Tri-State Generation and Transmission Association v. FERC

• Court: Court of Appeals for the Tenth Circuit
• Decided: March 24, 2026
• Docket: 24-9516
• Status: Published

Opinion

Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS March 24, 2026 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.,

Petitioner,

v. No. 24-9516

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent,

--------------------------------------

BASIN ELECTRIC POWER COOPERATIVE; MOUNTAIN PARKS ELECTRIC, INC.; UNITED POWER, INC.; LA PLATA ELECTRIC ASSOCIATION, INC.; NORTHWEST RURAL PUBLIC POWER DISTRICT,

Intervenors.

–––––––––––––––––––––––––––––––––––

v. No. 24-9538 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 2

Respondent.

-----------------------------

UNITED POWER, INC.; LA PLATA ELECTRIC ASSOCIATION, INC.; BASIN ELECTRIC POWER COOPERATIVE; MOUNTAIN PARKS ELECTRIC, INC.,

and

SAN MIGUEL POWER ASSOCIATION, INC.; BASIN ELECTRIC POWER COOPERATIVE,

Intervenors - Petitioners,

v. No. 25-9522

UNITED POWER, INC.; LA PLATA ELECTRIC ASSOCIATION, INC.;

2 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 3

MOUNTAIN PARKS ELECTRIC, INC.; NORTHWEST RURAL PUBLIC POWER DISTRICT,

Intervenors - Respondents.

v. No. 25-9544

----------------------------------

UNITED POWER, INC.; MOUNTAIN PARKS ELECTRIC, INC.; NORTHWEST RURAL PUBLIC POWER DISTRICT,

_________________________________

Petitions for Review of Orders from the Federal Energy Regulatory Commission (FERC Nos. ER21-2818, ER21-2818-002, ER21-2818-004, ER21-2818-005, ER21-2818-006, ER21-2818-007) _________________________________

Misha Tseytlin of Troutman Pepper Hamilton Sanders LLP, Chicago, IL (Fredrick Wilson and Russell Kooistra of Troutman Pepper Hamilton Sanders LLP, Washington, DC, Jeff P. Johnson of Troutman Pepper Hamilton Sanders

3 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 4

LLP, Richmond, VA, and Kenneth F. Rossman IV of Lewis Roca Rothgerber Christie LLP, Denver, CO, with him on the briefs), for Petitioner.

Carol J. Banta, Deputy Solicitor (David L. Morenoff, Acting General Counsel, and Robert H. Solomon, Solicitor, with her on the briefs), of Federal Energy Regulatory Commission, Washington, DC, for Respondent.

Jesse Halpern (Anthony F. Blum, Rebecca L. Shelton, Nicole S. Allen, Clifford Godiner, Peter K. Matt, and Jenna C. Cliatt with her on the briefs), of Thompson Coburn LLP, Washington, DC, for Intervenor Basin Electric Power Cooperative.

Norman C. Bay of Willkie Farr & Gallagher LLP, Washington, DC (Matthew S. Larson, Phillip J. Roselli, and Samuel D. Eisenberg of Wilkinson Barker Knauer, LLP, Denver, CO, Lauren M. Perkins, Michael Poster, and Gelane L. Diamond of Duncan, Weinberg, Genzer & Pembroke, P.C., Sacramento, CA, and Richard M. Lorenzo, Nicole A. Travers, and J.D. Taliaferro, of Loeb & Loeb LLP, Washington, DC, with him on the briefs), for Intervenors United Power, Inc., La Plata Electric Association, Inc., Mountain Parks Electric, Inc., and Northwest Rural Public Power District. _________________________________

Before PHILLIPS, McHUGH, and FEDERICO, Circuit Judges. _________________________________

PHILLIPS, Circuit Judge. ________________________________

In the early 1930s, few rural communities had access to electricity.

Congress, though, thought spreading electric power to rural America would

further the national interest. So Congress stepped in and passed the Rural

Electrification Act of 1936.

That Act created the Rural Electrification Administration and allowed it

to make favorable loans to not-for-profit electricity-distribution cooperatives.

Those cooperatives, often organized and owned by their consumer members,

used the loans to build and operate electricity-distribution systems.

4 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 5

Many of these distribution cooperatives later joined together to form

generation-and-transmission cooperatives. This allowed the distribution

cooperatives to more readily and economically secure long-term power sources.

Tri-State Generation and Transmission Association, Inc., is one such

generation-and-transmission cooperative. Its distribution-cooperative members

joined Tri-State by entering long-term, all-requirements contracts. These

contracts last through 2050 and require members to buy almost all their electric

services from Tri-State.

But what happens when some distribution-cooperative members want to

exit Tri-State and end their contracts early? That’s the key issue here.

Intervenors United Power, Inc., Mountain Parks Electric, Inc., La Plata Electric

Association, Inc., and Northwest Rural Public Power District sought early

termination of their Tri-State memberships and their all-requirements contracts.

In response, Tri-State filed a proposed methodology with the Federal Energy

Regulatory Commission for calculating an exit fee.

FERC initiated hearing procedures to identify a just and reasonable exit-

fee methodology. Relevant here, both Tri-State and FERC Trial Staff presented

exit-fee methodologies to an administrative law judge. Tri-State proposed a

lost-revenues approach, and Trial Staff proposed a balance-sheet approach.

The ALJ concluded that Tri-State’s proposed exit-fee methodology was

not just and reasonable. But she concluded that Trial Staff’s proposal was.

Unhappy with that conclusion, Tri-State sought FERC’s review.

5 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 6

FERC agreed with the ALJ that Tri-State’s proposed exit-fee

methodology was not just and reasonable. FERC then decided that the

methodology approved by the ALJ—with some modifications—was just and

reasonable. So FERC directed Tri-State to adopt it.

In these petitions for review, Tri-State challenges FERC’s adopted exit-

fee methodology. 1 Simply put, Tri-State thinks the methodology shifts costs to

its remaining members and gives departing members a windfall. So it argues

that FERC’s decisions adopting the methodology were arbitrary and capricious.

Exercising jurisdiction under 16 U.S.C. § 825l(b), we deny the petitions

for review.

BACKGROUND

I. Statutory Background

The Federal Power Act requires that “[a]ll rates and charges made,

demanded, or received by any public utility for or in connection with the

transmission or sale of electric energy . . . be just and reasonable.” 16 U.S.C.

§ 824d(a). Likewise, “all rules and regulations affecting or pertaining to such

rates or charges” also must be “just and reasonable.” Id. If rates, charges, or

related rules and regulations aren’t just and reasonable, then they are unlawful.

Id.

The clerk’s office procedurally consolidated Case Nos. 24-9516 and 24- 1

9538. It also procedurally consolidated Case Nos. 25-9522 and 25-9544. This opinion addresses all four petitions for review. 6 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 7

Under § 824d, or section 205 of the Act, utilities must file with FERC

“tariffs outlining [the utilities’] rates for FERC’s approval.” Emera Me. v.

FERC, 854 F.3d 9, 21 (D.C. Cir. 2017) (citation omitted). This section allows

utilities to propose changes to their own rates. Id. at 24.

Under § 824e, or section 206 of the Act, FERC has both the “authority”

and “duty” to ensure that wholesale electricity rates, charges, and related rules

and practices are just and reasonable. FERC v. Elec. Power Supply Ass’n, 577

U.S. 260, 277 (2016). If FERC finds otherwise, then it must “determine the just

and reasonable rate, charge, classification, rule, regulation, practice, or

contract” and “fix the same by order.” 16 U.S.C. § 824e(a).

Section 205 and section 206 proceedings are “related but distinct.” See

Emera Me., 854 F.3d at 24 (citation omitted). Section 205 proceedings begin

when a utility files its proposed tariff with FERC. See id. at 21, 24. The utility

need not show that its prior rate was unlawful. Id. at 21. But it must convince

FERC that its proposed changes are just and reasonable. See id. at 24.

By contrast, FERC or a complainant initiates section 206 proceedings,

which carry a different burden of proof. See id.; 16 U.S.C. § 824e(a). Section

206 imposes a “dual burden” on FERC. Emera Me., 854 F.3d at 25 (citation

omitted). First, before FERC can set a new rate, it must prove that the existing

one is unlawful. Id. at 24–25. Second, it “must show that its proposed changes

are just and reasonable.” PPL Wallingford Energy LLC v. FERC, 419 F.3d

1194, 1199 (D.C. Cir. 2005) (citation omitted).

7 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 8

The Act’s just-and-reasonable standard applies to the exit-fee

methodology at issue here. See United Power, Inc. v. FERC, 49 F.4th 554, 561–

62 (D.C. Cir. 2022). Both FERC and federal courts have long understood the

Act’s just-and-reasonable requirement “to incorporate a cost-causation

principle—the rates charged for electricity should reflect the costs of providing

it.” Consol. Edison Co. of N.Y. v. FERC, 45 F.4th 265, 271 (D.C. Cir. 2022)

(citation modified). Or put differently, rates must “reflect to some degree the

costs actually caused by the customer who must pay them.” Midwest ISO

Transmission Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004) (citation

omitted); see also Consol. Edison Co. of N.Y., 45 F.4th at 271 (stating that

though FERC “need not allocate costs with exacting precision, the costs

assessed against a party must bear some resemblance to the burdens imposed or

benefits drawn by that party” (citation omitted)).

II. The Parties

Tri-State is a generation-and-transmission cooperative that provides

wholesale electricity services to about forty utility members in Colorado,

Wyoming, New Mexico, and Nebraska. The utility members—most of them

distribution cooperatives—then resell that electricity to their consumer

members. Tri-State also provides electricity-transmission services to

nonmembers through its Open Access Transmission Tariff (OATT).

To join Tri-State, the utility members entered long-term, all-requirements

contracts. Known as Wholesale Electric Service Contracts, these contracts

8 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 9

require members to purchase almost all their electric services from Tri-State

through 2050.

By joining Tri-State, members gain a long-term power source, plus an

ownership interest in the cooperative. In return, Tri-State gains a stable power

market and assured revenues.

The Service Contracts are central to Tri-State’s existence. They give Tri-

State a secure revenue stream that it can use to grow and maintain operations.

The Service Contracts also help Tri-State secure debt financing for its

generation and transmission facilities.

The Service Contracts don’t mention early termination. But Tri-State’s

bylaws allow members to “withdraw from membership upon compliance with

such equitable terms and conditions as the [Tri-State] Board of Directors may

prescribe.” Agency R. vol. I at 151.

Intervenors United Power and La Plata were Tri-State members interested

in terminating their Service Contracts and leaving Tri-State. So they asked the

Colorado Public Utilities Commission to order Tri-State to set a reasonable exit

fee.

That effort proved futile. Just a few months before United Power and La

Plata sought relief from the Colorado Public Utilities Commission, Tri-State

had admitted its first non-utility member. Before that non-utility member’s

admission, all Tri-State members—and thus Tri-State itself—were exempt from

9 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 10

FERC’s jurisdiction. 2 But the new member was not. So after admitting the non-

utility member, Tri-State asked FERC to exercise jurisdiction over the exit-fee

dispute. FERC ultimately concluded that it had jurisdiction over both Tri-State

and the exit fee, preempting the Colorado Public Utilities Commission’s

jurisdiction over the exit-fee dispute. 3

These four petitions for review deal with the aftermath: FERC’s

proceedings to identify a just and reasonable exit-fee methodology.

III. Procedural History

Below, we summarize the procedural history underlying the petitions. We

examine relevant portions of these orders in more detail in our analysis.

A. Show-Cause Order

Under section 205 of the Act, Tri-State filed Rate Schedule No. 281 with

FERC. That rate schedule proposed an exit-fee methodology for members to

terminate their Service Contracts and leave Tri-State. FERC accepted the

methodology for filing and established hearing and settlement-judge

procedures. Tri-State Generation & Transmission Ass’n, 171 FERC ¶ 61,207, at

¶ 1 (2020).

