The 10th Circuit Court of Appeals upheld orders by the Federal Energy Regulatory Commission establishing a methodology for calculating exit charges for members withdrawing from Tri-State Generation and Transmission Association. The court denied petitions for review, concluding FERC acted within its authority under the Federal Power Act and provided a reasoned explanation for its approach.
The dispute centered on whether exit fees should reflect Tri-State’s projected lost revenues or instead allocate existing financial obligations. FERC rejected the lost-revenues model, emphasizing member withdrawal occurs under a tariff — not as a breach of contract — and warning that such an approach could overcompensate the utility and deter exit.
FERC instead adopted a modified cost-allocation framework that assigns departing members a proportional share of outstanding debt and long-term commitments, including generation and transmission costs, based in part on historical billing data. The court held that this methodology was reasonable and supported by the record, while distinguishing prior cases involving contract damages. A partial dissent questioned aspects of FERC’s reasoning, but the majority affirmed the agency’s orders in full.
Read the full opinion.