Denver, We Have a Problem

By Tom Walch, Chief Executive Officer

GRAND JUNCTION, COLO. - (Feb. 1, 2023) The rapid escalation in the cost of electricity we buy from Denver-based Xcel Energy is the problem we are all too familiar with. In paraphrasing the famous understatement attributed to Apollo 13 Mission Commander Jim Lovell in the title of this column, I want to signal to the leaders of our power supplier that it is time to address the problem.

I was 9 years old when the Apollo 13 mission launched 53 years ago. I have a vague recollection of watching the drama of the crew’s return on my family’s old black and white television. More of us are familiar with the Tom Hanks movie that has helped tell one of the great American stories where grit, perseverance and ingenuity helped overcome adversity. The Apollo 13 crew and NASA’s Mission Control faced problem after problem and came up with solution after solution. The lives of the crew members depended on it. The solutions came because, in the words attributed to Flight Director Gene Kranz, “Failure is not an option.”

While Grand Valley Power’s situation doesn’t have life or death ramifications, our leadership team and board have been working through a host of challenges. The root cause is overdependence on volatile natural gas as a fuel source for electric generation. The cost of natural gas is volatile for a host of reasons, including the move away from coal driven by the transition to clean energy. Even with higher prices, natural gas exploration and production lags. Don’t take my word for it — ask any western Colorado gas field worker. Increasing regulation and uncertainty about future limitations on carbon emissions have affected investment in natural gas development. To make matters worse, inflation and supply chain issues inject higher costs and more complexity. Unfortunately, there is not much that we can do about the supply chain, inflation or the cost of natural gas.

What can we do? Keep our members informed. We educate members so they can make the best decisions for their personal situations. Recently we shared with members the possibility that we could see a fuel cost adjustment for December after an Arctic Blast threatened to put the central U.S. in a deep freeze. We wanted members to have the opportunity to reduce their energy consumption if they chose. Fortunately, the cold temperatures did not last as long as forecasters anticipated, and wholesale gas prices quickly retreated from their temporary spike.

We can try to stay on top of rising costs so that we maintain our strong financial footing, without big surprises or rate shock Denver, We Have a Problem for our consumers. This is why we have to pass along increases in the cost of wholesale power and other growing costs with a rate increase effective March 1. The details of the rate adjustment are set forth on our website.

Another challenge, which you may have heard about recently in the media, goes back to the fuel cost adjustment that our members paid to Xcel after Winter Storm Uri in 2021. Grand Valley Power, along with three other Colorado electric co-ops that purchase wholesale power from Xcel Energy, filed a complaint with the Federal Energy Regulatory Commission (FERC) to recover surcharges that Xcel collected after Winter Storm Uri.

Xcel charged its wholesale customers a fuel cost adjustment when it found itself unprepared to meet the gas demands that Xcel’s own projections said were necessary for the winter weather conditions. Later, after temperatures rose, it sold extra gas that it had purchased at high prices to its gas customers and didn’t credit its electric customers. Xcel’s corporate parent also reported big profits that same quarter and attributed it to its natural gas and electricity sales.

The complaint is the first step in a long process that could have us measuring time in years rather than months, but it’s necessary that we stand up for our members and hold Xcel accountable for the excessive charges it imposed on Colorado customers.

The FERC complaint process is certainly important and has far-reaching implications for members and the co-op. But we must look forward. Looking forward, we have to fix our power supply problem. That’s why our board and management team is exploring the power supply market on multiple fronts. From alternative suppliers to negotiations with Xcel for a restructured contract, our goal is to bring home to our GVP members lower costs and more price stability. This is the biggest challenge of all. There are doubters and detractors on all sides. Gene Kranz responded to doubters at the Apollo 13 Mission Control with the declaration that, rather than NASA’s biggest failure, bringing the crew home safely would be “our finest hour.” And then he delivered.

Yes, we have challenges. There are uncertainties. The power supply market we are dealing with is not favorable. But failure is not an option. I am confident we will deliver to our Grand Valley Power membership. I believe it will be our finest hour.

About Grand Valley Power

Organized in 1936, Grand Valley Power is the first rural not-for-profit electric cooperative in Colorado. Serving over 16,000 members within the Mesa County area, Grand Valley Power is dedicated to empowering lives with hometown service and delivering safe, reliable and affordable electricity.