FERC lacks jurisdiction over certain exempted electric cooperatives and 2

any corporation “wholly owned” by those exempted cooperatives. 16 U.S.C. § 824(f). 3 United Power petitioned the D.C. Circuit for review. United Power, 49 F.4th at 558. The court denied the petition, concluding that FERC reasonably asserted jurisdiction over Tri-State and that FERC had exclusive jurisdiction over the exit fee. Id. at 560, 562. 10 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 11

In June 2021, FERC issued a show-cause order on Tri-State’s proposed

procedures. Tri-State Generation & Transmission Ass’n, 175 FERC ¶ 61,229, at

¶ 1 (2021). FERC “preliminarily” found aspects of Rate Schedule No. 281

unjust and unreasonable. Id. ¶ 9. FERC was mainly concerned with Tri-State’s

failure to provide “clear and transparent procedures” for calculating the exit

fee. Id. ¶¶ 1, 10–13. So FERC directed Tri-State either to show why its

proposal was just and reasonable or to revise the rate schedule to address

FERC’s concerns. Id. ¶¶ 15–16.

B. Order Establishing Section 206 Proceedings

After the show-cause order, Tri-State revised Rate Schedule No. 281. The

new filing proposed an exit fee that was the greater of (1) Tri-State’s estimated

lost revenues from a departing member’s early exit, minus certain costs; or

(2) a departing member’s pro rata share of Tri-State’s total debt and other

obligations.

FERC accepted the revisions for filing. Tri-State Generation &

Transmission Ass’n, 177 FERC ¶ 61,059, at ¶ 1 (2021). But again, it

preliminarily found that the methodology was not just and reasonable. Id. ¶

119.

First, FERC addressed Tri-State’s claim that a lost-revenues approach to

the exit fee was the only just and reasonable one. Id. ¶ 123. FERC recognized

that it had found lost-revenues approaches reasonable in some breach-of-

contract cases. See id. But it explained that when members terminated their

11 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 12

Service Contracts under Rate Schedule No. 281, there would be no breach of

contract. Id. So FERC concluded that other approaches to the exit-fee

methodology might be just and reasonable. See id. ¶¶ 123–124.

Along those lines, FERC noted that using a lost-revenues approach may

result in a windfall for Tri-State and improperly deter members from exiting.

Id. ¶ 123. So FERC instructed the parties to explore an exit-fee methodology

based on only a departing member’s pro rata share of debt and other obligations

or one based on a balance-sheet approach. Id. ¶ 124.

Second, FERC initiated section 206 proceedings to “ensure that, if

necessary, [it] can establish both a just and reasonable methodology for

calculating” the exit fee. Id. ¶ 120.

C. ALJ’s Initial Decision

Soon after, a FERC ALJ began hearing procedures. Tri-State, United

Power, and FERC Trial Staff each proposed exit-fee methodologies. 4

Tri-State stuck with its prior approach: the higher of its lost revenues or a

departing member’s pro rata share of debt and other obligations.

United Power proposed a balance-sheet approach. Under this approach, a

departing member would pay its pro rata share of generation-related debt and

other liabilities that Tri-State incurred to serve that member, including power

4 Some of Tri-State’s members also proposed an exit-fee methodology. That proposal is not relevant here.

12 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 13

purchase agreements (PPAs). 5 To calculate a member’s pro rata share, United

Power would multiply Tri-State’s total generation-related debt and obligations

by the departing member’s percentage share of patronage capital. 6

United Power’s balance-sheet approach didn’t account for transmission-

related debt. That’s because it assumed that the departing member would keep

using Tri-State’s transmission services through its OATT. And Tri-State’s

OATT rate included some charges for transmission-related debt. So in United

Power’s view, paying for OATT services would cover its share of that debt.

United Power’s balance-sheet approach also distinguished between

Eastern and Western Interconnection members. 7 Tri-State provides generation

and transmission services to its Western Interconnection members. But it serves

its Eastern Interconnection members only through agreements with other

utilities, including an all-requirements contract with intervenor Basin Electric

Power Cooperative. As a result, Tri-State doesn’t incur any generation-related

5 PPAs are Tri-State’s off-balance-sheet commitments, such as contracts for services with other utilities. 6 Patronage capital is the excess revenue, after operating expenses and costs, that Tri-State allocates to its members. 7 Tri-State serves members in two sections of the national electricity grid: the Western Interconnection and the Eastern Interconnection. Most of its members serve consumers in the Western Interconnection. But a few serve consumers in both sections or in the Eastern Interconnection only.

13 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 14

debt to serve its Eastern Interconnection members. So United Power’s approach

didn’t assign any generation-related debt to those members.

Trial Staff proposed a few adjustments to United Power’s balance-sheet

approach. For example, rather than using patronage capital to calculate a

departing member’s pro rata share of debt, Trial Staff proposed using the

member’s average load billings over the past three years. It also proposed that

the departing member’s exit fee reflect the member’s share of both

transmission- and generation-related debt.

Yet Trial Staff acknowledged that those members using Tri-State’s

OATT services after exiting would pay twice for some transmission-related

debt. So it proposed offsetting future revenue from the departing member’s

OATT payments against the member’s pro rata share of debt. Under this

approach, departing members would contract with Tri-State for OATT services;

then Tri-State would reduce the net exit fee by the present value of the OATT

payments.

After reviewing an extensive evidentiary record, the ALJ identified a just

and reasonable exit-fee methodology: Trial Staff’s. See Tri-State Generation &

Transmission Ass’n, 180 FERC ¶ 63,034, at ¶ 500 (2022).

First, the ALJ rejected Tri-State’s lost-revenues approach. Id. ¶ 189. She

concluded that FERC’s order establishing section 206 proceedings precluded

her from accepting a lost-revenues approach. Id. ¶¶ 190–202. And regardless,

she found Tri-State’s approach unreasonable because it gave Tri-State a

14 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 15

windfall and deterred members from exiting. See id. ¶¶ 228, 233. In fact, the

ALJ noted that if every Tri-State member terminated its Service Contract, Tri-

State would receive $9.1 billion in exit payments—almost double its total

liabilities and triple its debt. Id. ¶ 228.

Second, the ALJ rejected United Power’s balance-sheet approach. Id. ¶¶

338, 384, 418. She found it inappropriate to rely on patronage capital to

determine a departing member’s pro rata share of debt. Id. ¶ 387. She also

determined that excluding transmission-related debt from the exit fee was not

just and reasonable. Id. ¶¶ 419–24.

Third, the ALJ accepted Trial Staff’s balance-sheet approach as just and

reasonable. Id. ¶ 500. She found that a departing member’s three-year average

share of billings better captured the member’s pro rata portion of Tri-State’s

debt and other obligations like PPAs. Id. ¶ 503. As for transmission-related

debt, the ALJ concluded that Trial Staff’s balance-sheet approach was just and

reasonable because it appropriately accounted for transmission revenues in the

exit fee. Id. ¶ 512. She likewise approved the transmission offset because it

prevented departing members from paying twice for transmission-related debt.

Id. ¶ 511. That said, she modified Trial Staff’s proposal so that the offset

included only the debt-related portions of departing members’ future OATT

payments. See id. ¶ 512 & n.922.

15 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 16

D. Methodology Order

Tri-State and United Power filed exceptions to the ALJ’s decision with

FERC. 8 On review, FERC agreed with the ALJ that Tri-State’s and United

Power’s proposed exit-fee methodologies were not just and reasonable. Tri-

State Generation & Transmission Ass’n, 185 FERC ¶ 61,201, at ¶¶ 222, 408

(2023). It then decided that the ALJ’s exit-fee methodology—with some

modifications—was just and reasonable. Id. ¶ 537.

Starting with Tri-State’s proposed methodology, FERC clarified that its

order establishing section 206 proceedings hadn’t precluded the ALJ from

considering a lost-revenues approach. Id. ¶ 223. Even so, it affirmed the ALJ’s

reasons for finding a lost-revenues approach inappropriate. Id. ¶¶ 234–39.

FERC also reiterated the purpose of Tri-State’s exit fee: “to compensate

Tri-State for the costs that it has incurred or has an obligation to incur in the

future to satisfy its service obligations under the [Service Contract] with the

departing member.” Id. ¶ 227 (citation modified). FERC reasoned that Tri-

State’s lost-revenues approach “would go beyond compensating Tri-State” for

these costs. Id.

As for United Power’s approach, FERC agreed with the ALJ that relying

on patronage capital for a departing member’s pro rata share of debt would

“run[] contrary to sound economic principles.” Id. ¶ 409. FERC also affirmed

8 Several other parties also filed exceptions. 16 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 17

that United Power’s treatment of transmission-related debt was not reasonable.

Id. ¶ 417. FERC explained that “withdrawing members must pay a pro rata

share of Tri-State’s debt and other long-term obligations,” including

transmission-related debt, “to the extent that they caused such costs.” Id. ¶ 419.

FERC then turned to the ALJ’s exit-fee methodology. First, FERC

affirmed using a balance-sheet approach. Id. ¶ 538. FERC acknowledged that it

hadn’t used this approach before. Id. Still, it concluded that a balance-sheet

approach appropriately balanced unique factors at play, including the departing

members’ ownership interests in Tri-State and the likelihood that departing

members would use Tri-State’s OATT services. Id. Though Tri-State argued

that a balance-sheet approach ignored significant costs, FERC reasoned that

many of those costs weren’t fixed and could be mitigated. Id. ¶ 540.

Second, FERC agreed that departing members should pay their pro rata

share of generation-related debt and other obligations based on the member’s

three-year average share of billings. Id. ¶ 546.

Third, FERC agreed that Western and Eastern Interconnection members

were “not similarly situated.” Id. ¶ 574. Though “[t]he same [exit-fee] formula

is being used for all members, regardless of which interconnection they are

located in,” FERC concluded that Tri-State should allocate debt and other

obligations “based on a member’s pro rata share within a specific

interconnection.” Id. ¶ 573.

17 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 18

Finally, FERC agreed that including transmission-related debt in the exit

fee was just and reasonable. Id. ¶ 558. So it instructed Tri-State to calculate

transmission-related debt and generation-related debt the same way. See id.

Yet FERC rejected the transmission-revenue offset, finding it

unworkable. Id. ¶ 557. FERC explained that the offset required speculation,

was overly burdensome, and posed a “high likelihood” of cost shifts. Id. ¶ 559–

60. And so, “finding no other just and reasonable treatment for including the

transmission-related debt in the record,” FERC used its section 206 authority to

modify the ALJ’s balance-sheet approach. See id. ¶ 561.

At its core, FERC’s modification swapped the transmission-revenue

offset for “a transmission crediting approach” that requires Tri-State “to credit,

over time, the full time-value of the transmission-related debt portion of the”

exit fee back to the departing member. Id. ¶¶ 561–62. The transmission-

crediting mechanism works like this: Departing members pay for generation-

and transmission-related debt up front in the exit payment. See id. ¶ 558. Then

Tri-State sets aside the transmission-related-debt portion of that payment. Id. ¶

562. If the departing member uses Tri-State’s OATT services, over time, Tri-

State credits back the transmission-related-debt portion of the exit payment by

applying a credit to the departing member’s monthly OATT bill. Id.

The transmission credit is “amortized in a straight line over the

remaining term of depreciation rates for transmission assets effective” in the

OATT rate “at the time notice of withdrawal is given.” Id. The credit applies to

18 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 19

the departing member’s entire OATT bill, not just the debt-related portion. Id.

If the credit exceeds the monthly bill, then the departing member forfeits the

excess. Id.

