Empire makes power play

Electric association forms co-op to protest Tri-State's new rate structure

Empire Electric Association, together with a coalition of other electric cooperatives and large industrial clients, filed a formal complaint Monday with the Colorado Public Utilities Commission over Tri-State Generation and Transmission's new rate restructuring.

In a statement, Empire Electric General Manager Neal Stephens called the rate structure "unreasonable, preferential and discriminatory."

Two other Colorado utility co-ops - Durango-based La Plata Electric Association, and White River Electric Association, in the Meeker area - also signed on. Together, the three serve approximately 46,000 member-customers in 10 Colorado counties, according to the complaint.

The grievance is two-fold. First, that Tri-State eliminated the incentives that formerly encouraged cutting back on energy use during peak hours. And second, that heavy users - like Walmart, Southwest Memorial Hospital, the Ute Mountain Casino, and oil and gas companies - have been disproportionately hit by the changes. Stephens said such "high-load customers" could see a cumulative cost increase of 10-18 percent this year.

"These are (customers) that turn the power switch on and don't turn it off, the ones who consume consistent power around the clock," he said in an interview Monday.

Barry Spear, LPEA's attorney, told The Durango Herald that Tri-State has 20 days, from the Monday filing, to respond, but only 14 days to file a motion to dismiss the complaint if it feels the PUC doesn't have jurisdiction.

Starting in January, Tri-State hiked wholesale electricity rates by 4.9 percent, while also implementing the new rate structure. Stephens said Empire tried to minimize the impact on customers by trimming its internal labor and overhead costs so the co-op absorbed about half that increase.

Even so, some residents have complained that their bills have gone up. The "facilities charge," or base rate assessed to households regardless of electricity use, rose from $19.50 to $30.73 on Jan. 1. Meanwhile the kilowatt per hour energy charge decreased by 15 percent. Based on information provided by Empire, charges should stay constant with 2012 levels for customers with a monthly consumption of 672 kilowatt hours. Use less than that threshold, and your bill will be higher than last year. Use more, and it will be lower.

Industrial giants, including BP, Encana Corp., Enterprise Products Operating LLC, ExxonMobil Power and Gas Services, and Kinder Morgan, have joined forces with Empire and the other two co-ops in filing the complaint.

Stephens said intensive discussions over the past year and a half with Tri-State, protesting the pending changes, were to no avail. He called appealing to the PUC a "last resort."

"This action was very difficult for our board (of directors). We are supportive of the cooperative model and rate structure. We want that model to continue," he said. "We hope that (sentiment) is recognized, that we are still supportive of Tri-State, all in all. We understand why they have to raise rates. It's just the way the restructuring happened."

Stephens traveled to Denver on Tuesday to attend Tri-State's two-day board meeting.

In an email Wednesday, Stephens said the issue was only discussed in a closed-door executive session, not during committee meetings, so he didn't have a good handle on Tri-State's reaction.

"In Tri-State's defense, they probably only had time to read the filing and did not have time to develop a response to it (yet)," he said.

It's not the first time Tri-State has faced such accusations. The power supplier is currently embroiled in a separate legal battle involving three New Mexico electric co-ops. Tri-State filed a lawsuit arguing that, because its business involves interstate commerce, the January rate changes were outside the purview of state regulators, The Taos News reported last month. That case is ongoing.

In all, Tri-State supplies wholesale electricity to 44 rural co-ops in Colorado, New Mexico, Nebraska and Wyoming.

For every dollar on an Empire customer's monthly bill, about three-quarters gets passed along from Empire to Tri-State to pay for the generated electricity.

Empire is obligated, under contract, to purchase 95 percent of its power from Tri-State until Dec. 31, 2050.