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Victory for Local Renewable Energy

Federal Energy Regulatory Commission rules Tri-State fee on local Renewable power violates federal law. DMEA may buy from local renewable generators at negotiated rates. In a unanimous decision issued yesterday, the Federal Energy Regulatory Commission (FERC) in Washington D.C. struck down a fee imposed by Tri-State Generation & Transmission Association (Tri-State) on wholesale electric customers—such as DMEA—who purchase energy from renewable resources like wind, solar, hydro, or geothermal power.

“Yesterday’s ruling is a victory not just for DMEA and its members, but for people and communities throughout Delta and Montrose counties,” said Bill Patterson, Chairman of the DMEA Board of Directors. “FERC’s decision reaffirms that DMEA cannot be financially disadvantaged for following the law and purchasing local, renewable power.”

Yesterday’s ruling comes on the heels of a 2015 FERC ruling that declared DMEA must buy from renewable generation projects at negotiated rates under a federal law called PURPA (the Public Utilities Regulatory Policy Act). The 2015 ruling confirmed that PURPA requires such negotiated purchases, regardless of whether they are allowed under Tri-State customers’ wholesale electric contracts.

In response to that 2015 ruling, Tri-State adopted a new board policy (Policy 101) letting Tri-State impose a “lost revenue recovery fee” on electric cooperatives, like DMEA, that make the required renewable purchases. The fee would have required DMEA to pay Tri-State for the revenue Tri-State “loses” when DMEA buys energy from the renewable projects instead of from Tri-State.

In February 2016, Tri-State filed its own action with FERC, asking the Commission to declare that federal law allowed the fee. DMEA opposed Tri-State’s request, arguing that it would essentially undo FERC’s 2015 ruling. FERC agreed, denying Tri-State’s request and stating that Tri-State’s fee on DMEA “seeks to undermine the Commission’s prior order” from 2015 “by imposing financing burdens” on DMEA that would inhibit DMEA’s required renewable purchases. The Commission concluded that not only did Tri-State’s fee undermine FERC’s previous order, but it would also impermissibly “limit a [renewable generator’s] ability to sell its output at negotiated rates,” as required by PURPA.

More than 120 individuals and organizations—from across the political spectrum—supported DMEA’s position before FERC. “Community support for DMEA was overwhelming,” said DMEA Board President Patterson. “We are sincerely grateful to all of the members, communities, businesses, and chambers of commerce who supported us.”

DMEA CEO Jasen Bronec also noted that the FERC ruling “will further DMEA’s long-term strategic goal of diversifying our power supply, which means more stable rates to our members and lesser impacts from any future power rate increases.” He noted that the ruling “could also lead to serious local economic development, as renewable facilities locate to the area to take advantage of our abundant renewable resources in Delta and Montrose counties.”

 

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