FERC reasoned that an upfront payment would keep Tri-State’s

“transmission assets” from getting “stranded.” Id. ¶ 565. And crediting back the

payments to departing members would encourage them to keep using Tri-

State’s services. Id. With this in mind, FERC determined that swapping the

transmission offset for a transmission credit was just and reasonable. Id. ¶ 563.

In sum, FERC concluded that, with its modifications, the ALJ’s balance-

sheet approach was just and reasonable. 9 Id. ¶ 537. FERC then directed Tri-

State to submit a compliance filing within thirty days. Id. ¶ 1.

E. First Compliance Order

As ordered, Tri-State revised Rate Schedule No. 281.

FERC concluded that the filing partially complied with the Methodology

Order’s directives. Tri-State Generation & Transmission Ass’n, 186 FERC

¶61,239, at ¶ 1 (2024). Relevant here, FERC instructed Tri-State to change

three things about Rate Schedule No. 281.

First, FERC ordered Tri-State to revise its methodology for calculating

transmission-related debt, which did not calculate a departing member’s pro

9 We refer to the balance-sheet approach adopted by FERC as “the adopted balance-sheet approach” or “the adopted methodology.” We refer to FERC’s order as the “Methodology Order.” 19 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 20

rata share of debt from the “full amount of Tri-State’s transmission-related

debt” as FERC had directed. Id. ¶ 56 (quoting Tri-State, 185 FERC ¶ 61,201, at

¶ 558).

Second, FERC noted that Tri-State’s proposal applied the transmission

credit to only part of a departing member’s OATT bill. Id. ¶ 59. Yet the

Methodology Order had concluded that the credit should apply to the departing

member’s entire invoice. See id. So FERC directed Tri-State to revise this

section of its filing too. Id.

Third, FERC discussed Tri-State’s treatment of Eastern Interconnection

members. See id. ¶ 108. Recall that Tri-State serves its Eastern Interconnection

members through agreements with other utilities, including an all-requirements

contract with Basin. Basin had sued Tri-State in federal district court, asserting

breach-of-contract claims related to the potential withdrawal of Tri-State’s

Eastern Interconnection members. Id. ¶ 86.

In response to that lawsuit, Tri-State added language to Rate Schedule

No. 281 stating that if a court enjoined Tri-State from allowing member

withdrawal, or if a court concluded that withdrawal would breach the Basin

contract, Eastern Interconnection members could not withdraw. Id. ¶ 87. But

FERC found this language beyond the proceedings’ scope and ordered Tri-State

to remove it. Id. ¶¶ 112–14.

Similarly, FERC took issue with Tri-State’s exit-fee calculations for

Eastern Interconnection members. Rather than calculating a departing

20 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 21

member’s pro rata share of the stranded weighted average cost of the Basin

contract (a PPA), Tri-State’s methodology sought a price that “makes Basin

whole under that agreement.” Id. ¶ 109. Put differently, Tri-State “appear[ed]

to be introducing a lost revenues approach for calculating the buyout amount

for the Basin [contract].” Id. So FERC ordered Tri-State to remove this section

of the rate schedule too. Id.

F. Methodology Rehearing Order

Meanwhile, Tri-State and United Power requested rehearing of FERC’s

Methodology order. 10 See generally 16 U.S.C. § 825l(a). FERC denied the

requests by operation of law but noted that it would address them in a future

order. Tri-State Generation & Transmission Ass’n, 186 FERC ¶ 62,071 (2024).

Soon after, FERC entered an order addressing the arguments raised on

rehearing, as well as modifying and clarifying the Methodology Order. 11 Tri-

State Generation & Transmission Ass’n, 187 FERC ¶ 61,101, at ¶ 2 (2024).

First, FERC doubled down on its reasons for rejecting a lost-revenues

approach for the exit-fee methodology. Id. ¶¶ 20–24. It explained that neither

precedent, nor the Service Contracts or Tri-State’s bylaws, required it to use a

lost-revenues approach. Id. ¶¶ 20–21. And it reemphasized that a lost-revenues

approach would overcompensate Tri-State. Id. ¶ 23.

10 Other parties, including intervenor Mountain Parks, also requested rehearing. 11 We refer to this order as the “Methodology Rehearing Order.” 21 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 22

Second, FERC affirmed its use of a balance-sheet approach. Id. ¶ 54.

Again, it explained that this approach accounted for departing members’

ownership interests in Tri-State and the likelihood that those members would

keep using Tri-State’s transmission services. Id. ¶ 55. FERC also reasoned that

a balance-sheet approach aligned with Tri-State’s bylaws, the exit fee’s

purpose, and cost-causation principles. Id. ¶¶ 55–56.

Third, FERC affirmed that the adopted balance-sheet approach should

apply to Eastern Interconnection members. See id. ¶ 67. Tri-State had argued

that allowing an Eastern Interconnection member to exit would breach Tri-

State’s all-requirements contract with Basin. Id. ¶ 66. So it asserted that FERC

should have considered this potential breach when deciding how to calculate an

Eastern Interconnection member’s pro rata share of Tri-State’s obligations. See

FERC disagreed. It explained that “what might constitute a breach of the

Basin [contract] is not before [it] in this proceeding.” Id. ¶ 67. And besides,

“the potential for a breach . . . would impact the availability of exit payments

regardless of the particular [exit-fee] methodology” used. Id.

Fourth, FERC affirmed its adoption of a transmission-crediting

mechanism. Id. ¶ 90. It reiterated that the transmission credit struck a

reasonable balance between competing interests: “ensuring that the debt-related

costs of Tri-State’s transmission assets are recovered through the” exit fee and

22 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 23

“ensuring that the withdrawing member reaps the full benefit of these costs

incurred while minimizing cost shifts.” Id. (citation omitted).

FERC also stood by its conclusion that the credit should apply to a

departing member’s entire OATT invoice. Id. ¶ 91. “Applying the credit to the

entirety of the withdrawing member’s transmission invoice ensures that the

withdrawing member will receive the full benefit of its payment of

transmission-related debt.” Id.

Likewise, FERC affirmed that departing members should forfeit any

excess credit. Id. ¶¶ 91–92. FERC explained that—whether or not a departing

member keeps using Tri-State’s transmission services—the member must pay

Tri-State for transmission-related debt to avoid cost shifts. Id. ¶ 90. And the

crediting mechanism simply “provide[s] credit for the paid transmission debt up

to the level of service [the departing member] continues to use on the assets for

which it paid.” Id. ¶ 92. Thus, the departing member “should not accumulate

credit to the extent [it is] not using” those assets. Id.

So in the end, FERC sustained its Methodology Order as modified on

rehearing. Id. ¶ 6. It then directed Tri-State to submit another compliance filing

within thirty days. Id. ¶ 2.

G. Second Compliance Order

So Tri-State revised Rate Schedule No. 281 again. Still, Tri-State

struggled to get it right. In an order addressing arguments raised on rehearing

23 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 24

and on compliance, 12 FERC concluded that Tri-State had only partially

complied with the first compliance order’s directives. Tri-State Generation &

Transmission Ass’n, 189 FERC ¶ 61,165, at ¶¶ 55, 82 (2024).

First, Tri-State had included non-networked transmission facilities 13 in its

updated calculations for the upfront exit payment—but not in its calculations

for the transmission credit. Id. ¶ 56. As a result, departing members wouldn’t

recover “the full value” of the transmission-related-debt portion of the exit fee

as FERC had directed. Id. So FERC ordered Tri-State “to use a method for

allocating the transmission related debt portion of [the exit fee] that ensures all

transmission-related debt that was included in a withdrawing member’s [exit

fee] can be recovered through the transmission crediting mechanism, including

transmission related debt arising from . . . non-networked transmission

facilities.” Id. ¶ 58.

Second, FERC found that Tri-State was still using a lost-revenues

approach to calculate the Eastern Interconnection members’ share of the Basin

contract. Id. ¶ 85. FERC repeated that Tri-State shouldn’t design its

methodology “to arrive at a price that makes Basin whole.” Id. Nor should Tri-

State assume, when calculating an Eastern Interconnection member’s pro rata

12 We refer to this order as the “Second Compliance Order.” 13 Non-networked transmission facilities are typically those that benefit only one Tri-State member. Tri-State’s member rates include charges for such facilities. Tri-State’s OATT rates, on the other hand, do not. 24 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 25

share of costs, that the member’s withdrawal would breach the Basin contract.

Id. ¶ 87.

In support, FERC directed Tri-State to a concurrently issued order on the

Basin contract. Id. ¶ 87 & n.149. In a separate proceeding, FERC had

concluded that Tri-State would not breach the Basin contract if it allowed an

Eastern Interconnection member to withdraw. See Nw. Rural Pub. Power Dist.

v. Basin Elec. Power Coop., 189 FERC ¶ 61,164, ¶ 82 (2024). So FERC relied

on its findings in that concurrently issued order to explain why the exit-fee

methodology shouldn’t assume a breach of contract. See Tri-State, 189 FERC ¶

61,165, at ¶ 87.

At the same time, FERC noted that section 9 of the Basin contract should

inform Tri-State’s calculations. Id. That section allows Tri-State to reorganize

or “sell, lease or transfer” its Eastern Interconnection assets “so long as Tri-

State shall pay such pro rata portion of the outstanding indebtedness, as well as

other obligations and commitments of Basin at the time existing, as shall be

determined by Basin and shall otherwise comply with such reasonable terms

and conditions as Basin shall require.” Nw. Rural Pub. Power Dist., 189 FERC

¶ 61,164, at ¶ 11 (citation modified).

Once again, FERC ordered Tri-State to provide another compliance

filing. Tri-State, 189 FERC ¶ 61,165, at ¶ 3.

25 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 26

H. Compliance Rehearing Order

Tri-State requested rehearing of FERC’s latest compliance order. 14 On

rehearing, FERC “continu[ed] to reach the same result” but clarified and

modified its prior order. 15 Tri-State Generation & Transmission Ass’n, 191

FERC ¶ 61,088, at ¶ 3 (2025).

Tri-State had challenged FERC’s decision to include, in the transmission

credit, payment for non-networked transmission debt. Id. ¶ 22. Tri-State argued

that doing so shifted costs to Tri-State and exceeded the credit’s purpose of

preventing Tri-State from recovering twice for transmission-related debt. Id. ¶

23.

FERC rejected this argument, emphasizing that FERC hadn’t limited the

credit’s purpose to preventing double recovery from OATT rates. Id. ¶ 28.

Instead, the credit has two purposes: preventing double recovery and ensuring

that the departing member “gets the full transmission benefit it paid for.” Id.

(citation modified). FERC explained that including non-networked debt in the

credit satisfied those purposes and presented little risk of cost shifts. See id. ¶¶

28–29.

14 Intervenors United Power, Mountain Parks, Basin, and Northwest Rural also requested rehearing. 15 We refer to FERC’s rehearing order as the “Compliance Rehearing Order.” 26 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 27

Tri-State had also challenged FERC’s directive on the exit-fee

methodology for Eastern Interconnection members. Id. ¶ 58. Tri-State argued

that FERC ignored the additional costs that Basin could impose under the Basin

contract. Id. And it argued that FERC’s instruction to consider section 9 of the

Basin contract did not explain how to properly calculate the exit fee. Id. ¶ 59.

FERC again disagreed, pointing to its reasoning in another concurrently

issued order on the Basin contract. Id. ¶ 64 & n.172 (citing Nw. Rural Pub.

Power Dist. v. Basin Elec. Power Coop., 191 FERC ¶ 61,087 (2025)). 16 And

FERC restated that Tri-State shouldn’t assume a breach of contract when

calculating Eastern Interconnection members’ exit fees. Tri-State, 191 FERC

¶ 61,088, at ¶ 64.

FERC then directed Tri-State to provide another compliance filing. Id.

¶ 3.

