DISTRICT COURT, ADAMS COUNTY, COLORADO
1100 Judicial Center Drive
Brighton, Colorado 80601
Telephone: 303.659.1161
Plaintiff:
UNITED POWER, INC.

COURT USE ONLY

v.
Defendants:

Case No. ___________

TRI-STATE GENERATION AND TRANSMISSION
ASSOCIATION, INC., MIECO, INC., ELLGEN RANCH
COMPANY, and OLSON’S GREENHOUSES OF
COLORADO, LLC.

Courtroom: ___
Division: ___

Attorneys for Plaintiff, United Power, Inc.:
Name:
Michael L. O’Donnell (#10273)
Peter W. Herzog III (pro hac vice
application to be filed)
Joel S. Neckers (#40886)
Wheeler Trigg O’Donnell LLP
Address:
370 Seventeenth Street, Suite 4500
Denver, CO 80202-5647
Telephone: 303.244.1800
Facsimile:
303.244.1879
Email:
odonnell@wtotrial.com
pherzog@wtotrial.com
neckers@wtotrial.com
PLAINTIFF UNITED POWER, INC.’S
COMPLAINT FOR DECLARATORY RELIEF AND DAMAGES
Plaintiff United Power, Inc. (“United Power”), through its undersigned counsel,
files this Complaint for Declaratory Relief and Damages against Defendants Tri-State
Generation and Transmission Association, Inc. (“Tri-State”), MIECO, Inc. (“MIECO”),
Ellgen Ranch Company (“Ellgen”), and Olson’s Greenhouses of Colorado, LLC
(“Olson’s”). In support thereof, United Power states and alleges as follows:

 NATURE OF THE ACTION
1.

Tri-State is a generation and transmission cooperative owned by 43

distribution cooperatives. Although Tri-State purported to add three non-utility
members in 2019, for the reasons alleged below, the purported addition of those
members was unlawful and invalid, so Tri-State continues to be wholly owned by its 43
utility members. Tri-State staff has enlisted the assistance of a small group of directors
who sit on the Board’s Executive Committee, which also doubles as its Litigation
Committee, and together they conduct a great deal of Tri-State’s business in secret,
concealing information even from its own member-owners.
2.

United Power is Tri-State’s largest member, representing nearly 17% of

Tri-State’s revenues in 2019. For years, United Power has been dissatisfied with the
mismanagement of Tri-State as it failed to adapt to changes in the market and continued
to source coal generated power for its members instead of cheaper and greener
renewable energy. United Power watched as, first, Kit Carson Electric Cooperative (“Kit
Carson”) withdrew from membership, followed by Delta-Montrose Electric Association
(“DMEA”). Both paid negotiated amounts to buy out of their Wholesale Electric Service
Contracts (“WESC”) in order to access renewable power sources and provide savings to
their members.
3.

As a founding member of Tri-State, United Power preferred not to

withdraw but to modify its contractual relationship with Tri-State in a way that would
permit the cooperative family to stay together while also offering member-owners who
so desired to buy less than all their power requirements from Tri-State. To United
Power, that approach made eminent sense. It would allow member-owners to take
2

 advantage of cheaper and greener renewable energy sources, reducing rates to their
members, and de-carbonizing Tri-State in the process.
4.

United Power then spent years and hundreds of thousands of dollars

working in good faith with Tri-State staff to accomplish its goal of modifying its all
requirements relationship with Tri-State. Unbeknownst to United Power, Tri-State
never had any intention of allowing United Power to modify its relationship because it is
United Power’s load and purchases that have permitted Tri-State to avoid raising rates
and prevented other member-owners from following Kit Carson and DMEA out the
door.
5.

In November 2019, fed up with Tri-State’s dissembling, United Power filed

a formal complaint with the Colorado Public Utilities Commission (“Commission” or
“PUC”). United Power asked the PUC to set a just, reasonable and non-discriminatory
charge for it to buy out of its all-requirements contract with, and to withdraw from, TriState. Since that time, Tri-State has done everything in its power to prevent the PUC
from ruling in the case and to prevent United Power from withdrawing as a Tri-State
member-owner, a right it has under Tri-State’s Bylaws.
6.

The Evidentiary Hearing on United Power’s PUC proceeding was originally

scheduled for March 23-27, 2020. It recently was re-scheduled for May 18-22, 2020.
Notwithstanding that imminent proceeding, it has become completely clear that TriState has declared war on the Colorado PUC and literally will stop at nothing to try to
prevent it from deciding a just, reasonable and non-discriminatory charge for United
Power to withdraw as a member-owner of Tri-State. Tri-State’s legion of

3

 attorneys―whose fees are paid by Tri-State member-owners―are desperately seeking
the expedited assistance of the Federal Energy Regulatory Commission (“FERC”) in
creating a conflict that Tri-State will then use to claim that the PUC’s jurisdiction has
been pre-empted.
7.

Had Tri-State simply allowed United Power to exercise its right to

withdraw as a Tri-State member-owner on equitable terms proportionately similar to
those it afforded to Kit Carson and DMEA, the story of Tri-State’s dissembling and its
culture of concealment, would never have been told. But for reasons that will require
discovery under the Colorado Rules of Civil Procedure, Tri-State wouldn’t, or couldn’t,
afford United Power the same basic Bylaw right exercised by other Tri-State memberowners.
8.

Discovery in the PUC proceeding has revealed that Tri-State fraudulently

induced United Power to champion the 2019 Bylaw amendment which Tri-State now
seeks to use against the PUC and United Power. 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. If
the PUC is permitted to decide a just, reasonable and non-discriminatory exit charge,
perhaps Tri-State finally will afford United Power the same rights and privileges as Kit
Carson and DMEA.
9.

If not, however, United Power intends to prove that approval of the 2019

Bylaw amendment Tri-State has used to pursue FERC rate jurisdiction was procured by
fraud, so that any claim to federal jurisdiction that derives from its use is invalid. United

4

 Power will prove that Tri-State’s so-called non-utility members, MIECO, Ellgen and
Olson’s, were recruited by Tri-State to interfere with United Power’s right to withdraw
from Tri-State on equitable terms and thereafter conspired with Tri-State to unlawfully
deprive United Power of its right to petition the PUC to establish a just, reasonable and
non-discriminatory exit charge. United Power also will prove that the April 9, 2020 TriState Board resolutions designed to imprison it and other Tri-State member-owners are
ultra vires and inapplicable to United Power. United Power further intends to prove
that Tri-State has breached the Bylaw contract as well as the WESC by, among other
things, violating the duty of good faith and fair dealing implied into each, by
discriminating against United Power in favor of Kit Carson and DMEA, and by
unilaterally and unlawfully amending the WESC through Board Policies. As a result of
such breaches, United Power intends to seek a declaration that Tri-State is precluded
from enforcing the WESC under the doctrine of prior breach. Finally, and in the
alternative, United Power will prove that Tri-State’s breaches, and Defendants’ tortious
conduct, have caused United Power hundreds of millions of dollars in damages.
10.

This action thus seeks very different relief from that sought before the

PUC. United Power pleads common law relief in this Court that is not available in the
PUC, against Defendants who are not parties to that proceeding. And United Power
seeks relief from the PUC under the Public Utilities Law that is not available in this
Court. This Complaint is filed not to address any harm to Tri-State, but rather to address
individual and specific harm that has been levied against United Power by Tri-State and
its co-conspirators.

