BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF COLORADO
PROCEEDING NO. 19M-0460E
___________________________________________________________________
IN THE MATTER OF TRI-STATE’S NEW MEMBER(S) AND THE PUBLIC
UTILITIES COMMISSION’S JURISDICTION.
___________________________________________________________________
TRI-STATE’S RESPONSES TO COMMISSION QUESTIONS
___________________________________________________________________
Tri-State Generation and Transmission Association, Inc. (“Tri-State”), through

Colorado PUC E-Filings System

its undersigned legal counsel, pursuant to Colorado Public Utilities Commission (the
“Commission”) Decision No. C19-0708 (the “Decision”), hereby submits its
responses to the Commission’s questions set forth in the Decision.
RESPONSES
1.
Identify and describe the new member referenced in Tri-State’s FERC filings.
What steps has Tri-State taken to develop, design, or create an entity that will
become a member? Within the last six months from the date of this Decision, has
Tri-State negotiated with an existing entity to become a member? If so, identify that
entity and whether negotiations are currently ongoing.
On September 3, 2019, Mieco, Inc. (“Mieco”) joined Tri-State as a Member.
Mieco, a wholesale energy services company and subsidiary of Marubeni
Corporation, is a Delaware corporation headquartered in California with offices
throughout the United States. Mieco supplies natural gas to purchasers throughout
the nation, including Tri-State, for which it currently provides natural gas to TriState’s power generation facilities located in New Mexico and Colorado. Consistent
with Tri-State’s previous Federal Energy Regulatory Commission (“FERC”) filings,

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 Mieco is not an electric cooperative or governmental entity, and it is not owned by
electric cooperatives or governmental entities in the United States.
Although Tri-State has considered creating an energy services entity that
would become a Tri-State Member, it has not taken steps to develop, design, or
create such an entity at this time.
Within the six months preceding August 21, 2019, Tri-State has negotiated
with a wholesale agricultural company that currently buys non-electric services from
Tri-State.

The identity of this potential new member and the status of any

negotiations is subject to a non-disclosure agreement between Tri-State and the
entity, which agreement prohibits Tri-State from disclosing such information at this
time.

Tri-State has also had conceptual discussions with other existing entities

regarding potential membership in Tri-State. None of those discussions reached the
negotiations stage and no negotiations with prospective members are currently
ongoing.
2.
Describe the process and transactions(s) by which the new member will
accede to Tri-State membership.
In April 2018, the Tri-State membership approved a revision to Tri-State’s
Bylaws to authorize the addition of one or more classes of membership in addition to
the existing all-requirements class. Pursuant to that revision, in July 2019 the TriState Board created a new membership class for non-utility members.
became the first such new member on September 3, 2019.

Mieco

The process to

implement this new membership included the Tri-State Board of Directors
authorizing Tri-State’s Chief Executive Officer to execute all agreements necessary

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 to admit the new member, and the new member entering into a membership
agreement with Tri-State setting forth the terms of its membership.
3.
How does the new member Tri-State seeks to add affect Tri-State’s revenues
and expenses and the revenue requirement used to set rates?
Tri-State’s revenues, expenses, and revenue requirement are not materially
affected by the admission of Mieco as a new Member. Tri-State already does
business with Mieco and, therefore, revenues and expenses associated with Mieco
are already included in Tri-State’s corporate accounting. As a result, Tri-State’s
revenues will not increase, and expenses and revenue requirements may decrease
slightly. The amount of patronage capital allocated to Tri-State’s existing Members
will decrease slightly, however, the amount of patronage capital returned to TriState’s Members will not be impacted.
4.
Describe, providing a legal and factual basis for your position, whether TriState or the “New Member(s)” must make any filing with the PUC regarding, or
seeking PUC approval for, any part of the membership accession process or any
transaction related thereto.
No PUC approval is required for a new Member to join Tri-State because no
statute, Commission rule, or Commission decision requires Tri-State or a New
Member to seek such approval.

Where Commission approval is required for a

transaction, statutes and regulations provide the appropriate standards for the
Commission’s review. For example, Commission approval is required for certain
securities matters1 under C.R.S. § 40-1-104, which explains the circumstances

1

Note that a membership interest in a cooperative is not a security. See C.R.S § 7-55-115
(cooperative membership interest not a security); United Hous. Found., Inc. v. Forman, 421 U.S. 837,
858 (1975) (same); Distribution Cooperatives, 1974 WL 7238, at *4 (S.E.C. No - Action Letter June 1,
1974) (non-transferrable membership certificates in nonprofit distribution cooperatives are not
securities and are instead evidence of membership in a joint business arrangement for power supply);
Associated Elec. Coop. Inc., 1975 WL 10826, at *2 (S.E.C. No - Action Letter Feb. 17, 1975)