I. Federal Appeals

FERC’s orders on the exit-fee methodology sparked four petitions for

review. 17

Basin petitioned the D.C. Circuit for review of FERC’s orders. Basin 16

Elec. Power Coop. v. FERC, Case No. 25-1060. That petition is still pending.

Really, they sparked five. In Case No. 24-9532, United Power also 17

challenged FERC’s adopted exit-fee methodology. But before oral argument, United Power voluntarily dismissed its petition.

27 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 28

In Case No. 24-9516, Tri-State challenges FERC’s Methodology Order,

and in Case No. 24-9538, Tri-State challenges the Methodology Rehearing

Order. 18 The clerk’s office procedurally consolidated these petitions.

In Case No. 25-9522, Tri-State challenges the Second Compliance Order,

and in Case No. 25-9544, Tri-State challenges the Rehearing Compliance

Order. 19 The clerk’s office procedurally consolidated these petitions too.

We directed the clerk’s office to consolidate all four petitions for one

oral argument. We likewise address all four petitions in one opinion.

STANDARD OF REVIEW

We review FERC’s orders under the judicial-review standards in the

Administrative Procedure Act. See Elec. Power Supply Ass’n, 577 U.S. at 291–

92.

We will affirm FERC’s factual findings if they are supported by

“substantial evidence.” 5 U.S.C. § 706(2)(E). “Substantial evidence is such

relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” Fabrizius v. USDA, 129 F.4th 1226, 1237 (10th Cir. 2025)

(citation modified).

18 Basin, Mountain Parks, United Power, La Plata, and Northwest Rural intervened in Case No. 24-9516. Basin, Mountain Parks, United Power, and La Plata intervened in Case No. 24-9538.

United Power, La Plata, Mountain Parks, Northwest Rural, Basin, and 19

San Miguel Power Association, Inc. intervened in Case No. 25-9522. United Power, Mountain Parks, and Northwest Rural intervened in Case No. 25-9544. 28 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 29

We will affirm FERC’s other conclusions unless, among other things,

they are “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A). A conclusion is arbitrary and

capricious when the agency

relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or if the agency action is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

W. Watersheds Project v. Haaland, 69 F.4th 689, 700 (10th Cir. 2023) (citation

modified).

In reviewing FERC’s decision, “we may not substitute our own judgment

for” FERC’s. Elec. Power Supply Ass’n, 577 U.S. at 292. On the contrary, “we

afford great deference to [FERC] in its rate decisions.” Id. (citation modified).

So at bottom, “[o]ur important but limited role” is to ensure that FERC

“engaged in reasoned decisionmaking.” Id. at 295.

DISCUSSION

Together, these petitions claim that FERC acted arbitrarily and

capriciously in four ways: (1) by rejecting a lost-revenues approach for the

exit-fee methodology, (2) by adopting a balance-sheet approach for the exit-fee

methodology, (3) by adopting the transmission-crediting mechanism and later

changing its purpose, and (4) by applying the adopted balance-sheet approach

to Eastern Interconnection members despite the Basin contract.

29 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 30

We consider—and reject—each challenge in turn.

I. Rejecting a Lost-Revenues Approach

Tri-State argues that FERC acted arbitrarily and capriciously by rejecting

a lost-revenues approach for the exit-fee methodology. 20

We disagree. FERC explained that it rejected this approach as

(1) violating cost-causation principles by overcompensating remaining

members and (2) improperly deterring member withdrawal. Tri-State, 185

FERC ¶ 61,201, at ¶¶ 224, 227, 234, 237–38; Tri-State, 187 FERC ¶ 61,101, at

¶¶ 23, 34. For example, FERC explained that a lost-revenues approach could

allow Tri-State to “recover decades of revenues not yet earned from a departing

member, calculated based on decades of projected costs to serve that member

that Tri-State will never actually incur.” Tri-State, 185 FERC ¶ 61,201, at ¶

234 (citation omitted).

FERC also rejected a lost-revenues approach because of the approach’s

“breach-of-contract foundation.” Id. ¶ 238. FERC explained that calculating

lost revenues over the Service Contract’s life “embodies contractual damages,

which is not appropriate in contract termination situations such as this, when

We note that Tri-State’s opening brief doesn’t argue that FERC 20

arbitrarily and capriciously concluded that Tri-State failed to meet its section 205 burden of proposing a just and reasonable rate. And Tri-State confirmed during oral argument that it didn’t challenge FERC’s rejection of its proposed methodology, but instead challenged FERC’s broader rejection of a lost- revenues approach. See Oral Arg. at 7:55–8:49.

30 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 31

members depart Tri-State with a two-year notice period” under Tri-State’s

tariff. Tri-State, 187 FERC ¶ 61,101, at ¶ 34. Along those lines, FERC

explained that nothing entitled Tri-State to “the benefits of economies of

scale”—because “economies of scale are a function of [Tri-State] membership,

and[] . . . the withdrawal of a member does not constitute a breach of contract.”

Tri-State, 185 FERC ¶ 61,201, at ¶ 230.

Based on this explanation, FERC engaged in “reasoned decisionmaking”

when it rejected a lost-revenues approach for the exit-fee methodology. See

Elec. Power Supply Ass’n, 577 U.S. at 295.

But for two reasons, Tri-State argues that FERC’s rejection of a lost-

revenues approach was still arbitrary and capricious. First, Tri-State argues that

FERC did not “reasonably consider” the parties’ contractual obligations. Tri-

State Op. Br. at 42. And second, it argues that FERC failed to distinguish

relevant precedent.

We reject both arguments.

A. Contractual Obligations

Tri-State asserts that a just and reasonable rate typically “holds

sophisticated parties to their bargains.” Id. at 33 (citation modified). And it

emphasizes that its members agreed to remain part of the cooperative and take

almost all their electric services from Tri-State through 2050. So it argues that

a lost-revenues approach holds departing members to their end of the bargain

by compensating Tri-State for the revenues and benefits it would have received

31 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 32

had the departing member fulfilled its Service Contract. Put differently, Tri-

State wants an exit fee that resembles breach-of-contract damages.

Yet it is undisputed that “there is no breach of contract when a member

withdraws from Tri-State pursuant to [its] tariff.” Tri-State, 185 FERC ¶

61,201, at ¶ 231. So FERC concluded that there is “no breach of contract that

could warrant a remedy of damages in the form of lost revenues.” Tri-State,

187 FERC ¶ 61,101, at ¶ 20.

We think this reasoning was sound: with no breach of contract, FERC

was not required to approve lost-revenues damages here.

Tri-State, though, argues that its bylaws support using a lost-revenues

approach anyway. Under the bylaws, a member may withdraw from Tri-State

only “upon compliance with such equitable terms and conditions as the Board

of Directors may prescribe” and after meeting “all [the member’s] contractual

obligations.” Agency R. vol. I at 151. Withdrawal “shall not release a member

from any debts due [to Tri-State] nor impair the obligations of a member under

any contract with” Tri-State. Id.

But FERC rejected this argument, emphasizing that Tri-State identified

no “particular provision that would require the [exit fee] to be based on a lost

revenues calculation.” Tri-State, 187 FERC 61,101, at ¶ 21. FERC further

concluded that, absent a breach of contract, neither the Service Contracts nor

the bylaws entitled Tri-State and its remaining members to the benefits of

economies of scale. See Tri-State, 185 FERC ¶ 61,201, at ¶ 230.

32 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 33

We agree with FERC. Tri-State’s bylaws say nothing about what happens

when Tri-State releases a member from its contractual obligations under a

tariff. Nor do the bylaws state that the only way a member can cover its “debts

due” or meet its obligations is by paying Tri-State for its lost revenues. Indeed,

both the Service Contracts and the bylaws are silent about how to calculate an

exit fee. See id. ¶ 70 (“[I]t is undisputed that neither the Bylaws nor the

[Service Contracts] prescribe how [exit fees] should be calculated.”).

Simply put, neither the Service Contracts nor the bylaws mandate a lost-

revenues approach. So Tri-State hasn’t shown that FERC acted contrary “to the

evidence before” it when it rejected a lost-revenues approach for the exit fee.

See W. Watersheds Project, 69 F.4th at 700 (citation omitted).

B. Precedent

Tri-State argues that FERC ignored four decisions that supported using a

lost-revenues approach: Tri-State Generation & Transmission Ass’n v.

Shoshone River Power, Inc., 874 F.2d 1346 (10th Cir. 1989); Town of Norwood

v. FERC, 202 F.3d 392 (1st Cir. 2000); Am. Wind Energy Ass’n The Wind Coal.

v. Sw. Power Pool, Inc., 167 FERC ¶ 61,033 (2019); and Wabash Valley Power

Ass’n, 178 FERC ¶ 63,005 (2022).

In general, Tri-State is right that “FERC’s failure to come to terms with

its own precedent reflects the absence of a reasoned decisionmaking process.”

New England Power Generators Ass’n v. FERC, 881 F.3d 202, 213 (D.C. Cir.

2018) (citation omitted). But that’s not what happened here. We agree with

33 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 34

FERC that none of these decisions control. See Tri-State, 185 FERC ¶ 61,201,

at ¶¶ 231–33; Tri-State, 187 FERC ¶ 61,101, at ¶¶ 20–21.

1. Shoshone

Like the distribution-cooperative members at issue here, Shoshone had a

long-term, all-requirements contract with Tri-State. Shoshone, 874 F.2d at

1349. Yet Shoshone sold its assets to another utility company. Id. at 1350. So

Tri-State sued for breach of contract, seeking both damages and injunctive

relief. Id. A jury found in Tri-State’s favor, but the district court denied

injunctive relief and ordered a new trial. Id. at 1350–51. Tri-State filed an

interlocutory appeal. Id. at 1351.

We held that Shoshone and Tri-State had an implied agreement that

Shoshone would remain in business and maintain requirements under the

contract. Id. at 1356, 1360. And we reached that conclusion by reading the all-

requirements contract in connection with the entire cooperative system. Id. at

1359. Specifically, we explained that the contracts were “an assured source of

repayment and security for” Tri-State’s loans and “an essential factor to [Tri-

State’s] cohesiveness and financial strength.” Id. at 1349–50. We noted that

“the all-requirements contract and the entire enterprise of the parties” was

“based on the continuance of the contract throughout the agreed-upon term,

especially in light of the cooperative nature of the Tri-State system, the role the

all-requirements contract plays in the cooperative venture, and the participation

and interrelationship of the individual cooperatives.” Id. at 1357.

34 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 35

So based on that implied agreement, we ruled that Shoshone would

breach its all-requirements contract if it sold its assets when it still had

members that required electric power. Id. at 1360. As for a remedy, we

suggested that damages for “the present value of what it would have realized

over the [contract’s] life” would make Tri-State whole. Id. at 1361.

Here, FERC distinguished Shoshone by explaining that it involved a

breach of contract. Tri-State, 185 FERC ¶ 61,201, at ¶ 231. In contrast, when a

member exits Tri-State under its tariff, there is no breach of contract. Id.

We agree with FERC that this key difference—exiting by breaching a

contract versus exiting under a tariff—was enough to distinguish Shoshone.

Tri-State also relies on Shoshone to showcase the Service Contracts’

importance to its cooperative model. Tri-State argues that when FERC

distinguished Shoshone, it minimized departing members’ obligations under the

Service Contracts.

But again, neither the Service Contracts nor the bylaws require a lost-

revenues approach or entitle Tri-State to economies-of-scale benefits. So here,

Shoshone simply confirms that the “contractual relationship” between Tri-State

and its members is “a unique one.” 874 F.2d at 1359.

2. Norwood

In Norwood, New England Power, a wholesale electric-power supplier,

had long-term requirements contracts to provide electricity to other utilities.