5

 PARTIES
11.

United Power was founded in 1938 as a not-for-profit rural electric

cooperative providing services to homes and businesses throughout Colorado’s northern
front-range. United Power is headquartered in Adams County and is a founding
member of Tri-State. Its service territory extends from the mountains of Coal Creek and
Golden Gate Canyon, along the I-25 corridor and Carbon Valley region, to the farmlands
of Brighton, Hudson, and Keenesburg. United Power serves more than 90,000 meters
representing more than 250,000 customers.
12.

Tri-State is a generation and transmission cooperative corporation

headquartered in Westminster, Colorado. Tri-State is organized pursuant to Colorado
law and provides generation and transmission services to 43 member-owners in
Colorado, Wyoming, Nebraska, and New Mexico. Tri-State also purports to have three
non-utility member companies to which Tri-State does not provide generation or
transmission services.
13.

MIECO is a Delaware corporation with its headquarters in Long Beach,

California. MIECO sells natural gas to Tri-State. It purported to become a member of
Tri-State in September 2019.
14.

Ellgen is a Colorado corporation with its headquarters in Craig, Colorado.

Ellgen engages in agricultural and ranching activities. Ellgen rents land from a wholly
owned subsidiary of Tri-State (Colowyo Coal Co., L.P.) on which it grows crops and
grazes cattle. It purported to become a member of Tri-State in November 2019.

6

 15.

Olson’s is a Colorado LLC with its headquarters in Fort Lupton, Colorado.

Olson’s is a greenhouse that grows plants. It purchases thermal energy (steam) from TriState for its own use. It purported to become a member of Tri-State in November 2019.
JURISDICTION AND VENUE
16.

Jurisdiction is proper in this Court pursuant to C.R.S. § 13-1-124(1)(a)

because the acts giving rise to the claims asserted occurred within the State of Colorado,
and these acts involve the transaction of business within the State of Colorado. The
Court also has jurisdiction to hear this matter and the power to declare the rights of the
parties pursuant to C.R.C.P. 57 and the Colorado Declaratory Judgments Law, C.R.S. §
13-51-101, et seq.
17.

The Court has personal jurisdiction over Tri-State because Tri-State is a

corporation organized under Colorado law and located in Colorado and has committed
the wrongful acts described here in the State of Colorado.
18.

The Court has personal jurisdiction over MIECO because MIECO does

business in Colorado, and has committed the wrongful acts described here in the State
of Colorado.
19.

The Court has personal jurisdiction over Ellgen because Ellgen is a

corporation organized under Colorado law, located in Colorado, and has committed the
wrongful acts described here in the State of Colorado.
20.

The Court has personal jurisdiction over Olson’s because Olson’s is a

corporation organized under Colorado law, located in Colorado, and has committed the
wrongful acts described here in the State of Colorado.

7

 21.

Venue is proper in this Court pursuant to C.R.C.P. 98(c) because Tri-State

resides in Adams County and committed the wrongful acts described in this Complaint
in Adams County.
GENERAL ALLEGATIONS
I.

UNITED POWER’S RELATIONSHIP WITH TRI-STATE.
22.

United Power and Tri-State are parties to several contracts, including Tri-

State’s Bylaws and United Power’s WESC. Pursuant to the WESC, United Power is
required to purchase at least 95 percent of its wholesale power requirements from TriState on an annual basis through 2050.
23.

In recent years, United Power has purchased in excess of $200 million in

wholesale electricity annually from Tri-State that it then distributes to its individual
members as well as certain industrial and large commercial accounts (e.g. oil and gas
customers).
24.

United Power refers to the electricity that it sells to its oil and gas accounts

as its “indeterminate load.” Unlike a residential customer, the load cannot be
determined with assurance in amount or permanency.
25.

Tri-State charges United Power for the electricity it sells at its “Class A”

rate. Tri-State’s Class A rate is materially higher now—and has been for years—than
what United Power would be required to pay if it purchased electricity on the open
market.
26.

Tri-State’s Class A rate includes a built-in margin (i.e. profit) for the

electricity it sells. In recent years that margin has totaled approximately $45 - $70
million annually for the electricity that Tri-State sells to all of its members (including
8

 United Power). Due to the expenses associated with delivering electricity to and
investing in members’ service territories, some members contribute positively to TriState’s margins while some members negatively impact Tri-State’s margins.
27.

United Power is Tri-State’s largest member, as determined by the amount

of electricity that Tri-State sells to it on an annual basis and has been for many years.
28.

Not only is United Power the largest member of Tri-State, it also is the

fastest growing. Since at least 2012, United Power’s increasing load has enabled TriState―through its all-requirements contracts and unlawful restrictions on members’
contracting for power from other qualified sources―to continue to operate its old,
inefficient and high-emitting units. In recent years, United Power has been subsidizing
Tri-State’s operations by contributing tens of millions of dollars a year to Tri-State’s
margins. As a result, Tri-State’s system has appeared to grow, justifying various capital
projects and other expenses, many of which are outside United Power’s service territory
and provide little to no benefit to United Power’s members. Throughout that period,
United Power’s members have been required to pay substantially higher rates for their
power than United Power could have obtained from other suppliers, power that also
would have been lower emitting and more efficient, complying with goals established by
Colorado law. Instead, United Power’s growth has subsidized the other member-owners
of Tri-State, many of which have decreasing electricity requirements.
29.

In the past four years, by Tri-State’s own calculations, United Power has

contributed approximately $150 million to Tri-State’s margins.

9

 30.

Over the next decade, Tri-State estimates that United Power will continue

subsidizing Tri-State’s operations by contributing several hundred million dollars more
to Tri-State’s margins through the electricity it purchases from Tri-State. In other
words, United Power has already paid and is projected to pay to Tri-State hundreds of
millions of dollars more than its fair share of Tri-State’s costs, without receiving any
significant benefit in return. Rather than work with United Power to achieve a mutually
beneficial arrangement, Tri-State has refused to engage with United Power in good faith
and misused the cooperative governance structure in an effort to deprive United Power
of its right to exit Tri-State.
31.

No other Tri-State member has contributed in the past 10 years or is

projected in the next 10 years to contribute more to Tri-State’s margins than United
Power.
32.

The net effect of United Power’s contributions to Tri-State’s margins is

that United Power’s customers have paid and will continue to pay rates that are
significantly above market for their electricity needs.
II.

TRI-STATE DENIES UNITED POWER’S REQUESTS FOR AN
EQUITABLE EXIT CHARGE.
33.

Tri-State’s Bylaws constitute a contract between Tri-State and its

individual members, including United Power.
34.

United Power has performed all of its obligations under the Bylaws.

35.

The Bylaws expressly provide that, among other things, a member may

withdraw “upon compliance with such equitable terms and conditions as the Board of
Directors may prescribe,” provided that “it has met all its contractual obligations to this

10

 Corporation.”1 The Bylaws further require United Power to enter into what is known as
an “all requirements” contract (i.e. the WESC) to purchase 95 percent or more of its
electricity needs from Tri-State as a condition of membership.2 United Power’s Tri-State
membership, therefore, is inextricably intertwined with its WESC. United Power has
performed all of its obligations under the WESC.
36.

Tri-State emphasizes that one of its “core principles” as a cooperative is

“voluntary and open membership,” and it agrees that members can withdraw from TriState.3
37.

In 2016, a New Mexico-based Tri-State member, Kit Carson, withdrew

from Tri-State after paying a $37 million exit charge.
38.

