Guzman Energy snags two more utilities

Steamboat- and Grand Junction-based electrical cooperatives to pick up with Guzman when their wholesale contracts with Xcel Energy lapse in 2028

Denver-based Guzman Energy has gained two more customers, this time peeling away Steamboat Springs-based Yampa Valley Electric and Grand Junction-based Grand Valley Power.

Both cooperatives have contracts with Xcel Energy for their wholesale power supplies until June 1, 2028. Both plan to rely on Xcel’s transmission to deliver the electricity beyond the switch. Both have 15-year contracts with Guzman, to 2043.

In their announcements, both cooperatives also cited the price volatility and price increases of electricity delivered by Xcel in recent years as motivations for their switches. In its announcement, Yampa Valley specifically cited a 14% rate hike by Xcel in 2023.

Steve Johnson, the chief executive of Yampa Valley, said the decision to transition to Guzman was guided by considerations about rates, reliability, renewables and relationships.

“We have listened to our members, and this agreement powers us forward to deliver reliable and affordable electricity that incorporates more renewable sources and helps stabilize rates,” he said. The cooperative has 27,000 members in northwestern Colorado and a few in Wyoming.

Today, 42% of Yampa Valley Electric’s electricity comes from renewable resources. The agreement with Xcel allows it to procure 3% of its power independently.

With Guzman, it expects to be at 84% carbon-free power by 2030. That’s roughly the same as where Xcel expects to be by 2030. The more significant difference is that this agreement with Guzman allows Yampa Valley to procure 15% of its power independent of Guzman. That creates an opportunity to build more local solar, in particular. The valley currently has almost no solar, although work has begun on a 20 megawatt project in Craig.

Yampa Valley’s determined push into renewables contrasts with its five coal-burning units, two at Hayden and three at Craig. All five are scheduled to close between 2025 and 2030.

In the announcement by Grand Valley Power, Tom Walch, chief executive of the 19,000-meter cooperative, emphasized the stabilizing of costs but made no mention of renewables. Colorado’s oldest electrical cooperative, Grand Valley serves farms and exurban homes in areas mostly outside of Grand Junction from Fruita to Palisade to Gateway. That city, however, is mostly served by Xcel.

Dolores River near Gateway, Colorado. Photo/Allen Best

Grand Valley Power has a broad service territory that extends from Fruita to Gateway, the latter a hamlet located along the Dolores River south of Grand Junction, seen here in March 2022. Top, Steamboat Springs in May 2023. Photos/Allen Best

Four electrical cooperatives are currently supplied by Xcel. Sedalia-based CORE Electrical Cooperative, Colorado’s largest, with 170,000 members, is scheduled to pick up with Invenergy in 2026. With the loss of Grand Valley and Yampa Valley, that will leave only Glenwood Springs-based Holy Cross Energy.

Founded in 2015, Guzman Energy is one of several privately owned companies premised upon finding opportunities in the transition from carbon-based energy production to renewable within Colorado and elsewhere.

Guzman has been gained customers primarily from among local utilities supplied by either Tri-State Generation and Transmission and from Xcel Energy.

Its first contract was with the municipality of Aztec in northwestern New Mexico. In 2016, it financed the exit of Kit Carson Electric, a cooperative in New Mexico, from its all-requirements contract with Tri-State. Guzman financed the $37 million exit fee and agreed to help Kit Carson build out its solar capacity such that it could meet daytime demand with local solar generators. In summer 2022, that goal was achieved and the final payment was made to Tri-State.

In 2020, Guzman scored the contract with a Colorado cooperative, Delta-Montrose, and it is similarly helping build solar supply there with an 80-megawatt solar farm near Delta.

Guzman has other customers lined up. It is scheduled to begin delivering electricity in February 2025 to six municipal providers in southeastern Colorado. It will replace Xcel Energy in providing electricity to the City of Fountain by the end of 2026.

Other potential customers are uncertain. Most prominent is United Power, which plans to be apart from Tri-State by May 2024.

To supply its customers, Guzman buys electricity from the wholesale market. It also has the output from the 8% ownership by Holy Cross Energy in Comanche 3, the coal plant in Pueblo that began operations in 2010.

In July 2022, Guzman also announced a power-purchase agreement for 145 megawatts of generation from a new wind farm located in Colorado north of Pawnee Buttes, near the Wyoming border, and the company has said it expects to add more of its own generation.

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