202 F.3d at 396. Those utilities, including Norwood, could terminate the

35 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 36

contract only after providing seven years’ notice. Id. at 399. But Norwood

sought to terminate its contract with New England Power without the required

notice. See id. at 397–98. So New England Power proposed tariff revisions that

would allow utilities to terminate their contracts with thirty days’ notice

instead. Id. at 397. Under that proposal, utilities could terminate their contracts

on short notice by paying an exit fee to cover the revenues New England Power

would have collected had the member fulfilled the contract term. Id.

FERC approved the exit fee, and Norwood petitioned the First Circuit for

review. Id. at 398. The First Circuit upheld the fee. Id. at 398–402, 408.

Here, FERC distinguished Norwood by noting that the decision examined

inputs to a preexisting exit-fee formula. 187 FERC ¶ 61,101, at ¶ 20. FERC

also explained that Norwood “terminated its contract without availing itself of

the [effective] tariffs,” while here there is “no breach of contract that could

warrant [lost-revenues] damages.” Id.

We agree with Tri-State that this characterization of Norwood doesn’t

hold up. Norwood didn’t examine “inputs” to an existing exit fee. In fact, as the

First Circuit explained, Norwood’s “main attack” was on FERC’s “approval” of

an exit fee New England Power proposed in its tariff. Norwood, 202 F.3d at

398. We face a similar issue here: whether FERC acted arbitrarily and

capriciously in approving an exit-fee methodology.

As for a breach of contract, the First Circuit concluded that FERC hadn’t

decided whether Norwood breached its contract. Id. at 400. Instead, FERC

36 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 37

upheld, “on a generic basis, a termination charge for those customers who are

bound by existing contracts but wish to avoid their obligations.” Id. Again,

that’s the same issue here.

All that said, FERC’s conclusion that Norwood doesn’t require a lost-

revenues approach was not arbitrary and capricious. We agree with FERC and

the ALJ that “key factual differences” exist between Norwood “and the case at

hand.” See Tri-State, 180 FERC ¶ 63,034, at ¶ 209; Tri-State, 185 FERC ¶

61,201, at ¶ 232. Indeed, “we cannot conclude that [FERC’s] finding was

undermined by other cases in which it faced different claims in procedurally

distinct proceedings and reached different results based on distinct records.”

Int’l Transmission Co. v. FERC, 988 F.3d 471, 484 (D.C. Cir. 2021). And

Norwood involved different contracts and different circumstances from those at

issue here. For example, Norwood considered a contract-termination charge for

members exiting without contractually required notice. See id. at 397. But here,

members departing under Tri-State’s tariff must provide two years’ notice,

which allows Tri-State to adapt its operations and prepare for the member’s

departure. Tri-State, 185 FERC ¶ 61,201, at ¶ 540. Plus, nothing in Norwood

mandates the use of a lost-revenues approach anytime a cooperative member

exits an all-requirements contract.

Thus, we are not persuaded that FERC “fail[ed] to come to terms with”

precedent when it concluded that Norwood did not control. See New England

Power Generators Ass’n, 881 F.3d at 213 (citation omitted); cf. Zzyym v.

37 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 38

Pompeo, 958 F.3d 1014, 1033 (10th Cir. 2020) (“[A] court can sometimes

discern from the record whether the agency would have reached the same

decision without relying on the unsupported reasons.”).

3. American Wind

American Wind was a member of a transmission cooperative. See Am.

Wind Energy Ass’n Wind Coal., 167 FERC ¶ 61,033, at ¶ 1. To withdraw from

the cooperative, members had to pay an exit fee under a formula established in

the cooperative’s governing documents. Id. ¶ 3. American Wind filed a

complaint with FERC, alleging that the exit fee was unlawful as applied to non-

transmission owners. Id. ¶ 1.

FERC partially granted the complaint. Id. ¶ 2. It found that the exit fee

for non-transmission owners “create[d] a barrier to membership, [was] not

needed to maintain [the cooperative’s] financial solvency or avoid cost shifts,

and [was] excessive as a means of ensuring stability in membership and

members’ financial commitment.” Id. ¶ 50. FERC also discussed exit fees

generally, explaining that they should cover the cooperative’s costs and service

its debt, prevent cost shifts, and promote member stability. Id. ¶ 59.

To Tri-State, American Wind establishes that contract-termination

payments must “place[] remaining members in the same financial position as if

38 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 39

the member had completed the full term of its obligations.” 21 Tri-State Op. Br.

at 34.

But like FERC, we read American Wind differently. See Tri-State, 185

FERC ¶ 61,201, at ¶ 233. That decision never mentions a lost-revenues

approach, let alone concludes that all just and reasonable exit fees must account

for lost revenues. True, it counsels that exit fees should cover costs, service

debt, prevent cost shifts, and provide stability. But it never states that using a

lost-revenues approach is the only way to meet those goals. So FERC

reasonably concluded that American Wind did not compel it to adopt a lost-

revenues approach here. 22

Relatedly, throughout its briefing, Tri-State argues that the exit fee’s 21

purpose is to put Tri-State in the same financial position as if the departing member had fulfilled its obligations under its Service Contract. But in separate proceedings, FERC concluded that the exit fee’s purpose “is to compensate Tri- State for the costs that it has incurred or has an obligation to incur in the future to satisfy its service obligations under the [Service Contracts] with the departing member.” Tri-State Generation & Transmission Ass’n, 172 FERC ¶ 61,173, at ¶ 32 (2020). And we note that on appeal, the D.C. Circuit found this description of the exit charge “persuasive,” albeit when deciding whether FERC had exclusive jurisdiction over the exit-fee dispute. United Power, 49 F.4th at 561. The D.C. Circuit further explained that the exit fee should protect Tri- State “against rate increases caused by the exit of a member, while also increasing membership commitment and stability,” and should “cover the costs that a cooperative incurs to provide full requirements service to the member.” Id. (citation modified). With this in mind, we doubt Tri-State’s characterization of the exit-fee’s purpose.

Even if American Wind controls, FERC can pivot from its precedent if 22

it adequately explains its reasons. See Nat’l Cable & Telecomms. Ass’n v. FCC, 567 F.3d 659, 669 (D.C. Cir. 2009). 39 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 40

4. Wabash

Lastly, Tri-State points to Wabash, where a FERC ALJ approved using a

lost-revenues approach for another generation-and-transmission cooperative’s

exit fee. 178 FERC ¶ 63,005, at ¶¶ 74–77. FERC dismissed Tri-State’s Wabash

arguments because the ALJ’s decision in that case was not precedential. Tri-

State, 185 FERC ¶ 61,201, at ¶¶ 231–32; Tri-State, 187 FERC ¶ 61,101, at ¶ 21.

We agree with this reasoning. Because Wabash is an ALJ decision, it is

nonprecedential and does not bind FERC. See Tri-State, 187 FERC ¶ 61,101, at

¶ 21; see generally Christopher J. Walker, Melissa Wasserman & Matthew Lee

Wiener, Precedential Decision Making in Agency Adjudication app. E at 33–35

(Dec. 6, 2022) (report to the Admin. Conf. of the U.S.). Thus, it wasn’t

arbitrary and capricious for FERC to reject Tri-State’s Wabash arguments on

that ground. See RMI Co. v. Sec’y of Lab., 594 F.2d 566, 571 n.13 (6th Cir.

1979) (holding that when a commission “is not bound by unreviewed ALJ

decisions,” there is “no merit” to the argument that one of the commission’s

orders is “unreasonable as contrary to numerous ALJ decisions”).

So all in all, none of the cases Tri-State relies on establish that FERC had

to adopt a lost-revenues approach for Tri-State’s exit fee. What’s more, FERC

40 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 41

gave “reasoned explanation[s]” for why most of these cases did not control. 23

See New England Power Generators Ass’n, 881 F.3d at 210 (citation omitted).

* * *

In sum, Tri-State has not shown that FERC’s rejection of a lost-revenues

approach for the exit fee was arbitrary and capricious in violation of the APA.

Our “limited role is to ensure that [FERC] engaged in reasoned

decisionmaking,” i.e., that it “weighed competing views” and “intelligibly

explained the reasons for making [its] choice.” Elec. Power Supply Ass’n, 577

U.S. at 295. FERC met that standard here.

II. Adopting a Balance-Sheet Approach

Next, Tri-State argues that FERC acted arbitrarily and capriciously by

adopting a balance-sheet approach for the exit-fee methodology.

To recap, under the adopted balance-sheet approach, a departing member

makes a lump-sum payment reflecting its pro rata share of Tri-State’s debts and

other obligations. Tri-State, 185 FERC ¶ 61,201, at ¶¶ 546, 558. Tri-State

calculates that pro rata share using an unconsolidated FERC Form No. 1

23 Though we think FERC misread Norwood, we view this “minor misstatement of law” to be “an unfortunate lapse” that did not render FERC’s decision to reject a lost-revenues approach arbitrary and capricious. See Zzyym, 958 F.3d at 1034 (citation omitted); see also Nat’l Cable & Telecomms. Ass’n v. FCC, 567 F.3d 659, 669 (D.C. Cir. 2009) (holding that contrary precedent gives the court “no more power than usual to question [an agency]’s substantive determinations” and that courts “still ask only whether [the agency] has adequately explained the reasons for its current action and whether those reasons themselves reflect a clear error of judgment” (citation modified)). 41 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 42

balance sheet. 24 Id. ¶ 244. Tri-State also credits the transmission-related-debt

portion of the payment to departing members that keep using Tri-State’s

transmission services. Id. ¶ 557.

Again, we ask only whether FERC “engaged in reasoned

decisionmaking—that it weighed competing views, selected a[n] [exit-fee]

formula with adequate support in the record, and intelligibly explained the

reasons for making that choice.” Elec. Power Supply Ass’n, 577 U.S. at 295.

Here, too, FERC satisfied that standard. To start, we have no doubt that

FERC sufficiently weighed competing views on the best approach to the exit-

fee methodology. In a 200-plus page order, FERC assiduously weighed the

proposed exit-fee methodologies and the parties’ competing views. See Tri-

State, 185 FERC ¶ 61,201. It then reweighed the methodologies and competing

views on rehearing. See Tri-State, 187 FERC ¶ 61,101.

Next, record evidence supported a balance-sheet approach. In adopting

this approach, the ALJ relied on testimony from Trial Staff witnesses. See, e.g.,

Tri-State, 180 FERC ¶ 63,034, at ¶¶ 501–03, 511–12, 515–16. And FERC, too,

pointed to record evidence supporting its reasons for adopting a balance-sheet

approach. See, e.g., Tri-State, 185 FERC ¶ 61,201, at ¶¶ 540–43; Tri-State, 187

FERC ¶ 61,101, at ¶¶ 34, 55–57. For example, FERC cited evidence supporting

that Tri-State could re-optimize for load loss and that a balance-sheet approach

Certain electric utilities must file an annual report with FERC using 24

FERC Form No. 1. See 18 C.F.R. § 141.1. 42 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 43

was unlikely to increase Tri-State’s member rates. See Tri-State, 185 FERC ¶

61,201, at ¶¶ 540–41.

Finally, FERC “intelligibly explained the reasons for” adopting a

balance-sheet approach. Elec. Power Supply Ass’n, 577 U.S. at 295. First,

FERC determined that a balance-sheet approach best fit “the situation here.”

Tri-State, 185 FERC ¶ 61,201, at ¶ 538. FERC clarified that leaving Tri-State

was “not analogous to a withdrawal from long-term requirements contracts,

because it involves additional complications.” Id. These “complications”

included (1) departing members’ ownership interests in Tri-State, (2) the

likelihood that departing members would keep using Tri-State’s transmission

services after departure, and (3) the parties’ obligations under the bylaws and

Service Contracts. See id. FERC concluded that a balance-sheet approach best

accounted for these unique considerations. See Tri-State, 187 FERC ¶ 61,101,

at ¶ 55.