In 2019 (effective May 2020), DMEA and Tri-State agreed to an exit

charge of $62.5 million.
39.

In both instances, Tri-State only agreed to the exit charges after initially

demanding that both members pay punitively high and grossly inflated exit charges,
that as it turns out, were similar to the punitively high proposed “indicative buyout
calculation” that Tri-State demanded of United Power in August 2018.
40.

Tri-State, through its Chairman of the Board of Directors as well as its

Chief Financial Officer, among others, has admitted that the final exit charges for Kit
Carson and DMEA were just, reasonable, non-discriminatory, and left the remaining

1

Exhibit 1, Bylaws, ¶ 4(a).

2

Id. at ¶ 3(d).

See, e.g., Powering Potential: 2018 Investor Presentation, TRI-STATE GENERATION AND
TRANSMISSION ASS’N, at 4, https://www.tristategt.org/files/TriState-AnnualReport-FY2017040318.pdf.
3

11

 members “whole.” In other words, the exit charges to which Tri-State agreed for Kit
Carson and DMEA, constituted “equitable terms and conditions” for both members to
withdraw. United Power, all along, has been seeking the same fair and equitable
treatment.
41.

In August 2018, United Power exercised its right to explore options for

withdrawing from Tri-State under the Bylaws by requesting an exit charge. Tri-State
stated that it could provide United Power with an “indicative buyout calculation” that
would be within 10 percent of the actual exit charge that Tri-State would in fact propose
charging United Power to exit. Tri-State further stated that in order to provide United
Power with a more precise exit charge, United Power would have to pay Tri-State a
$250,000 fee.
42.

United Power declined to pay the $250,000, and Tri-State thereafter

provided it with an “indicative buyout calculation” of approximately $1.2 billion. If paid
to Tri-State, that figure would result in a massive windfall to Tri-State and its nonwithdrawing members.
43.

To put Tri-State’s proposed “indicative buyout calculation” in perspective,

if all but one of the current Tri-State members elected to exit Tri-State at the same time
and paid a proportionately similar exit charge, the last remaining member would own all
of Tri-State’s assets free and clear and would have $5 billion additional in cash.
44.

Tri-State provided the punitively high indicative buyout calculation to

United Power―which it represented would be within 10% of the actual buyout
number―in an effort to block a United Power withdrawal, notwithstanding the fact that

12

 United Power has a right to withdraw under the Bylaws and a right to be treated as
equitably as Kit Carson and DMEA were. Tri-State’s punitive and inequitable buyout
calculation constituted the first of several material breaches of the Bylaws that was
intended to prevent United Power from exercising its contractual right to exit Tri-State
on equitable terms and conditions.
III.

TRI-STATE PROCURES A BYLAW AMENDMENT THROUGH
FRAUDULENT AND BAD FAITH CONCEALMENT AND
MISREPRESENTATION OF MATERIAL INFORMATION.
45.

For most of its corporate existence, Tri-State’s Bylaws have allowed one

class of membership only. That is, the Bylaws have historically required that Tri-State
members agree to an “all requirements” class of membership, where Tri-State’s
members (all of whom have historically been rural, electrical cooperatives), are each
required to purchase 95 percent or more of their electricity needs from Tri-State.
46.

In 2018, in addition to its request for an exit charge, United Power also

began exploring other options that would allow it and other Tri-State members to
remain part of Tri-State, while transitioning, at least in part, to cleaner and cheaper
sources of power, through what is known as a “partial requirements contract.”
47.

The idea of a partial requirements contract is that Tri-State members, if

they choose, would remain Tri-State members, but would have more flexibility to
purchase a larger portion of their electricity needs from the open market (e.g. from other
renewable energy suppliers).4

Adding a new class of membership to allow for a partial requirements class of membership
required an amendment to Tri-State’s Bylaws, which in turn, required an affirmative vote of TriState’s 43 members.
4

13

 48.

At a presentation to Mountain Parks Electric on January 3, 2019, United

Power’s New Business Director Jerry Marizza explained that “the proposal for a partial
requirements contract option would assure that Tri-State continues to provide a portion
of United Power’s energy purchases, while allowing United Power to meet its electricity
load growth by pursuing its own local renewable energy projects, or buying wholesale
power from other providers.”5
49.

Beginning in late 2018, United Power proposed amending Tri-State’s

Bylaws to allow for partial requirements members. United Power understood―based on
Tri-State’s representations―that Tri-State envisioned using partial requirements
contracts to allow its member-owners to pursue more local renewable energy projects
that would, in turn, help Tri-State and its members meet Colorado’s clean power goals.
But Tri-State was constructing a Trojan Horse.
50.

Indeed, although Tri-State’s publicly-stated purpose for amending the

Bylaws was to allow for partial requirements contracts, the amendment was only a
pretext for Tri-State’s actual purpose—creating a new class of membership that would
permit the addition of non-utility members, to eliminate Tri-State’s FERC exemption
and prevent United Power or any other Colorado member from obtaining exit charges
from the PUC. Tri-State concealed that purpose from its member-owners at every step
along the way before the Bylaw amendment was passed in April 2019.

5

Clean Cooperative, 1/17/19, by Joe Smyth (https://www.cleancooperative.com/news/Unitedpower-says-tri-state-policies-are-turning-away-large-customers).

14

 51.

Tri-State staff and the Board’s Executive/Litigation Committee knew that

United Power was unhappy with Tri-State’s management and was actively considering
its options. But United Power had also shared with Tri-State staff its genuine desire not
to withdraw from Tri-State; instead, United Power wanted to modify its relationship
with Tri-State while keeping the Tri-State cooperative family together. Tri-State staff
knew that Tri-State’s loss of all, or even part, of United Power’s load would have
enormous adverse effects on Tri-State’s financial health. Tri-State staff also knew that
other Tri-State member-owners were, for similar reasons, interested in retaining United
Power as a Tri-State member.
52.

So Tri-State saw its opportunity, using United Power as a Trojan Horse to

convince Tri-State’s membership to amend Tri-State’s Bylaws in a way that members
believed would benefit them. Unbeknownst to United Power and other Tri-State
members, however, Tri-State secretly was engaged in a project to become FERC rate
regulated, a project that required a Bylaw amendment to accomplish its secret goal.
53.

Tri-State staff, fraudulently and in bad faith, led United Power to believe

that Tri-State was sincerely interested in creating an opportunity for United Power and
other Tri-State member-owners to modify their all-requirements contractual
relationships with Tri-State. Tri-State never had any such interest or intention.
54.

As of December 2018, Tri-State already had been consulting with outside

and in-house counsel about becoming FERC jurisdictional for at least six months, and
possibly much longer. In fact, Tri-State had initiated a secret project, codenamed “Blue
Sky II,” which was designed to explore ways for Tri-State to become FERC

15

 jurisdictional. Tri-State concealed the existence of Blue Sky II from its members. By
December 2018, Tri-State already had drafted the tariffs that it would need to file with
FERC if it were to seek to become FERC regulated. Tri-State concealed from United
Power and even from the Colorado PUC, the existence of those draft tariffs.6
55.

Reasonably and justifiably believing that Tri-State was acting in good

faith, United Power drafted a proposed Bylaw amendment that would create a new
membership class in Tri-State. Had United Power’s proposed amendment been adopted
by Tri-State’s membership, it would have allowed new or existing Tri-State members to
elect partial, rather than full, requirements memberships.
56.

