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Brighton, CO - After years of legal battles, United Power is one step closer on its path forward to buy out of its existing wholesale power contract with Tri-State Generation and Transmission (Tri-State). The methodology, defined by the Federal Energy Regulatory Commission’s (FERC) Administrative Law Judge (ALJ) Renee Terry, provides a way for all generation and transmission members to determine their cost to exit and will give United Power flexibility to move forward with its plan to leave the power supplier. The ALJ’s initial decision orders an exit fee based upon United Power’s proposed framework, and wholesale rejects Tri-State’s proposed $1.6 billion fee for United Power as excessive and unsupported. While the ALJ directed limited modifications to United Power’s proposal, the decision reaffirms United Power’s longstanding position that it should be able to leave by paying a reasonable exit fee. United Power is currently evaluating the exit options presented in the Judge’s initial decision, which is subject to further briefing and Commission review before it becomes effective.    

“I must first acknowledge the FERC Administrative Law Judge for her thorough and thoughtful assessment of the voluminous amount of material as well as the various statements and arguments she reviewed to reach her decision,” said Mark A. Gabriel, President and CEO of United Power. “We are pleased to finally have a course for the future in our quest to lower our power costs for our members and have more control over how the power we purchase is generated.”

United Power has been battling its power generation supplier since 2019 when the cooperative asked the Colorado Public Utilities Commission (PUC) to intervene in the dispute and help determine a fair and equitable buyout cost. As the case wound through the PUC process, Tri-State admitted additional non-utility members, triggering the generation cooperative to fall under FERC jurisdiction. While the PUC affirmed United Power’s buyout methodology, they deferred to FERC to determine the final opinion. 

“When we first began negotiating with our power supplier for an exit cost, they had already released two other members from their contracts, using methodologies that were far different than what they had proposed for United Power,” said Gabriel. “We have been willing to pay a reasonable exit fee, but our power producer never offered a methodology that we considered to be fair or equitable.”

The power market is in a unique period of growth and change, and United Power wants to take advantage of the opportunity to diversify its generation mix where possible. A leader in renewable energy, the cooperative added Colorado’s first community solar farm in 2009 and has since added solar and methane gas generation as well as batteries to provide more than 84 megawatts of electricity to the local electric grid. The current wholesale power contract limits the cooperative to purchasing only 5% of their power through sources of this type.

“Exercising control over the cost and make up of our power generation is the future of the electric industry,” said Gabriel. “We know we can lower costs for our members and take advantage of many of the new opportunities that exist to purchase locally produced renewable resources. The electric cooperative of the future can no longer be restrained by old paradigms that only produce power from centrally located sources far from where it is consumed.”

Earlier this month, the DC Circuit ruled that FERC had final jurisdiction over setting the methodology that would be used to arrive at the final exit cost for the Brighton, Colorado based electric cooperative.

United Power is a member-owned, not-for-profit electric cooperative, delivering electricity to homes, farms and businesses throughout Colorado’s northern front range. The cooperative is one of the fastest-growing electric cooperatives in the nation, and in June 2021 joined the elite ranks of cooperatives serving more than 100,000 meters. The 900-square mile service territory extends from the mountains of Coal Creek and Golden Gate Canyon, along the I-25 corridor and Carbon Valley region, to the farmlands of Brighton, Hudson, and Keenesburg. United Power is also a founding member of the NextGen Cooperative Alliance, dedicated to expanding the power supply and procurement options and reforming the traditional generation and transmission business model. For more information about the cooperative, visit www.unitedpower.com or follow them on social media Facebook, Twitter, LinkedIn, YouTube and Instagram.

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United Power Exits its Current Wholesale Contract Effective May 1, 2024

United Power caught the attention of electric distribution cooperatives nationwide in April when it filed its non-conditional Notice of Intent to Withdraw from its wholesale power contract with Tri-State Generation and Transmission (Tri-State). The cooperative entered a long-term contract with the generation cooperative when few viable sources of affordable and reliable power were available. At the time, it provided stability for United Power and assurance that members would continue to receive reliable power. But the industry has entered a transition, and the contract is no longer reflective of the cooperative or its members’ best interests. 

The current contract is too restrictive, capping locally sourced power at just 5% of its total load and preventing United Power from bringing more local generation onto its system, which would lower costs and expand member options. Before making the difficult decision to exit its contract, leadership at the cooperative attempted to negotiate a revised “partial requirements” contract. The revised contract would have continued United Power’s membership relationship with Tri-State while also allowing the cooperative to explore and purchase lower cost, cleaner power options on the market. Unfortunately, negotiations to this end failed. 

