Message From United Power's President & CEO
A Letter to Members
At United Power we continue with our sole focus of bringing power to our members at the greatest value.
During the past several years we have attempted to work with Tri-State Generation and Transmission Association, our power supplier, toward this end. Unfortunately, our G&T has been unwilling to make any changes in the pursuit of this goal, saddling United Power with some of the highest cost, carbon intensive power in the State of Colorado.
We have been unsuccessful in negotiating a revised contract with our G&T that would have allowed us to lower costs, expand member options, bring lower carbon generation and provide for a new future. Therefore, as of December 14, 2021 we have formally filed at the Federal Energy Regulatory Commission (FERC) our intent to withdraw from Tri-State effective January 1, 2024. The Board of Directors is strongly in the support of this action.
During my nine months as your President and Chief Executive Officer, I have presented our power supplier with numerous offers of settlement that would have continued our membership relationship while also allowing us to procure lower cost, cleaner power options. Despite many meetings and requests, the G&T has been mute on our offers and instead reacted through the legal system. I have agreed on at least two occasions to mediation with no response.
Instead of working with us in the pursuit of lower-cost, cleaner options, Tri-State has resisted these developments. Tri-State recently purchased additional coal generation, is limiting our members’ ability to add more carbon free generation and is penalizing additional storage on our system. Tri- State also offers non-members preferable transmission rates over those of us who have invested in their system for decades.
United Power has been a leader in the deployment of innovative new technologies and in the integration of renewable energy resources. Currently United Power has 84 megawatts of renewable generation on its system including 46 megawatts of utility scale solar, Colorado’s largest battery storage project, and more than 6,800 rooftop systems. Tri-State’s policies include penalties if a utility exceeds 5% of generation other than from the G&T.
United Power represents nearly 20% of the G&T’s annual revenue and is more than twice the size of the next largest cooperative. United Power joins Delta Montrose Electric Association and Kit Carson who have exited the G&T in the last five years. At least six other cooperatives are currently considering a potential exit.
United Power will be seeking alternative power supply and the use of transmission as outlined by FERC as part of Open Access Transmission Tariffs. Prior to January 1, 2024, United Power will work with other power suppliers and prepare for the transition from our G&T.
We do not take this decision lightly. Please feel free to reach out to me and other members of the United Power staff with any questions.
Mark A. Gabriel
President & Chief Executive Officer
Frequently Asked Questions
There are no short-term impacts or changes to rates with the recent announcement to seek a different wholesale power provider. In fact, United Power’s Board of Directors announced in early December that there will be no rate increase for members in 2022.
Due to the fact that we are locked into our power contract until December 31, 2023 there will be no change in the wholesale price of power our members pay. But this cost of power is one of the main reasons for our decision to find other providers.
United Power’s wholesale power costs currently represent 77% of our operating expenses, and our research shows we can provide economical clean power to our members at a significantly reduced cost if we leave the G&T. Reducing our single largest expense and exiting a contract that limits how much local renewable power we can generate will benefit all United Power members through lower rates and ability to access more locally generated renewable power.
There will be no change in the quality or our commitment to our members now or even after the transition. There is nothing members are required to do during this transition, but we encourage you to watch our newsletter and website for updates from your cooperative.
Staff at United Power will be working for the next 24 months to settle on a cost to leave our contract and to secure new sources of power. We welcome your continued feedback and questions, and we will continue to communicate updates and developments to you as the process of seeking a new wholesale power provider develops.
Rest assured you will remain a member-owner of United Power. We United Power will continue to be your power supplier. United Power and our dedicated employees will still be here to serve you and your electric service will continue to be delivered through the local United Power distribution system.
As your cooperative, we are committed to finding a wholesale power provider that will generate reliable, affordable, clean electricity for our members, and offer more flexibility for United Power to adapt to the changing energy landscape.
There are numerous wholesale generators who are willing and able to supply power to United Power. In an exploratory request for proposal three years ago more than a dozen entities offered their power and services to us. In addition, we anticipate a wholesale power market will come to Colorado in 2024 opening up more sourcing opportunities. The wholesale costs provided are significantly lower than we are paying today. We will find the right balance of cost, reliability, and diversity to serve our members’ needs. In addition, the actual generation assets owned by us through Tri-State will not be disappearing until 2030 at the earliest.
United Power is committed to ensuring our members have reliable electricity. It’s one of our core tenets and will continue to be one of our primary objectives in seeking more affordable and cleaner power. Among the key elements in any power supply change is ensuring resilience and reliability. The industry in Colorado and across the nation operates in balancing areas which assures sufficient supply in times of high demand. We also will potentially end up with multiple power suppliers which lowers any potential risk.
Tri-State currently provides United Power with wholesale power through an all-requirements power contract. United Power has been asking our power supplier to provide a fair and non-discriminatory exit fee so the cooperative can explore the cost savings and available power mix that could be realized if we purchased power on the open market.
United Power’s costs for power are disproportionately high, and Tri-State has been unwilling to negotiate in good faith with us regarding a reasonable exit fee. In fact, our G&T has used a myriad of legal maneuvers to avoid providing United Power with a fair and justifiable cost to exit our contract. By providing this formal request to leave, United Power can begin to explore other power sources and their costs.