But Tri-State staff resisted United Power’s proposal, because Tri-State

never had any intention of allowing members to choose unilaterally to elect partial
requirements memberships. Instead, Tri-State staff insisted on language in the Bylaw
amendment that would give the Tri-State Board discretion whether, and on what terms,
to establish a new partial requirements membership class.
57.

Tri-State staff persuaded United Power that the language it proposed was

necessary to give Tri-State the flexibility to consider other, non-partial requirements
options, but that staff fully supported both a partial requirements membership class and
United Power’s desire to transition to partial requirements. Neither was true.
58.

United Power believes, and therefore alleges, that Tri-State’s proposed

Bylaw amendment was drafted by its outside counsel with specific knowledge of Tri-

Transcript of 7/12/19 Hearing at 25:23-26:05, Delta-Montrose Elec. Ass’n, Complainant, No.
18F-0866E (Colo. P.U.C.).
6

16

 State’s secret scheme to seek FERC rate regulation and to ensure that United Power
would never secure a Bylaw right to elect partial requirements membership.
59.

Nevertheless, reasonably and justifiably believing that Tri-State was acting

in good faith, United Power, primarily through former CEO John Parker and current
Chief Energy Resource Officer Dean Hubbuck, spent weeks in early 2019 crisscrossing
Colorado to explain to Tri-State member-owners the purpose of the Bylaw amendment
and create support for it.
60.

Throughout 2018 and 2019, Tri-State concealed from United Power the

very existence of Blue Sky II.
61.

Tri-State continued to represent to United Power and other Tri-State

members in early 2019 that an amendment to the Bylaws to create new membership
classes would allow for partial requirements contracts. Tri-State concealed from United
Power that it never had any intention of modifying its all requirements relationship with
United Power and was, instead, planning to use the Bylaw amendment to try to
imprison United Power, and its annual $50 million plus subsidy, until 2050.
62.

Among Tri-State’s many material non-disclosures and misrepresentations,

it regularly stated that the purpose of the Bylaw amendment was to allow for the
creation of new membership classes that would facilitate partial requirements contracts:
Some Members have asked the Board to consider partialrequirements contracts or subscription contracts. … In order
to consider these changes, it is necessary to first amend the
bylaws to permit additional classes of membership. 7

7

Exhibit 2, Proposed Bylaw Changes Questions and Answers Memorandum, at 1.

17

 63.

Tri-State also represented that the Board “intends to carefully consider the

pluses and minuses to the existing Members before it decides to establish any additional
class of membership,” and further, that it would establish a Contract Committee to
consider the different class of membership and alternative contracts. 8
64.

The true purpose of the Bylaw amendment was not to create a realistic

partial requirements option for its members but instead to use the amendment to
displace the Colorado PUC’s jurisdiction over member withdrawals. To that end, none of
Tri-State’s statements about the Bylaw amendment ever disclosed Tri-State’s true
intentions. To the contrary, it affirmatively misled United Power and its other memberowners that the “Board has no current intention to seek FERC jurisdiction.”9
Tri-State made this representation to induce a favorable vote from its member-owners
on the Bylaw amendment, even though the representation was false, misleading, and
concealed material facts regarding Tri-State’s intentions about becoming FERC
jurisdictional.
65.

United Power and the other member-owners reasonably and justifiably

believed that Tri-State was acting in good faith and honestly regarding the amendment
to the Bylaws and Tri-State’s intentions related there to.
66.

In the weeks and months preceding Tri-State’s representation to its

members that it had “no current intention” to seek FERC jurisdiction, however, there
were hundreds of Tri-State internal and external communications (with outside and in-

8

Id., at 3.

9

Id. at 2.

18

 house counsel) about that very possibility.10 Prior to the member vote on the Bylaw
amendment, Tri-State even briefed its incoming Chief Executive Officer, Duane Highley,
on the secret plan to become FERC jurisdictional. Tri-State concealed those
communications from its members.
67.

United Power justifiably relied on Tri-State’s representations that it did

not intend to attempt to become FERC jurisdictional and that the purpose of the Bylaw
amendment was to allow for existing Tri-State members to explore options to become
partial requirements members.
68.

Relying on Tri-State’s misrepresentations that Tri-State did not plan to

seek to become FERC jurisdictional, and that the Bylaw amendment was intended to
provide for a partial requirements class of membership for existing members, Tri-State
members, including United Power, voted in favor of the Bylaw amendment at the April
3, 2019 annual meeting. United Power believes, and therefore alleges, that its support
for the Bylaw amendment was crucial to its passage. The amendment gave the Board the
power “to establish one or more classes of membership in addition to the existing allrequirements class of membership.”11
69.

The full text of the amended Bylaw provision is as follows:

Section 2: Additional Membership Classes. Notwithstanding any other
provision of these Bylaws to the contrary, the Board of Directors may
establish one or more classes of membership in addition to the existing allrequirements class of membership. Such additional membership classes
The false and misleading nature of Tri-State’s representations to United Power is confirmed
by a privilege log Tri-State prepared in connection with litigation involving DMEA, which details
the hundreds of communications Tri-State had with its inside and outside counsel about FERC
jurisdiction.
10

11

Exhibit 1, Bylaws, ¶ 2.

19

 may include, without limitation, one or more partial requirements
membership classes whereby a member who chooses to be a member of
that class shall assume responsibility for meeting a portion of its load
requirements. Members may choose their class of membership subject to
any terms and conditions of membership and rights and preferences and
limitations on the rights and preferences of the members of each
additional class of membership as the Board of Directors establishes from
time to time. Such rights and preferences and limitations on the rights and
preferences may differ between membership classes and may be different
for individual members within an additional class of membership.
Provided however, that representation on the Board of Directors of any
additional class of membership will be determined by a vote of the
members of this Corporation at a meeting of the members of this
Corporation.
IV.

TRI-STATE CONSPIRES WITH MIECO, OLSON’S, AND ELLGEN TO
INTERFERE WITH THE PUC’S JURISDICTION OVER EXIT CHARGE
DISPUTES INVOLVING COLORADO COOPERATIVES.
70.

Shortly after passage of the Bylaw amendment, Tri-State announced that it

would convene its Contract Committee to consider the establishment of new
membership classes in Tri-State. Based on Tri-State’s prior representations, United
Power reasonably understood this to be a partial requirements membership option for
Tri-State’s 43 existing member-owners.
71.

In connection with that announcement, Tri-State represented that the

change in its Bylaws would allow the Board to create “additional classes of membership
and contracts for our members as well as those entities interested in power and
services from Tri-State.” Tri-State’s Board Chairman identified the potential additional
classes of membership as “partial-requirements contracts, municipal memberships or
memberships from other utilities.”12

Tri-State Press Release, 4/5/19 (https://www.tristategt.org/tri-state-highlights-strongfinancial-and-operational-performance-67th-annual-meeting).
12

20

 72.

Although there was no mention in Tri-State’s announcement of possibly

adding a non-utility member or a member that was a vendor to Tri-State, at the same
time and unbeknownst to United Power, however, Tri-State was hard at work, trying to
identify one or more non-utility members that would facilitate its secret plan to try to
become FERC rate regulated.13
73.

