When Brighton-based United Power quit its longtime power supplier, Mark Gabriel, the cooperative’s CEO, went shopping for electrons.
The Tri-State Generation and Transmission Association provided United Power with about 600 megawatts of electric capacity, and assured another 200 MWs of backup, under a 50-year contract that required the cooperative to get 95% of its electricity from the association.
That contract blocked United Power from developing more clean and local energy alternatives, which ultimately led to the co-op paying a $627 million exit fee in 2024 and then Gabriel had to replace the 800 missing megawatts.
United Power’s solution speaks to the transformation underway in the power sector as utilities scramble to find new generation sources to meet new loads. The cooperative is banking on the merchant and wholesale markets to meet its needs.
“You want to find the right price, which is important, and find the quantity of power,” Gabriel said. “It’s much like buying anything.”
“You go to one store for one thing, but you may need to go to multiple stores,” he said. “That’s kind of what we have to do. Different resources have different capacity and energy.”
Gabriel also looked to locally source his power supply. “If I don’t have to put something on transmission, I won’t,” he said. “I’m not counting on big transmission lines, which may be congested.”
To bring power into the United Power’s service area by high-voltage transmission lines, the cooperative must pay for the electricity and the cost of transmitting over the lines. If it has to use the lines of multiple utilities it pays multiple fees.
“Avoiding using transmission saves our members money,” Gabriel said.
United Power has embarked on a program to develop as many resources — large solar arrays, gas plants, batteries — as possible inside its distribution network.
“This is a really cool model,” Ric O’Connell, executive director of GridLab, a Berkeley, California-based clean energy consultant. “It’s hard to make it work, because the world is still kind of set up for big projects.”
Keeping things “hyperlocal,” Gabriel said, “can handle immediate needs faster.”
That is all more important since nailing down new supplies has been a challenge across the region. “It’s getting harder for everybody in the West,” Gabriel said. “There is a lack of capacity.”
Working out the power supply and demand problem
Xcel Energy, Colorado’s largest electricity provider, recently asked state regulators to allow it to run its Comanche 2 coal-fired plant, scheduled to close in December, for another 12 months because of worries about adequate capacity.
“The supply of electricity is not growing fast enough to keep up with demand growth,” said the Western Electric Coordinating Council, which oversees electricity adequacy for 14 Western states and two Canadian provinces. “What was once a simple problem of supply and demand has become complicated.”
So how has United Power charted its course? Especially as it has seen its peak demand continue to rise, reaching 653 MW in 2024.
United Power has about 113,000 customers in two service areas — one stretching from north of Denver to Longmont and another including Golden, Louisville, Black Hawk and Nederland — and it has been growing, with demand increasing as much as 4% a year.
“The big challenge was to build a portfolio with a variety of resources,” Gabriel said. “Think about it like a stock portfolio.”
When United Power was getting all its power from Tri-State, it was like having a single savings account. “Now you may have a dozen stocks or mutual funds,” he said. “We’re just trying to build that portfolio with some short-term and long-term assets.”
The principal tool the cooperative is using are purchase power agreements, or PPAs, with merchant power developers, which are in essence long-term “build it and we will buy” deals.
Merchant power — where private developers raise private capital to build power projects and then sell the electricity — had its beginning in the 1990s electricity deregulation movement.
“Merchant power has been evolving over the last 25 years,” Gabriel said. “There are a lot of different merchant suppliers out there now, and the landscape changed a lot in the last five or 10 years.”
“Storage is the new game changer”
United Power’s portfolio deals are constantly being refreshed, he said, but it has about 20 PPAs and when it can, the utility has encouraged developers to build in the cooperative’s service territory.
Solar developer Silicon Ranch has five solar installations totalling 192 MW in United Power’s area. Mountain Peak Power has a new 162-MW natural gas peaking plant to be used for high-demand periods, and Ameresco has installed 78 MW of battery storage.
The installations also bolster the local economy and tax base. “The gas plant is a really good example,” Gabriel said. “I think there’s eight or nine people that are employed there now from the local community. It’s local tax dollars.”
In all, United Power has 119 MW of batteries in nine locations across the service area each with four to six hours of capacity. They can serve to meet peak demand, or just a portion of the capacity can help balance the system.
“I call it battery slices,” Gabriel said. “It’s very flexible.”
“Storage is really the new game changer,” O’Connell of GridLab said. “If you wound the clock back 10 years, it would have been much harder for United to do what it is doing.”
Gabriel, however, has had to go farther a field than his service territory to fill his portfolio. In October, the cooperative struck an agreement with Apaya Power for the electricity from a 220-MW solar installation with battery storage in Brush. The power will be carried on Tri-State transmission lines.
United Power also has a 25-year PPA for solar from an installation in Alamosa and a 25-year agreement with NextEra Resources for power from its solar farm in Morgan County.
On any given day the last 10% of the cooperative’s demand may be covered with energy trades and purchases that may come from Tri-State, Xcel Energy or Guzman Energy, a wholesaler with whom United Power has a long-term contract.
“So it’s a much more complex model for everybody, not just for us,” Gabriel said.
United Power along with — Colorado Springs Utilities, the CORE Electric Cooperative and Platte River Power Authority — is exploring the possibility of linking the five with a transmission line.
“We abut each other, and we think it’s best to keep things local,” Gabriel said. The utilities already have the rights of way for the project. “We call it the lariat loop because we go around the Xcel system.”
Trading for a better deal on power
In May, United Power will join the Southwest Power Pool, which operates a grid and wholesale power market serving all or parts of 14 states from Texas to North Dakota. SPP is extending west and most Colorado utilities, except Xcel Energy, are becoming members.
Energy trading — buying and selling power among utilities in a regional market — is more efficient with the lowest-cost electricity available always being offered and with a single transmission charge.
“Transmission costs go down because there’ll be one unified tariff,” Gabriel said.
United Power isn’t alone among cooperatives experimenting with new models of managing their electricity needs. In 2016, Kit Carson Electric Cooperative, in Taos, New Mexico, was the first co-op to leave Tri-State and strike out on its own.
When Kit Carson left it had 3 MW of local solar power. At the end of this year it will have 52 MW of solar and 25 MW of storage — all local.
“Our daytime peak is 40 MW, so we can cover 100% of our daytime demand with renewables,” said Luis Reyes, Kit Carson’s CEO. By 2028, the co-op aims to cover its round-the-clock demand with 60% to 70% renewables.
The utility is also developing a green hydrogen storage project with the help of federal funding.
“All this is local, so it does buy us time, because I still think in the Western states, we don’t have enough transmission lines, and so it’s a plus that we’ve been able to address some of the local issues,” Reyes said.
The approach being taken by United Power and Kit Carson may not be possible for all cooperatives, Kevin Brehm, a manager in the carbon-free electricity practice at the nonprofit clean energy consultant RMI.
“Some cooperatives have more limited abilities to get renewables and build in their territory,” Brehm said, and some distant generation may still be cheaper. “We do exist within this bigger grid.”
Still, Brehm said “it seems like such a big opportunity with a win-win for community economic development as well as cost-effective power supply, and resilience potential in the future.”