Second, FERC highlighted the exit fee’s two-year notice period,

reasoning that it would allow Tri-State to mitigate many costs not captured on

the balance sheet. Tri-State, 185 FERC ¶ 61,201, at ¶ 540; see also Tri-State,

187 FERC ¶ 61,101, at ¶ 34.

And third, FERC concluded that a balance-sheet approach satisfied the

exit fee’s purpose—“to compensate Tri-State for the costs that it has incurred

or has an obligation to incur in the future to satisfy its service obligations under

43 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 44

the [Service Contract] with the departing member”—without violating cost-

causation principles. Tri-State, 187 FERC ¶ 61,101, at ¶ 56 (citation modified).

Thus, we conclude that FERC engaged in reasoned decisionmaking when

it adopted a balance-sheet approach for the exit-fee methodology. See Elec.

Power Supply Ass’n, 577 U.S. at 295.

Tri-State’s counterarguments don’t persuade us otherwise. First, Tri-State

emphasizes that using a balance-sheet approach is “novel” and

“unprecedented.” Tri-State Op. Br. at 6. But an agency decision isn’t arbitrary

and capricious just because it takes a new approach. Agencies can change

position or adopt new policies if they provide a reasoned explanation for doing

so. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515–16 (2009);

Qwest Corp. v. FCC, 689 F.3d 1214, 1230–31 (10th Cir. 2012). And here,

FERC acknowledged that it was taking a new approach, then justified using that

approach under the case’s specific circumstances. See Tri-State, 185 FERC ¶

61,201, at ¶ 538.

Second, Tri-State argues that a balance-sheet approach ignores the

parties’ contractual obligations. But again, neither the Service Contracts nor the

bylaws require a certain exit-fee methodology. FERC also explained that a

balance-sheet approach was “consistent” with the bylaws because it ensures

that departing members pay their pro rata share of Tri-State’s debts. See Tri-

State, 187 FERC ¶ 61,101, at ¶ 55.

44 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 45

Tri-State, though, asserts that by ignoring the Service Contract’s term,

the balance-sheet approach “undercompensat[es] Tri-State in the first years of a

[Service Contract] but overcompensat[es] if the member departs shortly before

a [Service Contract] expires.” Tri-State Op. Br. at 54. To illustrate, Tri-State

argues that a member departing with only one year left on its Service Contract

would pay more under the balance-sheet approach than the cost of Tri-State’s

all-requirements services through the end of the contract term. By contrast, Tri

State argues that if a member departs at the beginning of the contract term, the

balance-sheet approach vastly undercompensates Tri-State by ignoring the

revenues it would have received over the contract’s life.

But FERC considered this argument and rejected it. See Tri-State, 185

FERC ¶ 61,201, at ¶ 539. Again, the exit fee must “compensate Tri-State for

the costs that it has incurred or has an obligation to incur in the future to satisfy

its service obligations under the [Service Contract] with the departing

member.” Id. ¶ 227 (citation modified). So departing members’ exit fees

include more than just the cost of transmission services—they also must pay

their pro rata share of debt and other obligations that Tri-State incurred to serve

them. Id. ¶ 419. As a result, it makes sense that a member departing with one

year left on its Service Contract would pay for more than just the cost of

transmission services for that year, assuming there are other debts and

obligations that Tri-State incurred on the member’s behalf. As for a member

departing at the beginning of the contract term, nothing in the Service Contract

45 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 46

entitles Tri-State to lost revenues. So it also makes sense that the adopted

balance-sheet approach doesn’t capture those prospective costs.

Third, Tri-State argues that a balance-sheet approach excludes significant

fixed costs—up to “two-thirds of Tri-State’s revenue requirement”—and thus

shifts those costs to Tri-State’s remaining members. Tri-State Op. Br. at 53. As

examples, Tri-State contends that the balance-sheet approach overlooks costs

that it will incur for labor, systems operations, insurance, regulatory

compliance, and human and legal resources. By excluding these costs, Tri-State

argues that the balance-sheet approach gives departing members a windfall and

increases costs for remaining members.

Yet FERC weighed these arguments and found them lacking. FERC

reasoned that most of the fixed costs Tri-State identified could be avoided or

mitigated, especially with the two-year notice period. Tri-State, 185 FERC ¶

61,201, at ¶¶ 540–41; Tri-State, 187 FERC ¶ 61,101, at ¶¶ 34, 51, 56. Plus,

FERC supported its reasoning with record evidence. See Tri-State, 185 FERC ¶

61,201, at ¶¶ 540–41; Tri-State, 187 FERC ¶ 61,101, at ¶¶ 34, 56. Simply put,

FERC “weighed competing views . . . and intelligibly explained the reasons for

making [its] choice.” Elec. Power Supply Ass’n, 577 U.S. at 295.

Fourth, Tri-State argues that FERC didn’t respond meaningfully to its

concerns that a balance-sheet approach could impact its credit rating or its

contracts with other entities. True, “[i]t is well established that [FERC] must

46 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 47

respond meaningfully to the arguments raised before it.” New England Power

Generators Ass’n, 881 F.3d at 210 (citation modified).

But here, too, FERC considered Tri-State’s arguments and responded

reasonably. Citing the record, FERC explained that Tri-State’s concerns about

its credit rating predated the proceedings, and that “it would be inappropriate

for the [exit-fee] payment to shield Tri-State from its other business risks.” Tri-

State, 185 FERC ¶ 61,201, at ¶¶ 571–72; see also Tri-State, 187 FERC ¶

61,101, at ¶ 23. FERC also relied on evidence that Tri-State could maintain its

credit rating under the balance-sheet approach. Tri-State, 185 FERC ¶ 61,201,

at ¶ 572. That was enough to meet FERC’s obligation. See Pub. Serv. Elec. &

Gas Co. v. FERC, 989 F.3d 10, 20 (D.C. Cir. 2021) (finding that FERC

responded meaningfully when it “expressly acknowledged” and “necessarily

rejected” an argument).

FERC also considered whether the balance-sheet approach would cause a

“Member Termination Event” 25 under Tri-State’s other contracts. Tri-State, 185

FERC ¶ 61,201, at ¶ 572. FERC answered no, reasoning that the adopted

methodology gave Tri-State “significant liquidity” from the lump-sum payment,

plus time to mitigate costs. Id. What’s more, because the balance-sheet

25 A Member Termination Event “is triggered only if withdrawing members do not pay their pro rata shares of debts and other obligations to Tri- State.” Tri-State, 185 FERC ¶ 61,201, at ¶ 243; see also id. ¶ 92. If triggered, “Tri-State’s lenders could take actions that Tri-State alleges would have significant negative consequences on remaining members.” Id. ¶ 243. 47 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 48

approach would allow Tri-State to recover its debts, FERC reasoned that this

approach would in fact prevent a Member Termination Event. See Tri-State,

187 FERC ¶ 61,101, at ¶ 43.

Fifth, Tri-State argues that a balance-sheet approach contradicts

precedent like Norwood and Wabash. But as discussed, the cases Tri-State cites

do not control. So for the same reasons as before, we are not persuaded by Tri-

State’s precedent-based arguments.

Finally, Tri-State argues that adopting a balance-sheet approach was

arbitrary and capricious because the approach (1) excludes short-term debt,

(2) overcompensates departing members through the transmission-crediting

mechanism, and (3) ignores Tri-State’s contract with Basin. Put differently,

Tri-State attacks discrete parts of the balance-sheet approach.

Yet Tri-State never explains how these aspects of the adopted

methodology make FERC’s decision to use a balance-sheet approach arbitrary

and capricious. 26 So we aren’t persuaded by these arguments, either.

26 To the extent that Tri-State argues that these aspects of the balance- sheet approach are arbitrary and capricious in themselves, we address the transmission credit and FERC’s applying the exit-fee methodology to Eastern Interconnection members in different sections of this opinion. As for short-term debt, FERC supported its conclusion that Tri-State recovers that debt through its current rates. See Tri-State, 185 FERC ¶ 61,201, at ¶¶ 244, 580 & n.937; Tri-State, 187 FERC ¶ 61,101, at ¶¶ 101–02. 48 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 49

FERC, “not this or any other court, regulates electricity rates.” Elec.

Power Supply Ass’n, 577 U.S. at 295. Choosing an appropriate exit-fee

methodology “involves both technical understanding and policy judgment.” Id.

In selecting a balance-sheet approach, FERC “addressed th[is] issue seriously

and carefully, providing reasons in support of its position and responding to the

principal alternative advanced.” Id. So FERC did not act arbitrarily and

capriciously by adopting that approach for the exit-fee methodology.

III. Adopting the Transmission-Crediting Mechanism

Tri-State challenges two aspects of the transmission-crediting

mechanism. First, Tri-State attacks FERC’s decision to apply the transmission

credit to a departing member’s entire OATT invoice. And second, Tri-State

challenges FERC’s decision to include payment for non-networked debt in the

transmission credit. Specifically, Tri-State argues that by directing it to include

payment for non-networked debt in the credit, FERC’s compliance orders

altered the credit’s purpose without explanation.

A. Applying the Credit to the Entire OATT Invoice

Recall that under the adopted balance-sheet approach, departing members

pay an upfront fee for generation- and transmission-related debt. Tri-State, 185

FERC ¶ 61,201, at ¶ 558. If a departing member uses Tri-State’s OATT

services, Tri-State over time credits the transmission-related-debt portion of the

exit-fee payment against the member’s monthly OATT bill. Id. ¶ 562.

49 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 50

Tri-State contends that applying the transmission credit to a departing

member’s entire OATT invoice is arbitrary and capricious because it

overcompensates that member and exceeds the transmission credit’s purpose of

preventing double recovery.

Yet FERC considered these arguments and reasonably rejected them. On

rehearing, FERC explained that “[a]pplying the credit to the entirety of the

withdrawing member’s transmission invoice ensures that the withdrawing

member will receive the full benefit of its payment of transmission-related

debt.” Tri-State, 187 FERC ¶ 61,101, at ¶ 91. By contrast, applying the credit

to only transmission-related debt would create a windfall for Tri-State. Id.

(“[W]hile the transmission credit is calculated by dividing Tri-State’s

transmission-related debt among its members, Tri-State also receives payments

toward transmission-related debt by non-member transmission tariff

customers.”). Indeed, “if the transmission credit were to be applied only to the

transmission-related debt portion of a withdrawn member’s transmission

invoice, the transmission credit would likely often exceed the transmission

related debt portion of the invoice.” Id.

So here, too, FERC “examined the relevant considerations and articulated

a satisfactory explanation for its action.” Elec. Power Supply Ass’n, 577 U.S. at

292 (citation modified). And again, we may not substitute our judgment for

FERC’s. Id. Nor do we ask whether “FERC made the better call” when

“reasonable minds [could] differ” on the best approach. Id. at 295. Thus, Tri-

50 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 51

State has not shown that FERC acted arbitrarily and capriciously by applying

the credit to a departing member’s entire OATT invoice.

B. Including Non-Networked Debt in the Credit

Tri-State argues that FERC acted arbitrarily and capriciously by

including payment for non-networked debt in the transmission credit.

Specifically, Tri-State argues that by including such payment in the credit,

FERC changed the transmission-crediting mechanism’s purpose without

sufficient explanation.

Recall that in the compliance proceedings, Tri-State did not initially

include non-networked debt in its transmission-related-debt calculations. See

Tri-State, 186 FERC ¶ 61,239, at ¶ 56. Yet FERC had instructed Tri-State to

calculate a departing member’s pro rata share from the “full amount of Tri-

State’s transmission-related debt.” Id. (quoting Tri-State, 185 FERC ¶ 61,201,

at ¶ 558). So FERC ordered Tri-State to revise its calculations. Id.