Some companies contacted by Tri-State rejected the invitation to join Tri-

State’s scheme to obtain FERC jurisdiction under false pretenses. Three companies,
however, who were aggressively recruited by Tri-State accepted its invitation to interfere
with United Power’s contractual right to exit Tri-State by purporting to become
members of Tri-State for an unlawful purpose: MIECO, Ellgen, and Olson’s (collectively
the “non-utility members”).
74.

Each of the non-utility members had a preexisting business relationship

with Tri-State. MIECO sold natural gas to Tri-State. Ellgen rented land from a wholly
owned subsidiary of Tri-State (Colowyo Coal Co., L.P.) on which it grows crops and
grazes cattle. And Olson’s purchased thermal energy (steam) from Tri-State for use in its
greenhouse.
75.

Tri-State began negotiations with Olson’s in May 2019, well before

revealing to Tri-State members its plan to use the April 2019 Bylaw amendment to
obtain FERC jurisdiction. During those negotiations, Tri-State told Olson’s that the
purpose of it becoming a Tri-State member was for Tri-State to become FERC rate
regulated.
Indeed, it was not until months into the PUC Proceeding that Tri-State disclosed these
communications for the first time in discovery.
13

21

 76.

Tri-State began negotiations with MIECO in June 2019. During those

negotiations, Tri-State told MIECO that the purpose of it becoming a Tri-State member
was for Tri-State to become FERC rate regulated.
77.

Tri-State began negotiations with Ellgen in September 2019. During those

negotiations, Tri-State told Ellgen that the purpose of it becoming a Tri-State member
was for Tri-State to become FERC rate regulated.
78.

MIECO, Ellgen, and Olson’s were aware of United Power’s Bylaw

Agreement and WESC with Tri-State.
79.

MIECO, Ellgen, and Olson’s agreements (“Membership Agreements”) to

become members of Tri-State caused Tri-State to breach the Bylaw Agreement and
WESC with United Power by taking actions to prevent United Power’s withdrawal from
Tri-State.
80.

MIECO, Ellgen, and Olson’s knew that Tri-State’s breach of the Bylaw

Agreement and WESC with United Power was certain or substantially certain to occur as
a result of their unlawful purported membership in Tri-State.
81.

MIECO, Ellgen, and Olson’s conduct was improper and wrongful because

their membership was essential to Tri-State’s false claim of FERC jurisdiction, they
joined as part of a conspiracy to obtain FERC jurisdiction under false pretenses, and TriState is using its false claim of FERC jurisdiction to try to imprison United Power in TriState.
82.

After purporting to become Tri-State members, the responsibilities of the

non-utility members did not change. MIECO continued to sell natural gas to Tri-State.

22

 Ellgen continued to rent land from a wholly owned subsidiary of Tri-State. Olson’s
continued to purchase steam from Tri-State for its own use. Each, however, received
additional payment from Tri-State for engaging in the scheme to deprive the Colorado
PUC of its jurisdiction over Tri-State through purported “patronage capital” and, in the
case of Olson’s, an increased discount in the price it paid for steam. United Power
believes, and therefore alleges, that even after substantial questions were raised publicly
about the lawfulness of their membership in Tri-State, the non-utility members failed to
take steps to determine whether their transactions with Tri-State violated Colorado law,
or Tri-State’s Articles of Incorporation and Bylaws.
83.

The Membership Agreements reveal the sole purpose of the non-utility

members’ additions to Tri-State―each Membership Agreement is terminable if TriState does not obtain FERC jurisdiction. The non-utility members are members only to
obtain FERC jurisdiction under false pretenses, and to deprive the Colorado PUC of its
jurisdiction over exit fees charged by Tri-State to Colorado cooperatives. In other words,
the purpose of their membership is to assist Tri-State in its efforts to prevent United
Power from withdrawing as a Tri-State member-owner.
84.

On June 3-4, 2019, Tri-State’s staff first revealed its plans to attempt to

become FERC jurisdictional in Strategic Planning sessions with Tri-State’s Board of
Directors. Tri-State staff indicated at that time, contrary to what Tri-State expressly told
its members just a few months earlier, that it intended to recommend that the Board
vote in July to pursue FERC regulation by adding a non-utility member.14 On June 13,
Tri-State’s conversations with potential non-utility members commenced, at the latest, in May
2019.
14

23

 2019, Tri-State’s Chief Executive Officer, Duane Highley, and General Counsel, Ken
Reif, made a similar presentation to Tri-State’s members, including United Power.
85.

United Power and some of the other members attempted to delay the vote

to allow for further due diligence, and Colorado’s legislative leaders also requested a
delay. Nonetheless, on July 9, 2019, over the objections of United Power and two other
members, without allowing the Contract Committee to consider or recommend a class of
membership for non-utility members, Tri-State’s Board of Directors rushed the decision
through and voted to seek FERC regulation by adding a non-utility member. Tri-State
then passed an unlawful resolution purporting to give its CEO the authority to enter into
contracts to add new, non-utility members.15
V.

THE PUC PROCEEDING AND TRI-STATE’S EFFORTS TO OBTAIN
FERC JURISDICTION.
86.

United Power filed its Formal complaint with the PUC on November 6,

2019, which began Proceeding No. 19F-0621E. In that proceeding, United Power seeks a
just, reasonable, and non-discriminatory exit charge to withdraw from Tri-State.16 The
adjudication of what amount United Power should pay as an exit charge is not at issue in
this lawsuit.
87.

On December 20, 2019, the parties filed briefs with the PUC addressing

the PUC’s jurisdiction to hear exit charges. Tri-State argued that its purported addition

United Power is presently challenging the impropriety of this resolution specifically and of
adding the non-utility members in the PUC proceeding.
15

The PUC subsequently consolidated United Power’s Proceeding with a Proceeding filed by La
Plata Electric Association, Inc., that also seeks a just, reasonable, and non-discriminatory exit
charge to end its membership in Tri-State. The Joint Proceedings are Nos. 19F-0620E and 19F0621E.
16

24

 of MIECO, Ellgen and Olson’s preempted the PUC’s jurisdiction over member
withdrawals.
88.

On December 23, 2019, Tri-State requested that FERC enter a declaratory

order confirming Tri-State’s contentions that (a) it was FERC jurisdictional, (b) FERC
had exclusive jurisdiction over exit charge disputes, and (c) United Power’s PUC
proceeding was preempted. Tri-State subsequently moved the PUC to stay the
proceeding pending a FERC decision on its motion for a declaratory order.
89.

On February 12, 2020, the PUC’s Hearing Commissioner rejected Tri-

State’s preemption argument because she was “unpersuaded that the MIECO
transaction was proper under Colorado law, that it resulted in MIECO becoming a
member of Tri-State, and that MIECO’s membership results in the Complaints being
preempted by federal law.”17 The Hearing Commissioner held that jurisdiction was
proper in the PUC.18
90.

On March 20, 2020, FERC issued its Order on Tri-State’s request for a

declaration that the Commission’s jurisdiction over United Power’s PUC proceeding had
been preempted. FERC declined to issue that declaration. It deferred to Colorado state
tribunals the question whether MIECO’s membership in Tri-State was proper, stating
that it was “more appropriately handled in state fora” and that “resolution of the
pending Colorado PUC proceedings, or other litigation concerning Colorado law issues,

La Plata Elec. Ass’n, Inc., Complainant, No. 19F-0620E, ¶ 28, 2020 WL 837750, at *6 (Feb.
12, 2020)).
17

18

Id. at §§ 23, 27, 2020 WL 837750, at *5.