“Our first option was to continue a mutually beneficial relationship with our wholesale power supplier, where we would continue sourcing a portion of our power from them,” said Mark A. Gabriel, United Power’s President and Chief Executive Officer. “It is unfortunate they were unwilling to help us reach this goal. Although we feel the current contract does not represent shifts taking place in the industry, it was not a decision we made lightly. We spent countless hours weighing our options and discussing a course of action that would result in the best outcome for our members and our future.”

United Power also issued a request for proposal (RFP) for new wholesale power suppliers along with its Notice of Intent to Withdraw. Perspective power suppliers will have until early August to submit proposals outlining their ability to meet the cooperative’s energy needs. Proposals from suppliers are expected to meet three criteria: 

• Energy, the critical resource keeping lights on for United Power members.
• Capacity, the ability to provide continuously reliable power even in adverse conditions.
• Resource adequacy, the assurance generation will be adequate to meet demand even on hot summer days during peak hours. 

“We are expecting a healthy response to our RFP,” said Dean Hubbuck, United Power’s Chief Energy Resource Officer. “We’ll spend about two months evaluating proposals before selecting a handful of potential suppliers to work with directly. We hope to select a supplier, or group of suppliers, and begin contract negotiations early next year.”

The final step in United Power’s exit is determining an exit fee, which is currently pending with the Federal Energy Regulatory Commission (FERC). Although the fee hasn’t been determined, FERC has issued a number of decisions in the cooperative’s favor over the past few months. In March, FERC economist Greg Golino determined Tri-State’s methodology for calculating the exit fee was “flawed and unreasonable.” The exit fee could be decided as early as this summer. 

“Our situation has substantially changed, with more affordable, reliable, and environmentally sustainable power supply options now available,” said Beth Martin, United Power’s Board Chairman. “We believe we should deliver electricity that is more reflective of the current market price, ultimately helping our members save.”

In June, United Power hosted a member forum to discuss its upcoming exit. Gabriel and Hubbuck provided detailed background of how United Power got to this point and where the cooperative is heading from here. The forum concluded with a question and answer session from attendees both online and in person. 

Additional information, including a recording of the forum is available on our Power Supply page. 
 

Brighton, CO - United Power, an electric cooperative based in Brighton, Colorado, is the first distribution utility in the Western Interconnection to join the Southwest Power Pool (SPP). SPP is a regional transmission organization (RTO), a nonprofit corporation mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure, and competitive wholesale electricity prices on behalf of its members.

“Since United Power is leaving our current wholesale power supplier in 2024, it is important that we seek out memberships and partnerships that will help us assure a reliable power source at the lowest cost possible,” stated Mark A. Gabriel, United Power President and CEO. “Our membership with SPP is one of the critical pieces we wanted in place as we move toward a new energy future for our members.”

SPP works as an aggregator of generation resources, dispatching the power where it is needed. The value of belonging to an RTO is multi-pronged for cooperatives like United Power. The power pool is charged with building reliability and predictability into their power marketplace and helping to reduce the risks that come with varying weather conditions. It is also committed to providing the lowest cost power available to serve its members, minute by minute.

The SPP is responsible for identifying power needs for the region it serves. Members of SPP will have an active role in determining where new transmission is built and will be able to have their interests represented directly.

“Membership matters. Our membership in SPP means we will have a meaningful say in the strategic direction of the organization,” stated Gabriel. “Members have an active role in determining how this new energy market develops and how the organization grows. We will be able to directly represent the interests of all United Power members.”

United Power is a member-owned, not-for-profit electric cooperative, delivering electricity to homes, farms and businesses throughout Colorado’s northern front range. The cooperative is one of the fastest-growing electric cooperatives in the nation, and in June 2021 joined the elite ranks of cooperatives serving more than 100,000 meters. The 900-square mile service territory extends from the mountains of Coal Creek and Golden Gate Canyon, along the I-25 corridor and Carbon Valley region, to the farmlands of Brighton, Hudson and Keenesburg. United Power is also a founding member of the NextGen Cooperative Alliance, which is dedicated to expanding the power supply and procurement options available to distribution co-ops and reforming the traditional generation and transmission business model. For more information about United Power, visit www.unitedpower.com or follow the cooperative on Facebook, Twitter, LinkedIn, YouTube, and Instagram.

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