Xcel to supply United Power with excess energy after co-op’s exit from Tri-State

Dive Brief:

Xcel Energy, an investor-owned utility operating in eight states, has reached a deal to supply Colorado electric cooperative United Power with low-carbon and renewable energy during times of excess production, the two companies announced Thursday.
The utilities said they “hope to develop a long-term relationship in which both will work in tandem to drive down power costs” and help Colorado meet its decarbonization goals.
United Power currently receives its power from Tri-State Generation and Transmission Association but is preparing to exit its wholesale power contract with the G&T provider on May 1, 2024.

Dive Insight:

As Tri-State loses members over cost and sustainability concerns, departing utilities are working to secure alternative energy supplies. The arrangement with Xcel benefits both utilities, United Power President and CEO Mark Gabriel said in a statement.

“Together we will plan our energy needs, negotiate lower pricing, and assure reliability for our members and customers,” Gabriel said. “This is an important step as we enter the new future of electric procurement and delivery.”

Xcel “seeks to leverage its renewable energy resources by making sales to United Power at times when excess energy is available, providing United Power with access to Xcel Energy’s significant portfolio at attractive prices,” the utility said in a statement.

The Xcel-United deal announced last week is the latest in a series of contracts the cooperative has entered into.

In August, United Power announced a 25-year deal with OneEnergy to purchase the output of its planned Overland Solar project beginning next year. And in July the cooperative announced a similar arrangement to purchase energy from Whetstone Power’s Solar of Alamosa project.

The deal with Xcel “will maximize the value of both companies’ combined generation towards achieving our goal of reducing carbon emissions by 80% by 2030, from 2005 levels, and providing 100% carbon-free electricity by 2050,” Robert Kenney, president of Xcel Energy-Colorado, said in a statement.

United Power serves nearly 110,000 meters and is Tri-State’s largest customer. The cooperative is “experiencing significant demand and energy growth, averaging approximately 6% annually,” it said in a statement.

Tri-State is a wholesale power supply cooperative serving 45 members, but has seen a number of members plan to leave its service over cost concerns and the company’s coal-heavy portfolio. Along with United Power, Northwest Rural Public Power District in Nebraska plans to terminate its wholesale electric service contracts with Tri-State in 2024, and Mountain Parks Electric in Colorado will leave in 2025.

Kit Carson Electric Cooperative in New Mexico exited its agreement with Tri-State in 2016 and Delta-Montrose Electric Association in Colorado left in 2020.

Tri-State has been working to lower costs and add renewables. But as members prepare to leave, the G&T utility this month announced it would consider offers to purchase its excess power.

“In a tightening regional power market, Tri-State has the opportunity to reduce cost pressures on our remaining members by selling power to other parties,” CEO Duane Highley said in a statement.