25

 could be relevant to [FERC] proceedings in the future.” 19 FERC further held that “the
Colorado PUC’s jurisdiction over complaints regarding such exit charges is not
currently preempted,” and “would not be preempted unless and until such ruling
conflicts with a Commission-approved tariff or agreement that establishes how TriState’s exit charges will be calculated.”20 FERC noted that “Tri-State has not yet filed,
and the Commission has not yet approved, a methodology for determining Tri-State’s
exit charges.”21
91.

As alleged, FERC deferred to a Colorado tribunal the question whether

Tri-State complied with Colorado statutes, its Articles of Incorporation, and its Bylaws
in adding the non-utility companies as members, and United Power is asking the PUC to
decide those questions in connection with determining a just, reasonable, and nondiscriminatory exit charge. The other Colorado law issues mentioned by FERC are
addressed in this Complaint.
VI.

THE APRIL 9, 2020 BOARD RESOLUTIONS AND SUBSEQUENT TRISTATE FERC FILINGS.
92.

On April 9, 2020, Tri-State’s Board approved two resolutions (collectively

the “Board Resolutions”) further underscoring that Tri-State never had any intention of
providing United Power a right to select a partial requirements membership class. Nor
did it have any intention of establishing an equitable methodology for Tri-State
members who wished to buy out of their WESC. The Board Resolutions were passed for

Tri-State Generation & Transmission Ass’n, Inc., 170 FERC ¶ 61224, P 76, 2020 WL 1321788,
at *19 (Mar. 20, 2020).
19

20

Id. at P 121, 2020 WL 1321788, at *32 (emphasis added).

21

Id.

26

 the specific purpose of trying to prevent United Power from withdrawing as a Tri-State
member, in direct contravention of the Bylaws.
A.

The Buy Down Payment Formula Board Resolution.

93.

On April 9, 2020, Tri-State’s Board adopted the first resolution at issue

here, known as the “Buy Down Payment Formula.” That formula identifies a
methodology by which a full requirements member can become a partial requirements
member.22
94.

The methodology is illusory, because the payment is so punitive that no

member can achieve a reasonable financial benefit by transitioning to partial
requirements membership. By way of example only, United Power would not achieve
any financial benefit from selecting Tri-State’s partial requirements option until after its
WESC had already expired. And even if it made any financial sense, Tri-State reserves to
its Board the discretion to preclude a member from selecting a partial requirements
membership:
BE IT FURTHER RESOLVED, that any change by a Utility
Full Requirements (Class A) Member to a Utility Partial
Requirements (Class B) Member shall be subject to the
approval of the Board of Directors and no such Member
shall be permitted to change, if, in the reasonable
business judgement of the Board such change
would have a material adverse effect on Tri-State
Generation and Transmission Association, Inc.23
95.

United Power believes, and therefore alleges, that Tri-State planned,

through Blue Sky II and otherwise, to make a partial requirements membership

Exhibit 3, Tri-State Buy Down Payment Formula Board Resolution and Attachment (April 9,
2020) (emphasis added). The term “material adverse effect” is not defined.
23 Id. at 2.
22

27

 economically impracticable and illusory, and Tri-State concealed this fact from United
Power while at the same time encouraging United Power to promote the April 2019
Bylaw amendment for the ostensible purpose of facilitating United Power’s request to
transition to partial requirements membership.
96.

The Buy Down Payment Formula Board resolution conflicts with Colorado

law because it reserves to the Board the discretion to discriminate among members.
97.

Because the Buy Down Payment Formula Board resolution conflicts with

Colorado law and was not passed in good faith, the Resolution is ultra vires, void, and a
legal nullity.
B.

The Contract Termination Payment Formula.

98.

On April 9, 2020, Tri-State’s Board also adopted a resolution purporting to

provide an exit charge methodology (the “Contract Termination Payment Formula” or
“CTP”). 24 The CTP methodology was adopted in bad faith because it ignores Tri-State’s
governing documents, is subject to bias and manipulation, and can be applied
discriminatorily. The CTP reserves to the Tri-State Board discretion to prohibit
members from withdrawing, contrary to the Bylaws:
BE IT FURTHER RESOLVED, that any withdrawal by a
Utility Member shall be subject to the approval of the Board
of Directors and no Utility Member shall be permitted
to withdraw, if, in the reasonable business
judgement of the Board such withdrawal would
have a material adverse effect on Tri-State
Generation and Transmission Association, Inc.25

Exhibit 4, Tri-State Contract Termination Payment Formula Board Resolution and
Attachment (April 9, 2020).
25 Id. at 2 (emphasis added).
24

28

 99.

The CTP also allows “adjustment” based on “individual Member

commitments, and Tri-State’s financial position at the time of the Utility Member’s
proposed withdrawal.” There is no definition in Tri-State’s Bylaws, Board Policies,
Board Resolutions, or the CTP methodology of “material adverse effect,” “individual
Member commitments,” or “financial position,” leaving the implementation of the CTP
to the discretion of Tri-State’s Board.
100.

The CTP Board resolution also conflicts with Section 4(a) of the Bylaws,

which provides that a member may withdraw “upon compliance with such equitable
terms and conditions as the Board of Directors may prescribe.”26 The discretion TriState attempted to reserve to itself cannot be conferred by Board resolution but, instead,
requires a Bylaw amendment. As such, the CTP Board resolution is a legal nullity.
101.

Even if the CTP Board resolution were valid, which it is not, it cannot

apply to United Power retroactively.
102.

Because the CTP Board resolution conflicts with Colorado law and Tri-

State’s Bylaws, is illusory and subject to discriminatory application, and was passed in
bad faith, it is ultra vires, void, and a legal nullity.
VII.

TRI-STATE’S MULTIPLE UNILATERAL AMENDMENTS OF UNITED
POWER’S WESC THROUGH BOARD POLICIES WERE UNLAWFUL
AND BREACHED THE WESC.
103.

Section 11.1 of United Power’s WESC provides that “all representations

and agreements between the Parties covering the subject matter hereof are expressed
herein and in the exhibits hereto and that no other representation of any kind or nature,
whether made by the officers or agents of either of the Parties, shall be binding.”
26

Exhibit 1, Bylaws, ¶ 4(a).

29

 104.

Notwithstanding the language § 11.1, the WESC also purports to

incorporate unidentified Tri-State Board Policies by reference.
105.

Even if one or more Tri-State member-owners votes against a particular

Board Policy, Tri-State takes the position that an affirmative vote in favor of a Board
Policy by the Tri-State Board allows the Policy to apply to the WESCs of all members,
including the dissenting member.
106.

Tri-State also takes the position that an affirmative vote in favor of a Board

Policy by the Tri-State Board, without seeking or receiving input from Tri-State
member-owners, allows the Policy to apply to the WESCs of all members.
107.

The Board Policies thus have been used by Tri-State to modify the terms

and conditions of United Power’s WESC unilaterally and, on occasion, over United
Power’s dissent and without its agreement. Among the Board Policies that have been
used to modify the terms and conditions of United Power’s WESC unilaterally and
without United Power’s agreement are Tri-State Board Policies 101 and 115.
108.

Tri-State’s use of Board Policies to modify the terms and conditions of

United Power’s WESC unilaterally and without its agreement constitute material
breaches of the WESC, including § 11.1 of the WESC.
VIII. TRI-STATE’S WRONGFUL ACTIONS DIRECTLY HARMED UNITED
POWER.
109.

