The Federal Energy Regulatory Commission ruled last Thursday that a rural co-op in western Colorado is less locked to its giant utility provider than previously understood and may, in fact, begin negotiations to buy power from a small producer nearby.
The ruling came after months of anxious waiting and years of turmoil between the co-op, the Delta-Montrose Electric Association, and the company that generates most of its electricity, Tri-State, a generation and transmission company. The decision stems from a request by Delta-Montrose in February that it be allowed to purchase electricity generated locally and that Tri-State be designated as a public utility, which would require its rates be regulated by the feds.
Tri-State, which is owned by and sells power to 44 rural co-ops in Colorado, New Mexico, Nebraska and Wyoming, opposed the request. The two have been at loggerheads over this issue, as well as many others, for years. FERC ruled in favor of Delta-Montrose’s request to buy local power but opted not to regulate Tri-State’s rates. While the ruling could open the door for more co-ops to work with nearby power producers, it was a narrow decision, and so may not completely disrupt the way rural cooperatives get power for their communities.
Delta-Montrose, which serves Paonia, where High Country News is headquartered, has been pushing for more and more freedom to generate its own power, especially from renewable sources. In 2013, the co-op began generating electricity from a small hydropower project on an irrigation canal operated by the Bureau of Reclamation. Delta-Montrose has also been eyeing other opportunities for additional solar, hydro and coal-methane power.
Delta-Montrose had been approached by Percheron Power, a Washington-based power developer, with the idea to build a small hydro project, also on the South Canal. But Delta-Montrose was restricted by its contract with Tri-State, which requires the generator supply at least 95 percent of the co-op’s power, as well as by the complex network of relationships between the two companies. (Technically, Delta-Montrose is a part owner of Tri-State.)
In response, Delta-Montrose filed a request for a decision from FERC, the federal agency that regulates such matters, citing a 1978 law intended to promote domestic energy production and fair energy rates, known colloquially as PURPA. The law requires that public utilities purchase power from so-called “qualifying facilities” when and where such facilities are available.
On Thursday, FERC ruled that Delta-Montrose must buy Percheron power, when it becomes available, under federal guidelines. While the ruling answered the immediate question, it left open a multitude of others. For example, the order states that Delta-Montrose is required to buy Percheron’s power, but did not clarify whether the co-op remains bound by the agreement to buy 95 percent of its power from Tri-State.
If Tri-State were to decide to hold Delta-Montrose to that contract and Percheron’s small hydropower facility came online as well, Delta-Montrose potentially could be required to buy more energy than it needs. Alternately, Delta-Montrose and Tri-State could renegotiate the terms of the contract (previously a source of tension between the two entities).
Tri-State did not respond by press time whether it would hold Delta-Montrose to the 95-percent power requirement.
The ruling could also open the door for some changes in the way rural communities get their power. For example, rural electric cooperatives might be able to pursue similar opportunities for generating their own power locally. Several other Tri-State co-ops filed comments on the case and a handful, including two in southwest Colorado and one in New Mexico, supported Delta-Montrose’s request.
The ruling could also let private homeowners or small-scale solar providers construct solar arrays and sell that energy back to the grid, without running up against Colorado’s standards for rural net metering.
And the fight between Tri-State and Delta-Montrose regarding local generation might not even be over. Both parties have the opportunity to appeal, and the question of the contract requirement remains open. As Rich Mignogna, a Colorado energy expert, says: “I don’t think this finishes anything.”
Kate Schimel is an editorial intern at High Country News. Follow her @kateschimel
Homepage photo courtesy of WinterCity296/WinterForce Media.