monetary ruling to cover the costs of the higher prices United had to pass on to its customers, a figure that could top $150 million.
In a statement, Tri-State said the complaint “smacks of desperation and is completely without merit.” The wholesaler said it never hid its intent to become federally regulated, and accused United of trying to break its obligations to the other customers within Tri-State.
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