Dive Brief:

• United Power on Monday filed a lawsuit against Tri-State Generation and Transmission in a Colorado county district court, alleging a "civil conspiracy" to deprive state regulators of jurisdiction over exit fees charged by the G&T utility. United claims "hundreds of millions of dollars in damages" and says it plans to seek punitive damages. 
• United alleges Tri-State acted "fraudulently and in bad faith" in modifying its bylaws in 2019, ultimately allowing the provider to seek regulation by the Federal Energy Regulatory Commission while misleading cooperatives on the addition of partial requirements contracts to allow members to develop more local renewables.
• Tri-State officials say it is "unclear" how this relates to FERC and Colorado Public Utilities Commission proceedings that could determine the exit fees it charges members who leave. Similarly, United Director of Power Supply and Rates Dean Hubbuck told Utility Dive "there's really no clarity on who has that jurisdiction."

Dive Insight:

The new lawsuit, filed in Adams County District Court, may not bring clarity to jurisdictional issues, but observers say it opens up a new front in the battle between United and Tri-State and reveals an intense acrimony between the cooperative and G&T provider.

"It's hard to imagine any other type of business treating its biggest client this way," Joel Dyar, an advocate working on Tri-State reform in western Colorado, told Utility Dive. ​"This lawsuit alleges a deliberate series of bad faith activities that Tri-State undertook at the beginning of the year to subvert legitimate member co-op requests for flexibility to develop their own local clean energy projects and local jobs."

Modifications to Tri-State's bylaws last year allowed for members to develop more of their own supply, but also cleared the way for Tri-State to add the new non-utility members which brought it under FERC jurisdiction.

United's lawsuit alleges those new members 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 claims that during bylaw negotiations Tri-State indicated allowing a new class of members was necessary to also allow for the development of partial requirements contracts. United says Tri-State assured members it was not planning to seek FERC regulation — but then did.

"Tri-State ​basically said they were not using this to become FERC regulated, at least at that time," Hubbuck told Utility Dive. "What we want to see is transparency, and it doesn't feel like we've been getting it."

United's lawsuit claims the "false and misleading nature of Tri-State’s representations" is confirmed "by a privilege log Tri-State prepared in connection with litigation involving" Delta-Montrose Electric Association (DMEA).

Tri-State has faced member defections due to its relatively carbon-intensive energy mix, though it is working to eliminate coal emissions in New Mexico by the end of 2020 and Colorado by 2030 and is adding more than 1,000 MW of new wind and solar resources.

DMEA agreed to pay Tri-State $88.5 million, including $26 million for purchase of facilities, and separately forfeit $48 million in patronage capital, to leave the cooperative's service on June 30. 

Tri-State says the new lawsuit is not clearly related to the FERC and PUC hearings.

"United Power has already filed at the Colorado Public Utilities Commission and is making the same case before FERC]," a spokesman said in an email. "By filing in all possible venues, United Power is pursuing a costly ‘let’s see what sticks’ strategy to force Tri-State’s other members in Colorado, Nebraska, New Mexico and Wyoming to pick up more than $1 billion in costs, because United Power does not want to honor its power contract obligations.

An administrative law judge at the Colorado PUC will hold an evidentiary hearing May 18 to 22, which could result in development of an exit fee that regulators would then need to approve. Hubbuck said that process could be complete sometime in June. At FERC, Tri-State has filed an exit methodology that it says would apply to all members.

United is asking the Colorado district court to issue a declaratory judgment that Tri-State's amended bylaws are unenforceable, and that the cooperative has "suffered actual and compensatory damages."

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