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  • Dylan Anderson

Yampa Valley Electric announces deal to break from Xcel Energy by 2028

Power co-op has been pursuing a new wholesale power supplier for years and now has a deal with Denver-based Guzman Energy.

Yampa Valley Electric Association has a deal to move away from its current power supplier Xcel Energy over the next five years, a deal the co-op says will save members tens of millions of dollars over a 15-year period.

The switch from receiving wholesale power from Xcel to Denver-based Guzman Energy will take place over the next five years as YVEA honors its prior commitment to Xcel, according to a release from the co-op on Thursday. Power will start coming from Guzman in 2028.

The move comes after YVEA started the process to assess the viability of a new power supplier five years ago, a process that was accelerated in 2021 after the co-op was forced to pass along $6.4 million in power costs to members following outages in Texas caused by Winter Storm Uri in February 2021. YVEA had to assess similar power surcharges earlier this year as well.

“Our decision to transition to Guzman Energy to provide wholesale power was guided by the ‘Four Rs’ — Rates, Reliability, Renewables and Relationships,” said YVEA CEO Steve Johnson in the Thursday Release. “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 us stabilize rates.”

The co-op currently serves about 27,000 customers across a 7,000 square-mile service area in northwest Colorado and Southern Wyoming.

YVEA’s current contract with Xcel extends through 2042, but requires a five-year notice to break the deal, according to Steamboat Pilot & Today reporting from last summer. The co-op received six proposals for a new wholesale power supplier late in 2021 and announced it was evaluating four different plans last summer.

“YVEA has faced consistent increases in wholesale costs over the past few years, including a rate hike of 14% in 2023,” the co-op said in the release. “The agreement with Guzman Energy will stabilize member energy costs through predictable, fixed wholesale power rates. In contrast, YVEA’s current contracted rate structure fluctuates with variable market conditions with the power cost adjustment, leaving members vulnerable to spikes in dynamic pricing.”

Members felt those cost adjustments earlier this year when natural gas prices surged and Xcel passed along additional costs to YVEA, which led to a 50% increase in power costs for many members.

The deal with Guzman also hopes to make the transition to renewable energy faster, as with the new supplier YVEA would be on track to provide 84% of its power carbon-free by 2030. About 42% of YVEA’s power comes from renewable sources which includes power that is generated from local renewable energy projects.

The deal also allows more energy to be provided locally with up to 15% of YVEA’s power to come from locally contracted sources. That is up from the current 3% restriction with Xcel which has been a limiting factor when local partnerships have talked about adding more local power production in projects such as large-scale solar.

YVEA met with the Routt County Commissioners last month where this limit was a significant focus. In that conversation, commissioners expressed frustration with this limit, as they have eyes on building solar systems to offset the county’s energy usage, particularly at wastewater treatment plants in Phippsburg and Milner, but the 3% restriction was viewed as a limiting factor.

“It's important for local communities to have decision-making control over their electricity portfolio and to have certainty around the cost,” said Robin Lunt, Chief Commercial Officer of Guzman Energy, in the release. “Guzman Energy is proud to be part of YVEA’s solution for its membership and we look forward to our partnership.”

The new agreement is expected to provide the same stability in power as Xcel, as electricity will still be delivered through the company’s current distribution system. But the power itself will come from Guzman, which will either have its own generation assets or secure power purchase agreements to provide power directly from generation assets.

According to YVEA’s website, members shouldn’t notice a difference in their electric service other than more stable rates each month and said the transition in power suppliers will be a “straightforward and hassle-free process.”

“All YVEA members depend on affordable power, and we have a responsibility to our members to deliver the most value,” Johnson added. “Whether you are a retired member on a fixed income, a young family with new expenses, an agriculture business with high demand or a large business with hundreds of employees, our new partnership with Guzman will help us keep your rates more stable in the future.”

YVEA is set to discuss the change in wholesale power suppliers with the Routt County Commissioners in a work session on Monday.

Top Photo Caption: Xcel Energy's Hayden Station is set to shutter before the end of the decade, part of the power giant's transition to more renewable energy. (Dylan Anderson/The Yampa Valley Bugle)


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