Tri-State battles with New Mexico commission over rate authority

Tri-State Generation and Transmission Assn. has gotten into a battle with the state of New Mexico over a state law regulating utilities and a 2000 approval under that law by the New Mexico Public Regulation Commission of Tri-State’s merger with Plains Electric Generation and Transmission Cooperative.

Tri-State got the ball rolling by filing suit against the New Mexico commission in U.S. District Court for the District of New Mexico, based on a contention that the state law, called the NMSA, does not regulate Tri-State’s rates.

In response, on Sept. 11, the commission opened a proceeding where it is thinking about reviewing the Tri-State/Plains merger approval from 2000, which was issued under the NMSA. Tri-State’s federal complaint claims that part of the NMSA is unconstitutional.

“Given this challenge to the foundations of the Commission’s approval of the merger, the Commission should review that approval,” the commission said in its Sept. 11 order. The commission said it wants Tri-State and commission staff to answer whether if the relevant section of the NMSA is unconstitutional, whether the stipulation under which the commission approved the 2000 merger is valid. Other commission questions include:

  • If the stipulation or the merger is no longer valid, would Tri-State then be considered a public utility subject to the commission’s full regulation of public utilities?
  • If the merger or the stipulation is not valid, are Tri-State’s all-power contracts with its New Mexico members void or voidable?

In its Oct. 2 response, Tri-State wrote that the commission has no authority to reopen the 2000 Tri-State/Plains merger. While the commission had the authority to approve that merger under the NMSA, it has no power now under that statute to re-visit that approval, Tri-State argued.

“As a matter of sound public policy, the Commission should not attempt to undo a 13-year old merger,” Tri-State added. “Even where courts may administer the remedy of divestiture, such action is avoided because it is costly, complicated, and difficult if not impossible. First, one of the original parties to the merger (Plains) no longer exists, has not existed for 13 years, and cannot be reformed, thereby rendering divestiture pointless. Further, what were then Plains’ and Tri-State’s separate assets and businesses have now been commingled for 13 years.”

Tri-State says it doesn’t want a ‘war’ with the New Mexico commission

Tri-State later added: “Further, this Commission has no reason to ‘declare war’ on Tri-State in light of the substantial benefits that have accrued to New Mexico Member Systems and their customers as a result of the merger between Plains and Tri-State. Since the merger, Tri-State has spent about $362 million in capital investments in New Mexico, substantially improving electric service and reliability for rural New Mexicans in Tri-State’s Members’ areas.”

Commission staff recommended in an Oct. 2 filing that the commission issue an order requiring further filings from Tri-State and its New Mexico members that address potential reorganization to an independent or affiliated entity of Tri-State’s New Mexico assets, addressing legal, financial and practical implications, and also requiring that Tri-State provide exit fee estimates, including a complete list of assumptions and costs associated with those estimates, to each of its New Mexico members.

Continental Divide Electric Cooperative and Springer Electric Cooperative said in their Oct. 2 filing that they have some issues with Tri-State.

The two cooperatives said: “At this time, the Cooperatives urge the Commission to consider the following courses of action: a) declare its approval of the merger in NMPRC Case No. 2989 to be null and void and reopen the proceedings to determine what action can be taken to protect the rights of the member/consumers of Tri-State’s New Mexico cooperatives; b) declare that the contracts executed by the New Mexico members of Tri-State are void or voidable as having been induced by misrepresentations made during the merger proceedings; c) suspend any final consideration of the rate requests filed by Tri-State in Advice Notice No. 19 until such time as the jurisdictional challenge to the Commission’s exercise of regulatory oversight is resolved through the courts; and, d) consider such further relief as deemed appropriate for the Cooperatives and Kit Carson, each of which has incurred substantial expenses for exercising their rights to protest Tri-State’s proposed rate, while also bearing a portion of Tri-State’s costs (and apparently the costs of numerous intervenors funded by Tri-State).”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.