On April 13, 2020, Tri-State filed its CTP Methodology with FERC,

purportedly as a tariff, and asked FERC to declare it effective as of April 14, 2020. The
comment period for Tri-State’s request expires on May 11, 2020, and FERC will take at
least 60 days to review the request.

30

 110.

Tri-State’s filing seeks to displace the PUC’s jurisdiction over an exit

charge for United Power.
111.

If Tri-State is successful, United Power will be deprived of its statutory

right to have the PUC adjudicate the exit charge, meaning that Tri-State could imprison
United Power in violation of Colorado law and the Bylaws for years, which will cost
United Power and its members tens or hundreds of millions of dollars.
112.

Indeed, if the PUC or this Court does not stop Tri-State from using the

Bylaw amendment that was procured by fraud or implementing the Board Resolutions
requiring a three-year notice period and giving the Board essentially unfettered
discretion over whether to allow United Power to withdraw, United Power will be
imprisoned in Tri-State through 2050, which will cause United Power hundreds of
millions of dollars or more in damages.
FIRST CLAIM FOR RELIEF
(Declaratory Judgment Pursuant to C.R.C.P. 57 and C.R.S. § 13-51-106
Concerning the April 2019 Bylaw Amendment―Tri-State Only)
113.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.
114.

The Bylaws are an enforceable written contract between Tri-State and

United Power.
115.

The April 2019 amendment to the Bylaws purports to be an amendment to

the written contract and to allow for the creation of new membership classes in TriState.

31

 116.

There is an existing and actual legal controversy that can be effectively

resolved by a declaratory judgment from this Court, namely, (1) whether the April 2019
Bylaw amendment is ultra vires, void, invalid, and a legal nullity because it was passed
as a result of Tri-State’s fraudulent conduct as described herein.
117.

Specifically, as alleged, Tri-State made material misrepresentations of fact

and concealed material facts related to the purpose of the Bylaw amendment and TriState’s intentions vis-à-vis attempting to become FERC jurisdictional. United Power
relied on Tri-State’s representations to its detriment when it championed the Bylaw
amendment and voted in favor of it and that reliance has directly harmed United Power
because Tri-State is using the Bylaw amendment it procured by fraud to prevent United
Power from withdrawing from Tri-State on equitable terms and to purportedly add new
members whose membership is unlawful under Colorado law, as well as Tri-State’s
Articles of Incorporation and Bylaws.
118.

United Power has legal rights that are affected by Tri-State’s use of a Bylaw

amendment, the passage of which was procured by fraud and thus is invalid. Because
the Bylaw amendment is invalid, any use of the amendment by Tri-State is likewise null,
void, and invalid.
119.

An actual and justiciable controversy exists regarding the parties’

respective rights under Colorado law, and a declaratory judgment will terminate the
controversy giving rise to this aspect of the proceeding.
120.

United Power is requesting an interpretation of the rights, legal status, and

relationships of the parties under the above law and facts.

32

 121.

United Power is entitled to a declaratory judgment pursuant to C.R.C.P. 57

and Uniform Declaratory Judgments Law, C.R.S. § 13-51-101, et seq., declaring that the
April 2019 amendment to the Bylaws providing the Tri-State Board of Directors
authority to create new membership classes is ultra vires, void, and a legal nullity
because it was procured through fraud and in bad faith.
SECOND CLAIM FOR RELIEF
(Civil Conspiracy―All Defendants)
122.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.
123.

Defendants conspired for the express purpose of depriving the PUC of

jurisdiction over exit charge disputes involving Colorado cooperatives, including United
Power’s, which would interfere with United Power’s contractual right to exit Tri-State,
and they agreed to accomplish that purpose by execution of the Membership
Agreements.
124.

Defendants used unlawful means to accomplish the object of their

conspiracy including, inter alia, Tri-State’s use of fraud, misrepresentation, and
material non-disclosure to procure the passage of the 2019 Bylaw amendment as alleged
in United Power’s First Cause of Action, the recruitment and unlawful purported
addition of MIECO, Ellgen and Olson’s as non-utility members in violation of Colorado
law and Tri-State’s Articles of Incorporation and Bylaws, and the non-utility members’
intentional interference with United Power’s contractual rights as alleged in United
Power’s Third Cause of Action.

33

 125.

As a direct and proximate result of Defendants’ unlawful conspiracy,

United Power has suffered actual and compensatory damages far in excess of this
Court’s jurisdiction, in an amount to be proved at trial.27
THIRD CLAIM FOR RELIEF
(Intentional Interference with Contract―MIECO, Ellgen & Olson’s only)
126.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.
127.

The Bylaws are an enforceable contract between Tri-State and United

Power.
128.

The Bylaws between Tri-State and its members provide that a member

may withdraw “upon compliance with such equitable terms and conditions as the Board
of Directors may prescribe.”
129.

The Bylaws and WESC are inextricably intertwined because executing the

WESC was a condition of United Power’s membership in Tri-State. The “equitable terms
and conditions” required by the Bylaws for withdrawal therefore includes termination of
the member’s WESC with Tri-State.
130.

MIECO, Ellgen, and Olson’s were aware of United Power’s Bylaw

Agreement and WESC with Tri-State.
131.

MIECO, Ellgen, and Olson’s agreement to become members of Tri-State

caused Tri-State to breach the Bylaw Agreement and WESC with United Power by
taking actions to prevent United Power’s withdrawal from Tri-State.

Because Defendants’ conduct was intentional and malicious, United Power will amend this
Complaint at an appropriate time to seek punitive damages against all Defendants.
27

34

 132.

MIECO, Ellgen, and Olson’s knew that Tri-State’s breach of the Bylaw

Agreement and WESC was certain or substantially certain to occur as a result of their
unlawful purported membership in Tri-State.
133.

Tri-State materially breached the Bylaw Agreement and WESC by, inter

alia, refusing to allow United Power to withdraw from Tri-State on equitable terms and
conditions proportionately similar to the terms and conditions on which Kit Carson and
DMEA were permitted to withdraw and terminate their WESCs. Tri-State’s breach is
continuing.
134.

MIECO, Ellgen, and Olson’s conduct was improper and wrongful because

their unlawful purported membership was essential to Tri-State’s false claim of FERC
jurisdiction, they joined as part of an unlawful conspiracy to claim FERC jurisdiction
under false pretenses, and Tri-State is using its false claim of FERC jurisdiction to try to
imprison United Power in Tri-State.
135.

As a direct and proximate result of MIECO, Ellgen, and Olson’s intentional

interference with the Bylaw Agreement and WESC, United Power has suffered actual
and compensatory damages far in excess of this Court’s jurisdiction, in an amount to be
proved at trial.
FOURTH CLAIM FOR RELIEF
(Declaratory Judgment Pursuant to C.R.C.P. 57 and C.R.S. § 13-51-106
Concerning the April 2020 Board Resolutions―Tri-State only)
136.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.

35

 137.

The Bylaws are an enforceable contract between Tri-State and United

Power. The covenant of good faith and fair dealing is implied by law into every contract,
including the Bylaws. The covenant of good faith and fair dealing requires that parties to
a contract, when exercising discretion, act in good faith and deal fairly and nondiscriminatorily with parties like United Power that seek to withdraw from Tri-State.
United Power has legal rights that are affected by the interpretation of the Bylaws and
Board Resolutions.
138.

