Northwest Rural Public Power District along with three other Nebraska utilities have been in a five year dispute with their power supplier, Tri-State Generation and Transmission. The central issue in the dispute has been that due to contractual obligations NRPPD and the others were required to purchase all needed electricity from Tri-State at a rate higher than the systems thought was appropriate.
In 2009 NRPPD along with the other systems filed a lawsuit claiming, among other things, that Tri-State’s cost of power was unfair to the group and that terms set by Tri-State for ending the contract were not equitable. The case was originally filed in Nebraska but moved to the 10th Circuit Federal Court in Denver, CO after a motion for movement by Tri-State. Over the five year period all but one of the claims had been dismissed by the judge for one reason or another. The claim that went to trial for a jury decision was that the terms provided for buyout were inequitable, the terms violated a provision of the Bylaws of Tri-State, and thus breached the contract.
The trial began in Denver on May 19th, 2014 with jury selection and opening statements of counsels for the plaintiff group and the defendant. A jury of eight was initially selected. Upon development of an illness of one juror, the jury ended up being a seven member jury. The trial lasted six days and the jury deliberated for a day and a half before returning a verdict on May 28th, 2014.
The plaintiffs attempted to present evidence that showed an unfair margin (profit) was being contributed by the complaining Nebraska systems and the buyout terms captured that margin until the end of the contract in 2050. By the late 1990’s the price from Tri-State to the Nebraska systems was approximately 130% over the cost to procure power on their behalf. By 2009 that price increased to about 230% over the cost of the power. Since 2009 the gap has narrowed back to about 130%. The buyout terms offered by Tri-State used those historical highs in 2009 and projected those out for 41 years to produce a buyout for the four systems of about 200 million dollars which the systems could not afford.
Among the defendant’s arguments were that Tri-State was not obligated to offer any buyout terms, that the complaining member systems knew what the terms would be prior to signing a contract extension, and that the ultimate buyout terms were equitable because they collected all amounts due to Tri-State by terms of the contract.
Ultimately the jury returned a verdict in favor of the defendant, Tri-State, finding there was not sufficient evidence that Tri-State breached the contract by violating the Bylaw provision. There are several more steps remaining to the process that could prolong the case for a while longer. Some of those issues would be options for appeals by the plaintiffs or a counter-suit seeking legal costs of the defendant.
At a Board meeting of Tri-State after the verdict was rendered the newly installed Executive Vice President and General Manager commented that Tri-State will continue to work with all their members, including the Nebraska systems, to work through their differences and try to find common ground by which to move forward. In addition to Northwest Rural PPD of Hay Springs, the other three plaintiffs were; Panhandle Rural Electric Membership Association of Alliance, Midwest Electric Cooperative of Grant, and Chimney Rock PPD of Bayard.