Tri-State Generation and Transmission is a generation cooperative that provides power to 42 cooperatives in a four-state region. United Power is the G&T’s largest customer, purchasing nearly 20% of all the power Tri-State generates. The cost of wholesale power constitutes 77% of United Power’s overall expenses, and reducing this cost is key to United Power’s effort to lower costs for its members.
The structure of the G&T board awards one vote to each cooperative, regardless of the cooperative’s size, which has hampered United Power’s ability to have an appropriately weighted voice in our discussions. We do not believe our members should continue to pay the cost of poor purchasing decisions or be saddled with ongoing costs that our G&T refuses to contain.
Our power supplier has continued to provide power from a legacy framework that relies heavily on fossil fuels. Instead of pursuing renewable power initiatives, Tri-State invested in additional coal resources in the past year. In addition, our current contract has strict limits on the amount of locally produced renewable energy we can purchase.
United Power is interested in exploring other power sources that would lower our reliance on fossil fuels and reduce overall costs for our members. Our research shows we can provide economical clean power to our members at a significantly reduced cost if we leave the G&T. We believe the future marketplace will look and operate very differently and we want to move forward to assure that we secure a portfolio of energy that meets the goals and needs of our membership - today and into the future.
United Power has worked diligently with Tri-State to reach some mutual agreement regarding an exit cost. For several years United Power has brought its concerns to different regulatory bodies and courts in an effort to compel our power supplier to provide a fair and non-discriminatory methodology for determining our cost to leave. Leadership at our G&T has actively avoided having a productive conversation about our concerns and has used a multitude of strategies to avoid providing that cost. United Power has offered to submit to mediation on this issue, has provided several buyout methodologies, and has met repeatedly with leadership in an effort to reach an agreement, but these efforts have not been productive.
We believe we can no longer wait for an answer. The electric industry is in the middle of a huge shift in how it generates and delivers power. There is legislative pressure to reduce reliance on fossil fuels and encourage smarter use of electric power in our homes and businesses. We believe now is the time to investigate new power sources, to exert control over our costs, and to prepare for a future that has a greater reliance on economical, reliable power. The flexibility we will gain by leaving our G&T will allow us to invest in more renewable energy projects, explore more local generation projects, and leverage new technologies that will lower costs and improve reliability for our members.
No. Every methodology we have proposed is calculated based on United Power paying its fair share of Tri-State’s long-term debt. The result is fair to both exiting and remaining members, and all members will have the opportunity to exit based on the same methodology. If any cost-shifting has occurred in recent years, it is the shifting of costs to United Power as the largest and fastest growing member of Tri-State through Tri-State’s discriminatory rate practices.
No. Tri-State’s Tariff includes a provision allowing member cooperatives to depart following a two-year notice period. In an October 29th, 2021 Order, the Federal Energy Regulatory Commission (FERC) confirmed this, stating, “if a Tri-State utility member [such as United Power] departs…, there would be no breach of contract between Tri-State and the departing utility member, because such action would be taken pursuant to Tri-State’s tariff.”
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Locally Owned by Those We Serve
United Power, a member-owned utility founded in 1938, provides electric service to more than 95,000 meters, or 250,000 residential, agricultural and business consumers along Colorado’s northern Front Range. The not-for-profit electric cooperative is guided by a member-elected board of directors comprised of eleven directors who serve three-year terms.
Surrounding Denver on three sides, United Power serves 900 square miles along the north central range of the Colorado Rockies. Our service territory wraps around the north and west borders of Denver International Airport and includes the north metropolitan development corridors of Interstate 25, Interstate 76, State Highway 85, and E-470.
Cooperative businesses, like United Power, are special because they are owned by the consumers they serve, and they are guided by a set of seven principles that reflect the best interests of those consumers.
All cooperative businesses adhere to these seven guiding principles:
- Voluntary and Open Membership.
- Democratic Member Control.
- Members’ Economic Participation.
- Autonomy and Independence.
- Education, Training, and Information.
- Cooperation Among Cooperatives.
- Concern for Community.
United Power purchases wholesale electricity from Tri-State Generation & Transmission. Tri-State is the supplier of electricity to United Power and 41 other customer-owned utilities in Colorado, Wyoming, New Mexico and Nebraska.
Currently, wholesale power from Tri-State constitutes more than 77% of our total costs paid by our members. Since 2018 United Power has been actively seeking to reduce our costs for wholesale power, and to have more control over the generation mix of that power.
Our members deserve cleaner, more affordable power. United Power is committed to providing safe, reliable and affordable electric power, and as a cooperative, we’re always looking out for our member-owners.
United Power has been a leader in innovative and renewable energy projects. From developing the state’s first cooperative solar farm, to several large-scale solar projects, and to operating the state’s largest battery storage facility, we have been driven by what is financially and environmentally best for our members.
We are limited by our Tri-State contract to incorporate any additional renewable energy. United Power has been consistently at the table asking for solutions that give our members what they want. We know our members want more local, renewable power serving their homes and businesses.