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On heels of well-received energy plan, Tri-State faces lawsuit by Durango cooperative

La Plata Electric Association wants out of contract with Tri-State or money for alleged damages

On the heels of a well-received energy plan, Tri-State Generation and Transmission faces a lawsuit by one of its member cooperatives. The Durango-based La Plata Electric Association's lawsuit accuses Tri-State of breach of contract.
Judith Kohler, The Denver Post
On the heels of a well-received energy plan, Tri-State Generation and Transmission faces a lawsuit by one of its member cooperatives. The Durango-based La Plata Electric Association’s lawsuit accuses Tri-State of breach of contract.
DENVER, CO - DECEMBER 12:  Judith Kohler - Staff portraits at the Denver Post studio.  (Photo by Eric Lutzens/The Denver Post)

A Durango-based electric cooperative that has vocally criticized the practices of Tri-State Generation and Transmission has filed a lawsuit accusing the utility of being “sneaky and underhanded.” The La Plata Electric Association is seeking to end its contract with the power supplier or be compensated for damages it says it has suffered.

The lawsuit accuses Tri-State, a wholesale power provider, of breach of contract. The electric cooperative is among Colorado rural electric associations that have explored leaving Tri-State due to disputes over rates, the push for more renewable energy and the desire to generate more of their energy locally.

The La Plata Electric Association and Brighton-based United Power, Tri-State’s largest member, have gone to the Colorado Public Utilities Commission and the Federal Energy Regulatory Commission to get what they view as fair terms for ending their contracts. LPEA said in its lawsuit, filed in La Plata County District Court, that Tri-State has dealt in bad faith by failing to offer a fair and just exit plan and stringing it along in talks about an agreement to allow it to produce more of its own electricity.

The cooperative saw the ability to generate more of its own power from local projects as an alternative to ending its contract with Tri-State. The cooperative said the local projects would benefit the local economy.

“LPEA, out of options and without any active dialogue to modify its power supply, was left with the single option of filing this lawsuit to vindicate its rights,” the association said in the complaint.

The cooperative said it could show that Tri-State’s alleged breaches of contract “have caused LPEA to suffer millions of dollars in damages.”

Tri-State said in a statement Friday that LPEA’s lawsuit is an attack on its fellow Tri-State cooperative members, “which continue to work collaboratively to advance greater contract and power supply flexibility.”

Tri-State will vigorously defend itself and its members from the lawsuit, the company said.

The electric cooperative has tried for years to work collaboratively with Tri-State to provide its members more local control over their power supply and power costs, Ted Compton, LPEA board chairman, said in a statement.

“We regret having to take legal action to get the engagement and collaboration we are seeking,” Compton said.

Tri-State, based in Westminster, provides wholesale power to 42 electric associations in Colorado, Wyoming, Nebraska and Wyoming. The associations are members of Tri-State.

Some of Tri-State’s members have complained about the rates and what they considered over reliance on coal. They’ve chafed under the 5% cap on the amount of power individual cooperatives can generate or buy from other sources.

The Kit Carson Electric Cooperative in Taos, N.M., paid $37 million in 2016 to break its contract with Tri-State. The Delta-Montrose Electric Association in Montrose paid $62.5 million in 2020 to leave Tri-State.

Tri-State has told United Power that it will take $1.6 billion to break its contract, which won’t expire until 2050. United Power has asked FERC to reject that amount. In the meantime, United Power plans to leave Tri-State on May 1, 2024, and has signed an agreement to buy electricity from another company.

United Power filed a lawsuit in Adams County District Court in 2020 to challenge Tri-State’s addition of other types of members so the utility could be regulated by federal rather than Colorado regulators. The lawsuit by LPEA alleges Tri-State pursued “a sneaky and underhanded course of action to deprive the Colorado Public Utilities Commission of jurisdiction.”

United Power and Tri-State said in a news release Friday that they will file an agreement to settle the lawsuit in Adams County District Court.

Tri-State said that LPEA’s lawsuit comes as the power supplier has filed a new electric resource plan that accelerates its move to clean energy and bolsters its system’s reliability. The plan would increase Tri-State’s amount of renewable energy resources and close two coal plants, including one in Craig by Jan. 1, 2028.

“LPEA has positioned themselves far outside the interests of both our members that are working for greater contract flexibility, and all those advancing a reliable and affordable clean energy transition,” Tri-State CEO Duane Highley said.