Tri-State’s next filing included non-networked transmission debt in its

calculations for the lump-sum exit payment—but not in its calculations for the

credit. See Tri-State, 189 FERC ¶ 61,165, at ¶ 56. So FERC again instructed

Tri-State to include payment for non-networked debt in the credit so that

departing members would recover “the full value” of the transmission-related-

debt portion of their exit payments. Id. ¶¶ 56, 58.

Tri-State argues that FERC’s compliance orders changed the transmission

credit’s purpose without acknowledgment or reasoning. See generally Fox

51 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 52

Television Stations, 556 U.S. at 515–16 (explaining that an agency acts

arbitrarily and capriciously by failing to acknowledge or properly explain its

reasons for changing policy). In Tri-State’s view, the transmission credit’s

purpose is to prevent Tri-State from recovering twice for transmission-related

debt—once in the upfront exit payment and again in the departing member’s

OATT payments. So Tri-State asserts that FERC “expanded” the credit’s

purpose by directing Tri-State to return the “full time-value of the

transmission-related debt portion of the” exit fee, and that this change shifted

the cost of transmission-related debt onto Tri-State. Tri-State Op. Br. Compl. at

39 (citation omitted).

Tri-State’s challenge fails because FERC never changed the transmission

credit’s purpose. True, FERC implemented the transmission-crediting

mechanism to prevent Tri-State from recovering twice for transmission-related

debt. But that was never the only reason FERC adopted the credit. From the

start, FERC made clear that the credit had other purposes: ensuring “that the

debt-related costs of Tri-State’s transmission assets are recovered through the”

exit fee and “that the withdrawing member reaps the full benefit of these costs

incurred while minimizing cost shifts.” Tri-State, 187 FERC ¶ 61,101, at ¶ 90

(citation omitted); see also Tri-State, 185 FERC ¶ 61,201, at ¶ 563.

Indeed, FERC consistently reasoned that the transmission-crediting

mechanism must return “the full time-value of the transmission-related debt

portion” of the exit fee to departing members. See Tri-State, 185 FERC ¶

52 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 53

61,201, at ¶ 562; see also id. ¶¶ 557–58, 563–64, 581; Tri-State, 187 FERC ¶

61,101, at ¶¶ 90–91; Tri-State, 189 FERC ¶ 61,165, at ¶¶ 56–58; Tri-State, 191

FERC ¶ 61,088, at ¶¶ 28–29. That includes returning the departing member’s

payment for non-networked debt. See Tri-State, 189 FERC ¶ 61,165, at ¶ 56. So

FERC did not alter the transmission-crediting mechanism’s purpose when, in its

compliance orders, it directed Tri-State to include non-networked debt in the

transmission credit.

In fact, the Methodology Rehearing Order acknowledged concerns that

Tri-State’s member rates—which underpinned the exit-fee payment—included

charges for non-networked facilities. See Tri-State, 187 FERC ¶ 61,101, at ¶¶

76, 95. And FERC rejected these concerns by explaining that though “the

monthly transmission credit is directly tied to the portion of the [exit-fee

payment] based on Tri-State’s transmission-related debts, the rates against

which the credit is applied are not.” Id. ¶ 95. This, too, shows that FERC never

limited the transmission credit’s purpose to preventing Tri-State from

recovering twice for transmission-related debt. So all in all, Tri-State’s

arguments that FERC changed course in its compliance orders fall flat.

We therefore conclude that Tri-State has not shown that FERC acted

arbitrarily and capriciously in adopting the transmission-crediting mechanism.

53 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 54

IV. Applying the Balance-Sheet Approach to Eastern Interconnection Members

Tri-State and intervenor Basin argue that FERC acted arbitrarily and

capriciously by ordering that the adopted balance-sheet approach apply to

Eastern Interconnection members despite the Basin contract. 27 They contend

that by applying the methodology to these members, FERC ignored “an

important aspect of the problem”: how to handle the Basin contract in Eastern

Interconnection members’ exit fees. See W. Watersheds Project, 69 F.4th at 700

(citation omitted).

According to Tri-State, if an Eastern Interconnection member exits, the

Basin contract allows Basin to assess costs against Tri-State. Tri-State argues

that by not incorporating these “unknown” costs into the exit fee, FERC “nearly

assures that remaining members will have to pay costs [that] Basin” “could

impose” for an Eastern Interconnection member’s exit. Tri-State Op. Br.

Compl. at 8, 52.

Tri-State first raised its concerns about the Basin contract when it sought

FERC’s review of the ALJ’s initial decision. See Tri-State, 185 FERC ¶ 61,201,

at ¶¶ 482–83. On rehearing, FERC clarified that “what might constitute a

27 To the extent that Basin argues that FERC acted arbitrarily and capriciously by not creating an exit-fee methodology for Eastern Interconnection members, we disagree. FERC’s Methodology Order directed Tri-State to use the same exit-fee formula “for all members, regardless of which interconnection they are located in.” Tri-State, 185 FERC ¶ 61,201, at ¶ 573. 54 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 55

breach” of the Basin contract was outside the proceedings’ scope. Tri-State,

187 FERC ¶ 61,101, at ¶ 67. Specifically, it reasoned that deciding what

breached the Basin contract and what made a just and reasonable exit-fee

methodology were distinct questions. See id. (“[T]he potential for a breach and

the consequences thereof would impact the availability of exit payments

regardless of the particular [exit-fee] methodology.”).

Tri-State raised similar concerns in the compliance proceedings. It

argued that its approach was appropriate because it was “obligated under the

Basin [contract] to fulfill through Basin all capacity and energy that Tri-State’s

Eastern Interconnection members require until 2050,” leaving “the costs

associated [with] a withdrawing member’s requirements . . . stranded.” Tri-

State, 189 FERC ¶ 61,165, at ¶ 87.

But FERC disagreed, referring to its reasoning in a separate proceeding:

Northwest Rural Public Power District, 189 FERC ¶ 61,164. See Tri-State, 189

FERC ¶ 61,165, at ¶ 87 & n.149. There, FERC concluded that Tri-State would

not breach the Basin contract by allowing an Eastern Interconnection member

to exit. Nw. Rural Pub. Power Dist., 189 FERC ¶ 61,164, at ¶ 82. So FERC told

Tri-State not to assume, when calculating an Eastern Interconnection member’s

pro rata share of costs, that the member’s withdrawal would breach the Basin

55 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 56

contract. Tri-State, 189 FERC ¶ 61,165, at ¶ 87. FERC also instructed Tri-State

to consider section 9 of the Basin contract when calculating the fee. 28 Id.

On rehearing, FERC repeated these instructions and referred Tri-State to

its concurrently issued rehearing order in Northwest Rural Public Power

District, 191 FERC ¶ 61,087. See Tri-State, 191 FERC ¶ 61,088, at ¶ 64.

We think FERC reasonably handled this issue in both the methodology

and compliance orders. FERC has “broad discretion in determining how best to

handle related, yet discrete, issues in terms of procedures and priorities.” Mobil

Oil Expl. & Producing Se. Inc. v. United Distrib. Cos., 498 U.S. 211, 230

(1991) (citation modified). And whether an Eastern Interconnection member’s

exit breached the Basin contract was an issue FERC chose to address in a

separate proceeding. That decision wasn’t arbitrary and capricious. As FERC

explained, the exit-fee methodology and Tri-State’s obligations under the Basin

contract are distinct issues. See Tri-State, 187 FERC ¶ 61,101, at ¶ 67.

Regardless of the methodology used, a breach of the Basin contract affects a

member’s ability to exit Tri-State. See id. So any potential breach does not bear

on a generally applicable exit-fee methodology.

28 That section states that Tri-State may transfer its Eastern Interconnection assets “so long as Tri-State shall pay such pro rata portion of the outstanding indebtedness, as well as other obligations and commitments of Basin at the time existing, as shall be determined by Basin and shall otherwise comply with such reasonable terms and conditions as Basin shall require.” Nw. Rural Pub. Power Dist., 189 FERC ¶ 61,164, at ¶ 11 (citation modified). 56 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 57

Besides, in the Northwest Rural Public Power District proceedings,

FERC concluded that Tri-State wouldn’t breach the Basin contract by allowing

an Eastern Interconnection member to withdraw. 189 FERC ¶ 61,164, at ¶ 82.

Based on that determination, FERC reasonably instructed Tri-State not to

assume a breach of contract when calculating an Eastern Interconnection

member’s exit fee. 29

Nor did FERC act arbitrarily and capriciously by instructing Tri-State to

consider section 9 of the Basin contract when calculating the fee. In doing so,

FERC pointed Tri-State to “the reasons stated in the concurrently issued”

orders in Northwest Rural Public Power District. Tri-State, 191 FERC ¶

61,088, at ¶ 64; see also Tri-State, 189 FERC ¶ 61,165, at ¶ 87. Those orders

considered Tri-State’s and Basin’s section 9 obligations in detail. See Nw.

Rural Pub. Power Dist., 189 FERC ¶ 61,164, at ¶¶ 72–79; Nw. Rural Pub.

Power Dist., 191 FERC ¶ 61,087, at ¶¶ 25–31. And the appropriate place for

Tri-State and Basin to challenge those findings isn’t here—it’s in the pending

29 We also note that if, “in the future,” the exit-fee methodology for Eastern Interconnection members “results in an unjust outcome, [Tri-State] may petition [FERC] to order appropriate changes at that time under section 206 of the Federal Power Act.” See Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 520, 542 (D.C. Cir. 2010).

57 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 58

D.C. Circuit appeal of FERC’s orders in the Northwest Rural Public Power

District proceedings. 30

With all this in mind, we conclude that FERC’s handling of the Basin

contract in the Tri-State proceedings was not arbitrary and capricious.

FERC did not act arbitrarily and capriciously by (1) rejecting a lost-

revenues approach for the exit-fee methodology, (2) adopting a balance-sheet

approach for the exit-fee methodology, (3) adopting the transmission-crediting

mechanism, or (4) applying the adopted balance-sheet approach to Eastern

Interconnection members despite the Basin contract. Rather, when FERC made

these decisions, it “engaged in reasoned decisionmaking.” Elec. Power Supply

Ass’n, 577 U.S. at 295. So FERC did not violate the APA.

CONCLUSION

For these reasons, we deny the petitions for review.

30 Similarly, Basin argues that FERC’s reading of section 9 renders other parts of the Basin contract superfluous. But that argument challenges FERC’s findings in the Northwest Rural Public Power District proceedings, not its findings in the proceedings on appeal here. 58 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 59

Nos. 24-9516, 24-9538, 25-9522, 25-9544, Tri-State Generation and Transmission Association, Inc. v. Federal Energy Regulatory Commission

MCHUGH, Circuit Judge, concurring in part and dissenting in part:

I agree with the well-reasoned majority opinion that FERC did not act

arbitrarily and capriciously by (1) rejecting a lost-revenues approach, (2) adopting a

balance-sheet approach, (3) applying transmission credits to a departing member’s

entire OATT invoice, or (4) applying the balance-sheet approach to Eastern

Interconnection members. However, I depart from the majority with respect to the

inclusion of non-networked debt in the transmission credit.

In the methodology proceedings, FERC cited to the D.C. Circuit’s statement

that the purpose of an exit charge is to “protect[ ] members of a cooperative against

rate increases caused by the exit of a member, while also increasing membership

commitment and stability” and to “cover[ ] the costs that a cooperative incurs to

provide full requirements service to the member.” See Tri-State Generation &

Transmission Ass’n, 185 FERC ¶ 61,201, at ¶ 226 (2023) (brackets and quotation

marks omitted) (quoting United Power, Inc. v. FERC, 49 F.4th 554, 561 (D.C.