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 under which approval is and is not required. Similarly, C.R.S. § 40-5-105 provides
the basis for Commission review of public utility asset transfers and mergers.
More generally, as an administrative agency the Commission is constrained
by the due process provisions of both the Colorado and U.S. Constitutions when it
seeks to apply legal standards to particular transactions. See Douglas Cty. Bd. of
Comm'rs v. Pub. Utilities Comm'n of State of Colo., 829 P.2d 1303, 1307 (Colo.
1992). The due process requirement allows Commission action on a quasi-judicial
question (such as the review of a new member transaction) only where there are
sufficient statutory and administrative standards governing the Commission’s review.
Id. at 1311; see Farmer v. Colorado Parks & Wildlife Comm'n, 382 P.3d 1263, 1268
(Colo. App. 2016) (“Everyone would agree that an administrative agency cannot
validly engage in quasi-judicial decision-making without sufficient standards.”); see
also Elizondo v. State, Dep't of Revenue, Motor Vehicle Div., 194 Colo. 113, 118
(1977). Absent a standard, the Commission may act only in its legislative capacity
on a prospective basis. See Colorado Office of Consumer Counsel v. Pub. Serv. Co.
of Colorado, 877 P.2d 867, 870 (Colo. 1994) (describing the Commission’s
legislative authority).

(agreeing with the position that “certificates evidencing membership interests in the Cooperatives are
not securities . . . but are rather certificates evidencing membership in a joint business arrangement
for power supply.”); Old Dominion Elec. Coop., 2004 WL 2404332, at *9 (S.E.C. No - Action Letter
Oct. 13, 2004) (same).

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 5.
Describe how Tri-State can ensure its compliance with Colorado’s state
energy goals reflected in House Bill 19-1261, Senate Bill 19-236, and Executive
Order B 2019 002 if FERC regulates its rates.
Tri-State will continue to comply with all valid and applicable Colorado
statutes and regulations, including HB 19-1261, SB 19-236, Executive Order B 2019
002.
For example, HB19-1261 states that:
Colorado shall strive to increase renewable energy generation and
eliminate statewide greenhouse gas pollution by the middle of the
twenty-first century and have goals of achieving, at a minimum, a
twenty-six percent reduction in statewide greenhouse gas pollution by
2025, a fifty-percent reduction in statewide greenhouse gas pollution
by 2030, and a ninety-percent reduction in statewide greenhouse gas
pollution by 2050 . . . relative to 2005 statewide greenhouse gas
pollution levels.
Codified at C.R.S. § 25-7-102(2)(g).
This legislation directs the Colorado Air Quality Control Commission
(“AQCC”) to promulgate rules and regulations consistent with these emission
reduction goals, encourages the development of Clean Energy Plans by electric
utilities, directs the AQCC to consult with this Commission on issues related to the
electric utility sector, and specifies how the AQCC is to consider utilities’ Clean
Energy Plans in the context of the rulemaking to implement the statewide emission
reduction goals. See C.R.S. § 25-7-105(1)(e)(VIII).
Although no rules or regulations have yet been promulgated, Tri-State
believes it is unlikely that implementation of this directive will implicate Tri-State’s
wholesale rates in such a way as to be preempted by federal law. As acknowledged
by the U.S. Supreme Court, states may generally take steps to encourage the
development of clean generation, so long as they do so in a way that respects
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 FERC’s exclusive authority over wholesale rates.

See Hughes v. Talen Energy

Mktg., LLC, 136 S. Ct. 1288, 1299 (2016).
Similarly, SB 19-236 directs the Commission to engage in Electric Resource
Planning with Tri-State. The rulemaking implementing this directive is ongoing in
Proceeding No. 19R-0408E and Tri-State is submitting comments in that Proceeding
contemporaneously with this filing. Tri-State does not believe that FERC regulation
of Tri-State’s wholesale rates will interfere with or preempt the Commission’s ability
to engage in legitimate resource planning activities within the State of Colorado.
Finally, Executive Order B 2019 002 creates a transportation electrification
workgroup, directs the Colorado Department of Public Health and the Environment
(“CDPHE”) to promulgate a Colorado Zero Emission Vehicle rule, directs CDPHE
and the workgroup to revise Colorado’s Beneficiary Mitigation Plan, and directs the
Colorado Department of Transportation to develop a department zero emission
vehicle and clean transportation plan.

While Tri-State recognizes that these

directives embody a state energy goal, it is not clear at this time that they will result
in a compliance requirement applicable to Tri-State.