On April 9, 2020, Tri-State’s Board of Directors approved two Board

Resolutions—the Buy Down Payment Formula Board Resolution and the Contract
Termination Payment Board Resolution. Those resolutions conflict with the Bylaws and
were passed in bad faith and for the purpose of discriminating against United Power.
139.

There is an existing and actual legal controversy that can be effectively

resolved by a declaratory judgment addressing the Board Resolutions, namely, whether
the Board Resolutions apply to United Power (since they were passed subsequent to
United Power’s request to withdraw) and whether the Board Resolutions violate the
duty of good faith and fair dealing implied into the Bylaws, conflict with Tri-State’s
Bylaws and thus are ultra vires, void, and a legal nullity. United Power is requesting an
interpretation of the rights, legal status, and relationships of the parties under the above
law and facts.
140.

United Power is entitled to a declaratory judgment pursuant to C.R.C.P. 57

and Uniform Declaratory Judgments Law, C.R.S. § 13-51-101, et seq., declaring that the
Board Resolutions do not apply to United Power, conflict with the Bylaws, and were

36

 passed in bad faith and for the purpose of discriminating against United Power,
rendering them ultra vires, void, and a legal nullity.
FIFTH CLAIM FOR RELIEF
(Declaratory Judgment Pursuant to C.R.C.P. 57 and C.R.S. § 13-51-106
Concerning United Power’s Rights and Obligations
Under the Bylaws and WESC―Tri State only)
141.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.
142.

United Power entered into the Bylaws and WESC with Tri-State. Those

two contracts are inextricably intertwined because executing the WESC was a condition
of United Power’s membership in Tri-State under the Bylaws. United Power has legal
rights that are affected by the interpretation of the Bylaws and WESC.
143.

The covenant of good faith and fair dealing is implied by law into every

contract by law, including the Bylaws and WESC.
144.

Tri-State materially breached the Bylaw Agreement and WESC by, inter

alia, refusing to allow United Power to withdraw from Tri-State on equitable terms and
conditions proportionately similar to the terms and conditions on which Kit Carson and
DMEA were permitted to withdraw and terminate their WESCs. Tri-State’s breach is
continuing.
145.

Tri-State materially breached the WESC by unilaterally and unlawfully

purporting to amend its terms and conditions through Board Policies to which United
Power did not agree, as more specifically alleged in ¶¶ 103-108, above.
146.

Tri-State’s material breaches of the Bylaws and WESC excuses United

Power from further performance under the Bylaws and WESC.

37

 147.

There is an existing and actual legal controversy that can be effectively

resolved by a declaratory judgment regarding the Bylaws and WESC, namely, whether
Tri-State has materially breached the Bylaws and WESC, and whether Tri-State’s prior
material breaches excuse United Power from further performance under the Bylaws and
WESC. United Power is requesting an interpretation of the rights, legal status, and
relationships of the parties under the above law and facts.
148.

United Power is entitled to a declaratory judgment pursuant to C.R.C.P. 57

and Uniform Declaratory Judgments Law, C.R.S. § 13-51-101, et seq., declaring that TriState has materially breached the Bylaws and WESC, and due to Tri-State’s prior
material breaches, United Power is relieved from any obligation to further perform
under those agreements.
SIXTH CLAIM FOR RELIEF
(In the Alternative, Breach of Contract―Tri-State only)
149.

United Power incorporates by reference the allegations set forth in all

prior paragraphs as if fully set forth herein.
150.

The Bylaws are an enforceable contract between Tri-State and United

Power.
151.

The Bylaws are an enforceable contract between Tri-State and United

Power. The covenant of good faith and fair dealing is implied by law into every contract,
including the Bylaws. The covenant of good faith and fair dealing requires that parties to
a contract, like Tri-State, when exercising discretion, act in good faith and deal fairly
and non-discriminatorily with parties like United Power that seek to withdraw from TriState.

38

 152.

United Power has performed all of its obligations under the Bylaws and

the WESC.
153.

The Bylaws between Tri-State and its members provide that a member

may withdraw “upon compliance with such equitable terms and conditions as the Board
of Directors may prescribe.”
154.

The Bylaws and WESC are inextricably intertwined because executing the

WESC was a condition of United Power’s membership in Tri-State under the Bylaws.
The “equitable terms and conditions” required by the Bylaws for withdrawal therefore
includes termination of the member’s WESC with Tri-State.
155.

In August 2018, in response to United Power’s request for equitable terms

and conditions to exit Tri-State, Tri-State provided an “indicative buyout calculation,”
which if paid by United Power, would result in a massive windfall to Tri-State and its
non-withdrawing members. Since that time, Tri-State has refused to provide equitable
terms and conditions for United Power to withdraw from membership and has refused
to allow United Power to withdraw on terms proportionately similar to those afforded
Kit Carson and DMEA, which contravenes the Bylaws and Colorado law.
156.

Tri-State’s refusal to provide equitable terms and conditions for United

Power’s withdrawal is contrary to material terms of the Bylaws, the implied covenant of
good faith and fair dealing, Colorado law, and the voluntary nature of cooperative
membership.
157.

By refusing to provide equitable terms and conditions on which United

Power can withdraw as a member of Tri-State, Tri-State materially breached the Bylaws.

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 158.

Tri-State’s conduct has resulted in damages to United Power in the form of

higher electricity rates, adverse impacts on the consumer-members of United Power,
and adverse impacts on the economy of the areas served by United Power far in excess
of this Court’s jurisdiction, in an amount to be proved at trial.
PRAYER FOR RELIEF
WHEREFORE, United Power respectfully requests the following relief:
1.

For an Order on United Power’s First Cause of Action, pursuant to

C.R.C.P. 57, declaring that the April 2019 amendment to the Bylaws providing the TriState Board of Directors authority to create new membership classes is ultra vires, void,
and a legal nullity because it was procured through fraud, in violation of the covenant of
good faith and fair dealing implied into the Bylaws, and in material breach of the
Bylaws;
2.

For damages on United Power’s Second and Third Causes of Action in an

amount to be proved at trial;
3.

For an Order on United Power’s Fourth Cause of Action, pursuant to

C.R.C.P. 57, declaring that the April 9, 2020 Board Resolutions conflict with the Bylaws
and the covenant of good faith and fair dealing implied into the Bylaws, and are thus
ultra vires, void, and a legal nullity;
4.

For an Order on United Power’s Fifth Cause of Action, pursuant to

C.R.C.P. 57, declaring that Tri-State materially breached the Bylaws and WESC, and due
to Tri-State’s prior material breach, United Power is relieved from any obligation to
further perform the Bylaws and WESC;

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 5.

In the alternative, for damages on United Power’s Sixth Cause of Action in

an amount to be proved at trial;
6.

For an award of all reasonable attorneys’ fees to the extent such may be

allowable by law or contract;
7.

For an award of allowable costs and expenses;

8.

For an award of pre-judgment and post-judgment interest; and

9.

For such other and further relief in law or equity as the Court deems just

and proper.
DEMAND FOR JURY TRIAL
United Power demands a jury trial on all claims or aspects of claims so triable.
Dated: May 4, 2020

Respectfully submitted,
s/ Michael L. O’Donnell
Michael L. O’Donnell
Peter W. Herzog III (pro hac vice
application to be filed)
Joel S. Neckers
Wheeler Trigg O’Donnell LLP
Attorneys for Plaintiff,
United Power, Inc.

Plaintiff’s Address:
500 Cooperative Way,
Brighton, CO 80603

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