Guzman Energy LLC, a Denver-based wholesale power provider with some financial backing from an heir of billionaire Sam Walton’s retail empire, is looking to displace legacy energy suppliers in the Western United States.
The company, which has a tiny slice of deals in place in rural Carbon County, Wyoming, is taking aim at regional strongholds in smaller communities that oftentimes pay high rates locked in with long-term contracts for power produced by coal-fired generation plants.
Guzman has taken advantage of some distribution electricity cooperatives that have severed ties with Tri-State Generation and Transmission Association, a giant Colorado-based co-op with member organizations in a four-state territory, including parts of Wyoming.
Its business strategy is a simple one.
As big utilities move to renewable power, rural electric co-ops want to shed long-term power agreements for electricity generated by coal-fired power plants. Some of these rural co-ops want access to cheaper wind or solar power, thus giving large agricultural or industrial and commercial customers an ability to pay lower electric bills.
Guzman helps rural utilities dump the coal power contracts with swaps.
Since 2016, a handful of co-ops have followed the lead of New Mexico-based Kit Carson Electric Cooperative, which became the first co-op to sever ties with Tri-State, raising some rumors among critics that things aren’t that great for those who’ve paid millions of dollars to leave Tri-State.
Another co-op, United Power Inc. in Brighton, Colorado, has drawn criticism as well. United, which paid over $702 million to leave Tri-State, generated about 20% of Tri-State’s revenue when it left in May.
Jerry Thompson, president of the board of directors of the Garland Light & Power Co. in Powell, Wyoming, and whose co-op is a member of Tri-State along with seven others in the state, wrote in an email to Cowboy State Daily that Wyoming’s co-ops are “happy United Power is out of Tri-State.”
Thompson, whose voice resonated with other co-op heads as critical of ex-members of Tri-State during a meeting with Cowboy State Daily last month, said that the legal battles with United Power to fight its “extreme ideas of renewable energy and want everything for nothing” were a drain on Tri-State’s time and resources.
“Maybe look at how some of those other co-ops (Kit Carson) are doing financially,” he said.
The complaints about those that have left Tri-State also have focused on them paying more for wholesale power from Guzman Energy, which in turn distributes the electricity to its customers over the electrical grid.
United Power President and CEO Mark Gabriel denied this is the case.
"The opportunity to buy our own power and transmission has been very attractive,” Garbriel told Cowboy State Daily.
“This thing about us losing money is a misnomer,” said Luis Reyes Jr., chief executive of Kit Carson Electric Cooperative Inc., who defended his co-op. "We run lean.”
Critics like Thompson say that Kit Carson, United and other co-ops that have left Tri-State are really paying more for their power now that they’ve left, and that Guzman may not have enough electricity to deliver on its promises of electricity in future years.
'Unfounded' Criticisms
These criticisms aren’t true, said Guzman Energy Chief Commercial Officer Robin Lunt in an interview with Cowboy State Daily.
“When you are the new kid on the block, there’s sometimes people who have criticisms, unfounded criticism, but criticism nonetheless,” Lunt said. “We take our reliability obligation seriously and meet that, and have never missed on that, and won’t going forward. There are rumors out there always.”
A cornerstone philosophy for Guzman is to meet the power needs of co-ops and others during what seems like a turbulent energy transition from fossil-fuel power plants to alternative forms of energy, like from wind and solar sources, Lunt said.
“This is a time of energy transition in the country and in the world, and Guzman really thinks that this is an opportunity for those local communities to make decisions about what they want in their power supply,” she said. “What Guzman does is bring a competitive option to the table for these co-ops to examine and make decisions about the future of their power supply.”
An example of Guzman’s strategy to meet future electricity requirements is Kit Carson, which expects to achieve between $150 million to $170 million in wholesale power savings over its contract lifetime, according to Guzman information.
The savings are real for rural America.
Generally, rural power customers pay an average of 4.4% of their income toward energy bills versus a national average of 3.3%, according to the American Council for an Energy-Efficient Economy, a Washington, D.C.-based trade group.