To the extent that rules

applicable to Tri-State are promulgated, Tri-State does not believe that FERC
regulation of Tri-State’s wholesale rates will interfere with or preempt this aspect of
the state’s carbon emission reduction policies.
6.
If FERC regulates Tri-State’s rates, describe to what extent Tri-State will be
bound by Phase I or Phase II decisions as they are currently proposed in the Notice
of Proposed Rulemaking in Proceeding No. 19R-0408E. Can Tri-State comply with
PUC decisions that modify Tri-State’s ERP?
Under Rule 3605 as presently proposed, Tri-State will demonstrate
compliance with the Commission’s Phase I decision through the proposed ERP
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 Implementation Report. The Commission may enforce the Phase I decision
consistent with its authorities to enforce any other Commission decision. Likewise,
Tri-State will demonstrate compliance with the Commission’s Phase II decision by
developing resources consistent with the decision, filing and posting information as
contemplated in Rule 3605(h)(V) and (VI), and through the annual progress reports
filed pursuant to Rule 3618(a). The Commission may enforce the Phase II decision
consistent with its authorities to enforce any other Commission decision. Tri-State
can comply with PUC decisions modifying Tri-State’s proposed ERP to the extent
such decisions are within the PUC’s authority and are capable of implementation.
7.
How can the legislative intent behind § 40-2-134, C.R.S. (requiring the
Commission to approve Tri-State’s ERP) be honored if FERC regulates Tri-State’s
rates?
While it is not entirely clear what “legislative intent” is referred to in this
question, consistent with the discussion above, Tri-State does not believe that
FERC’s regulation of Tri-State’s wholesale rates will interfere with or preempt the
Commission’s ability to engage in legitimate resource planning activities within the
state of Colorado.

As with other appropriate Commission regulatory actions,

Commission decisions under C.R.S. § 40-2-134 concerning Tri-State’s resource
planning will be factored into the costs to be recovered through Tri-State’s wholesale
rates regulated by FERC.
8.
What are the total costs to Tri-State of its efforts to move to FERC regulation
(including amounts spent to date and planned expenditures) and how will these
costs affect Tri-State’s payments into Colorado’s Fixed Utility Fund?
Tri-State has been considering the move to FERC regulation since 2010 and
has not specifically tracked associated costs during that entire time period.
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 Furthermore, costs associated with Tri-State personnel working on this issue are
included in annual General and Administrative budgets without specifically being
assigned to this effort.

In calendar year 2018 Tri-State incurred a total of

approximately $890,000 in consultant and outside legal fees in support of this effort.
As of August 31, 2019, Tri-State incurred a total of approximately $2,000,000 in
consultant and outside legal fees in connection with developing the information
necessary to support and to prepare the various tariff and other filings associated
with Tri-State transitioning to FERC regulation. Tri-State anticipates that it will incur
additional consultant and legal fees in connection with being subject to FERC rate
regulation, however, the amounts of those expenditures will depend on further
developments in and the outcome of the current FERC proceedings. As a public
utility providing electric transmission service, Tri-State will pay to FERC an annual
charge equal to Tri-State’s pro-rated allocation of FERC’s total annual costs to
regulate such public utilities. For example, it is estimated that Tri-State’s annual
charge for 2018 would have been approximately $1.4 million.
Tri-State does not believe the costs it has incurred or will incur in connection
with becoming regulated by FERC with respect to its wholesale rates will affect TriState’s payments into Colorado’s Fixed Utility Fund. The Commission will continue
to exercise its authority with respect to Tri-State’s resource planning and facilities.

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 9.
Identify whether Tri-State’s bylaws are part of its tariffs and if so identify
where the bylaws are located in its tariff filings.
Tri-State objects to this question because it essentially seeks discovery
related to the Commission’s intervention and protest of Tri-State’s filings at FERC.
Without waiving its objection, Tri-State’s bylaws are not part of its tariffs.

Submitted this 11th day of September, 2019.
LEWIS ROCA ROTHGERBER CHRISTIE LLP

s/ Dietrich C. Hoefner
Thomas J. Dougherty, #30954
tdougherty@lrrc.com
Dietrich C. Hoefner, #46304
dhoefner@lrrc.com
1200 17th Street, Suite 3000
Denver, Colorado 80202
(303) 623-9000
F: (303) 623-9222
Kenneth V. Reif, #10666
kreif@tristategt.org
Timothy B. Woolley, #34570
twoolley@tristategt.org
Tri-State Generation and Transmission
Association, Inc.
P.O. Box 33695
Denver, CO 80233
(303) 452-6111
F: (303) 254-6067
Attorneys for Tri-State Generation and
Transmission Association, Inc.

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