Cir. 2022)); see also Tri-State Generation & Transmission Ass’n, Inc., 180 FERC

¶ 63,034, at ¶ 12 n.16 (2022). The entire analysis in adopting its balance-sheet

approach was geared towards this purpose. FERC consistently focused on ensuring

that the exit payment would compensate Tri-State for the costs incurred to serve the

departing member and thereby preventing these costs from shifting to other members.

See Tri-State Generation & Transmission Ass’n, 185 FERC ¶ 61,201, at ¶¶ 227, 234. Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 60

Of course, FERC balanced other concerns, such as not unreasonably deterring exit

and ensuring that Tri-State did not over recover. See id. ¶¶ 57, 71, 75, 224, 564. But

the entire proceeding focused on ensuring that Tri-State recovered its costs such that

remaining members would not be burdened with the cost of investments made for the

benefit of departing members.

The transmission-crediting system specifically focused on ensuring that Tri-

State would (1) fully recover the departing member’s share of transmission-related

debts and obligations (2) without requiring members to pay twice for services

through rates if they opted to continue using transmission services through the

OATT. When FERC’s Trial Staff proposed a transmission offset, it stated that this

offset was needed for withdrawing members who continue to purchase transmission

services “to avoid having the withdrawing Member pay again for that debt in future

payments.” Tri-State Generation & Transmission Ass’n, Inc., 180 FERC ¶ 63,034,

at ¶ 97. The ALJ determined that this proposal was just and reasonable. Id. ¶ 103.

And she explicitly adopted Tri-State’s proposed modification that an offset only be

provided for “debt and debt-service related portions of future transmission-related

payments.” Id. ¶ 512 & n.920. FERC affirmed the ALJ’s “inclusion and allocation of

transmission-related debt.” Tri-State Generation & Transmission Ass’n, 185 FERC

¶ 61,201, at ¶ 557. Although FERC changed the form of the offset to a crediting

mechanism out of workability concerns, it never indicated an intent to change the

ALJ’s underlying allocation or rationale. See id. ¶¶ 557–66.

2 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 61

FERC first agreed that termination payments should include a pro-rata share of

all Tri-State’s transmission-related debt, reasoning that “Tri-State has built its

transmission system to serve its members” and this approach “ensures that it will be

able to recover those costs.” Id. ¶ 558. But FERC rejected an upfront offset because it

would be unworkable and likely inaccurate. Id. ¶ 559. FERC emphasized that

accurately calculating any transmission offset was necessary to formulating a

payment that was just and reasonable. Id. ¶ 560. Otherwise, the offset “would

potentially create impermissible cost shifts . . . . because the transmission revenue

offset is supposed to be recovered through the transmission rates Tri-State charges a

withdrawing member.” Id. If the offset were overestimated, “Tri-State w[ould] not

recover the full offset amount from the withdrawing member, and the cost for the

offset would shift onto other transmission customers.” Id. However, FERC found the

risk of underestimating the offset “[l]ess problematic” because “the costs would shift

solely onto the withdrawing member.” Id. ¶ 560 n.910.

In explaining its approach, FERC continued to concern itself with cost shifts to

other members. It determined that its crediting mechanism was just, reasonable, and

not unduly discriminatory or preferential because it would have “no effect on the

rates of other Tri-State transmission customers,” “does not disadvantage other OATT

transmission customers,” and does not “unduly favor the withdrawing member as it is

only receiving credit and benefit for the amount it prepaid, which avoids a double

recovery by Tri-State.” Id. ¶ 565. In focusing primarily on avoiding cost shifts to

other Tri-State members while also preventing double recovery—crediting only the

3 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 62

amount that a withdrawing member has prepaid—FERC affirmed its commitment to

the ALJ’s initial rationale despite changing the timing of the transmission offset.

Additionally, in response to complaints about the forfeiture rule not allowing a

member to receive the full benefit of its payments, FERC in its Methodology

Rehearing Order justified that rule by stating that, to prevent shifting costs of

transmission-related debt to other members, “the withdrawing member must

compensate Tri-State for this debt whether it uses Tri-State’s system or not.” Tri-

State Generation & Transmission Ass’n, Inc., 187 FERC ¶ 61,101, at ¶ 90 (2024).

“The crediting mechanism is intended to ensure that, to the extent a withdrawn

member continues to use and pay for Tri-State transmission, it receives credit for

what it has already paid toward the recovery of Tri-State’s costs.” Id. But they

“should not accumulate credit to the extent they are not using the assets for which

they paid.” Id. ¶ 92.

Crediting back the non-networked portion of a member’s transmission-related

debt payment is inconsistent with the above analysis. Including this debt in the

transmission credit will naturally shift costs to other members for that member’s

share of non-networked transmission debt. Even if Tri-State were to fully recover this

debt in member rates, rates would have to be increased to make up for the withdrawn

member’s share. Furthermore, FERC’s inclusion of non-networked debt in the credit

goes against the statement that a withdrawing member would not be unduly favored

because the withdrawing member would receive more than the benefit it prepaid

before using OATT services.

4 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 63

The majority opinion relies on certain quotes from the methodology orders to

justify including non-networked debt in the transmission credit. The opinion first

points to language in the Methodology Rehearing Order stating that the transmission

crediting mechanism has additional purposes to (1) “ensur[e] that the debt-related

costs of Tri-State’s transmission assets are recovered through the [exit fee]” and

(2) “ensur[e] that the withdrawing member reaps the full benefit of these costs

incurred while minimizing cost shifts.” See Tri-State Generation & Transmission

Ass’n, Inc., 187 FERC ¶ 61,101, at ¶ 90. Next the majority points to language from

the Methodology Order stating that FERC consistently explained the transmission

credit must return “the full time-value of the transmission-related debt portion of the

[exit fee].” See Tri-State Generation & Transmission Ass’n, Inc., 185 FERC

¶ 61,201, at ¶ 562.

To be sure, FERC consistently used phrases like “full benefit” and “full time-

value” in the methodology orders. But the entire dispute on this issue is what FERC

initially meant by those words. In context, I cannot read the methodology orders as

intending to credit back more than departing members were at risk of being required

to pay twice.

Starting with the Methodology Order, FERC makes much of its directive that

Tri-State must “credit, over time, the full time-value of the transmission-related debt

portion of the [exit fee].” See id. Indeed, FERC similarly relied on this language in

the Second Compliance Order when it directed that separation of debt for networked

and non-networked facilities failed to comply with the directive that Tri-State “credit,

5 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 64

over time, the full time-value of the transmission-related debt portion of the [exit

fee].” See Tri-State Generation & Transmission Ass’n, Inc., 189 FERC ¶ 61,165,

at ¶¶ 36–37 (2024) (quoting Tri-State Generation & Transmission Ass’n, 185 FERC

¶ 61,201, at ¶ 562). However, in the Methodology Order, the phrase “full time-value”

is followed by footnote 911, which defines full time-value as “[m]eaning the same

interest rate used to calculate Commission-jurisdictional refunds under 18 C.F.R.

§ 35.19a (2022).” Tri-State Generation & Transmission Ass’n, 185 FERC ¶ 61,201,

at ¶ 562 & n.911. The cited section of the Code of Federal Regulations directs how

interest is to be calculated on FERC refunds. See 18 C.F.R. § 35.19a. Furthermore, in

the accounting and finance context, “time-value” of money is defined as the

“financial principle that . . . a sum of money is worth more now than in the future.” 1

Accordingly, looking at the entire context of the Methodology Order, it

becomes clear that when FERC directed Tri-State to credit the “full time-value” of

the transmission-related debt portion of the termination payment, it was directing that

transmission credits must carry interest. FERC was not directing that Tri-State must

credit back non-networked debt that Tri-State would then never recover.

Indeed, in the same paragraph of the Methodology Order, FERC states that

“credit will be amortized in a straight line over the remaining term of depreciation

rates for transmission assets effective in Tri-State’s OATT Formula Rate at the time

notice of withdrawal is given.” Tri-State Generation & Transmission Ass’n, 185

1 Catherine Cote, Time Value of Money (TVM): A Primer, Harvard Bus. Sch. Online (June 16, 2022), https://online.hbs.edu/blog/post/time-value-of-money. 6 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 65

FERC ¶ 61,201, at ¶ 562 (emphasis added). This language further suggests that

credits would be calculated and allocated with reference to debt for facilities included

in Tri-State’s OATT rate, which does not include payments for non-networked

facilities.

Turning to the second quote relied on by the majority, FERC stated in its

Methodology Rehearing Order that its transmission crediting mechanism “strikes a

reasonable balance between ensuring that the debt-related costs of Tri-State’s

transmission assets are recovered through the [exit fee], while also ensuring that the

withdrawing member reaps the full benefit of these costs incurred while minimizing

cost shifts.” Id. ¶ 563 (emphasis added). But this language on striking a reasonable

balance comes immediately after FERC’s explanation of its decision to allow the

transmission credit to apply to a withdrawn member’s entire bill while also

implementing a forfeiture rule for unused credits. See id. ¶¶ 562–63.

In context, the reasonable balance struck appears to be between allowing Tri-

State to recover its full transmission debts from a withdrawing member while also

allowing withdrawing members to receive the benefit they already prepaid. By “full

benefit” the order seems to minimize the risk of credit forfeiture by applying that

credit to the entire OATT invoice. The order does not explain why (or clearly

indicate that) a withdrawing member should be credited back debt that it will not pay

again under the original rationale.

The last point made in the majority opinion is that FERC in its Methodology

Rehearing Order acknowledged concerns that member rates included charges for non-

7 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 66

networked facilities, but FERC rejected these concerns as relating to rates and

therefore outside the scope of this proceeding. See Tri-State Generation &

Transmission Ass’n, Inc., 187 FERC ¶ 61,101, at ¶¶ 76, 95. That, of course, is

correct. But while this demonstrates that FERC was aware member rates included

charges for both networked and non-networked facilities, I am not persuaded it

provides evidence that FERC intended departing members to recover more than

necessary to prevent double recovery by Tri-State and double payment by departing

members.

Indeed, if FERC had intended the transmission credit to include more than the

amount needed to avoid double recovery by Tri-State and double payment by

departing members, the decision as stated in the methodology orders might not

survive arbitrary and capricious review.

FERC never explained how granting recovery of the entire transmission debt

payment serves the purposes of an exit charge to “protect[ ] members of a

cooperative against rate increases caused by the exit of a member, while also

increasing membership commitment and stability,” and to “cover the costs that a

cooperative incurs to provide full requirements service to the member.” See United

Power, 49 F.4th at 561 (brackets and internal quotation marks omitted). Nor did

FERC adequately address how crediting back non-networked debt would not create

an undue risk of cost shifts. Thus, it is likely that if FERC intended to include non-

networked debt in the credit, its decision would have “entirely failed to consider an

important aspect of the problem,” rendering it arbitrary and capricious. See Motor

8 Appellate Case: 24-9516 Document: 149-1 Date Filed: 03/24/2026 Page: 67

Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43

(1983).

Accordingly, I believe that FERC changed its position and underlying

rationale when it directed that the transmission credit must include amounts paid for

both networked and non-networked facilities. Although FERC is permitted to change

its mind, it did not acknowledge, much less explain, its decision to change course in

the compliance proceedings. See FCC v. Fox Television Stations, Inc., 556 U.S. 502,

515 (2009) (emphasizing that an agency must at least “display awareness that it is

changing position” and “show that there are good reasons for the new policy”).

Instead, in my view, FERC attempted to assert that crediting back non-networked

transmission debt was always its intention and thereby engaged in impermissible post

hoc rationalization to justify this directive.

Although I join the remainder of the majority opinion in full, I respectfully

dissent with respect to the inclusion of non-networked debt in the transmission credit.

I would grant the petition for review with respect to this limited point.