The bread-and-butter for Guzman has been to step in with a handful of former co-ops associated with Tri-State to provide reliable energy.
Guzman has invested in clean energy projects ranging from a 150-megawatt wind project located about 120 miles east of Denver along Interstate 70, to the Garnet Mesa Solar project, an 80-megawatt agrivoltaic solar facility a few miles southeast of Delta, Colorado.
Walton Money
Guzman Energy has a strategic plan in place.
The company was founded in 2012 by Chairman Leopoldo Guzman; Christopher Riley, who grew up in a rural coal mining community in central Utah; and CEO Christopher Miller, who replaced Riley last year in the top executive role.
The company has received more than $130 million in backing from private equity companies Vision Ridge Partners and Denver-based Zoma Capital, according to Pitchbook, a trade publication that tracks private equity investments of privately held companies.
Zoma Capital was founded by Lucy Ana Walton and Ben Walton, a grandson of Walmart founder Sam Walton and an heir to some of the retail magnate’s fortune.
Vision Ridge Partners is an investment firm based in Boulder, Colorado, specializing in energy, transportation and agriculture.
Vision Ridge has tossed money into such energy-related projects as EVgo, a network of public fast-charging stations for electric vehicles, and Highland Electric Fleets, a provider of fleet solutions delivering electric-vehicle charged technologies to school districts and fleet managers.
To date, the 12-year-old Guzman Energy has made inroads in its New Mexico, Colorado and Montana territory. Two tiny communities are served in Wyoming, according to Guzman Energy’s customer footprint provided to Cowboy State Daily.
These areas include Baggs and Savery, both located in Carbon County.
Baggs is a tiny historic ranching community reputed to be a hangout over a century ago for notorious outlaws Butch Cassidy, the Sundance Kid and their "Wild Bunch."
Baggs is located in southwest Carbon County along the Little Snake River, and has a population of 411.
Savery is an unincorporated community in southeastern Carbon County located on the upper Little Snake River. It boasts a museum with 15 historic buildings and exhibits in the secluded ranching valley.
It has a population of 25.
Growing Power
But this is just the tip of the iceberg for Guzman Energy.
The privately held company has contracted in future years to serve over 4,000 gigawatt-hours (GWh) of wholesale power load to at least 15 customer sites — including Tri-State breakaway co-ops Kit Carson, Mountain Parks Electric Inc. in Granby, Colorado, Delta-Montrose Electric Association in Montrose, Colorado, and United Power.
A GWh is a very substantial quantity of energy. The 4,000 GWh of power that Guzman has under contract is enough electricity to power 3 billion homes.
Other co-ops in Colorado and Nebraska are considering Guzman for future power needs as well.
“We don’t serve any co-ops who are still members of Tri-State,” Lunt said.
“When Guzman comes in, steps in and starts serving the wholesale power, we’re providing the generation mix that goes over the … transmission lines,” she said. “It’s delivered to those distribution utilities who are customers, who then distribute that across the distribution system to people’s home and businesses.”
Tri-State Generation’s pivot away from fossil fuel-generated power has some of its members uneasy. In Wyoming, there’s concern among its eight co-op members in the state over the future of the coal-fired, 1,710-megawatt Laramie River Station power plant.
This is a tough regulatory landscape to navigate for Tri-State and its members, she said.
“How do you navigate state policies versus market efficiencies?” Lunt asked. “That’s like a complex component of market deployment that I think probably impacts a lot of decision-making, which I guess is a little bit of a microcosm of the Wyoming question of resource preferences and a desire, you know, to preserve some of those important plants to the state of Wyoming.”
The three-unit Laramie River Station, located near Wheatland, Wyoming, is owned jointly by North Dakota-based Basin Electric Power Cooperative, Nebraska-based Lincoln Electric System, the Western Minnesota Municipal Power Agency and Tri-State.
Pat Maio can be reached at pat@cowboystatedaily.com.
