This story by Allen Best appeared on BigPivots.com on October 23, 2025. We are sharing it in two parts.
After the story appeared, FERC rejected Tri-State’s proposal for a large load tariff, saying that it did not have jurisdiction. Tri-State would have to file with the regulatory bodies in Colorado and other states in which it does business.
Data centers in Colorado have been almost exclusively located along the Front Range, more narrowly yet between Colorado Springs and Boulder County. Might data centers make their way to rural areas of Colorado?
Duane Highley, the chief executive of Tri-State, said he has talked with developers covered by non-disclosure agreements. “I can’t share who they are, but I’ll just say I’m inspired by them,” he said. “They have a lot of money, and they do have the ability to execute. I also believe they’re shopping multiple locations at once, and so it’s a little bit of competition.”
Could this HILT tariff from Tri-State become a model for others? Highley said he got a call from a White House office in late September. The individual had lots of questions about Tri-State’s FERC filing. The individual had read Tri-State’s FERC filing in detail.
“Why do you care so much? Why are you calling me?” Highley asked. “And he said, ‘Because I think this tariff that you filed could set a precedent for the industry nation-wide.'”
Highley said he has not noticed another large-load tariff approved at FERC, although he has seen two that were rejected. “I don’t think we have it perfect, but we think we’re moving down a good path. We had input from developers and from our own co-op members to design this.”
Stranded assets?
Would such a tariff interfere with Tri-State’s plans to decarbonize? It expects to be at 50% carbon free electricity by year’s end and 70% by 2030. No, said Highley. Tri-State can meet new demand with solar, wind and battery storage. It also plans another natural gas plant near Craig, pending approval by the Colorado Public Utilities Commission.
Tri-State and its members would also allow data center developers to produce part of their own generation. That tariff is called bring-your-own-resource, or BYOR. A developer might have better access to supply chains, Highley said. “Again, some of these hyper-scalers have such a big checkbook they can buy their way to the front of the line. ”
HIghley said the Tri-State’s tariff would ensure that it has the capacity to back up the data center developer while getting properly compensated, so no other members subsidize the project.
A September presentation by Matt Fitzgibbon, Tri-State’s vice president of planning and analytics, tells a slightly nuanced story. A slide deck reported “limited potential” for stranded assets resulting in financial risk to Tri-State and its members while enabling “economic development across our members’ systems at an unprecedented level and pace.”
This gets at the heart of one concern about data centers, as illustrated in the Xcel filing with the Colorado Public Utilities Commission last year. How much of the prospective demand from data centers is real? And if it is not real, who will be left holding the bag if a utility spends gobs of money building new generating capacity? How much risk will be put on ratepayers, in the case of Xcel, or in the case of cooperatives, members?
In Durango, Chris Hansen, the chief executive of La Plata Electric since November, foresees data centers arriving in more rural parts of Colorado.
“We have had significant discussions with three different data center operators who are interested in southwest Colorado,” he reported. “We are making sure that we are open for business and communicating our opportunities in the near term, in the next 24 months, and those requiring more lead time of three, four or five years.”
Data centers, he said, “are most focused on low cost of power and availability of water for cooling. Those are very high on their list.”
And Colorado’s sales tax policy will not make it a higher cost for developers when they are buying hundreds of millions of dollars for chips. “That is something that is relevant for them as they make their decisions.”
Hansen said he believes that data center demand can be met in ways that are highly beneficial to existing customers and the electrical system more broadly.
Some rural places could be limited by lack of sufficient fiber connectivity to more urban areas. Hansen acknowledges that but points out that data centers can have different needs. As for southwest Colorado, it is well connected.
Delta-Montrose’s Blackwell sees his cooperative being in a good position to interest data center developers. It has fiber connectivity to Denver, Salt Lake City and Albuquerque. “A Facebook, an Amazon — the big data centers will want direct fiber connectivity.”
Hansen said he believes electrical cooperatives are positioned to meet demand that investor-owned utilities in urban areas cannot.
“Larger investor-owned utilities around the country are not in great position to meet demand. That is the trend I am seeing. Rural co-ops can move fast, as they don’t have to necessarily go through PUCs. Those things help make rural areas more attractive.”
Lots of shopping, little commitment
In Southwest Colorado, the data developers have been looking to get started at 50 to 100 megawatts. If things go well, they might want to grow to data centers of a gigawatt or more.
Data centers come in different flavors, said Hansen. Some data centers do have flexibility in their need for electricity, while others must respond immediately to needs of their consumers.
Then there is the bring-your-own power approach. The Wall Street Journal article on Oct. 15, “AI Data Centers, Desperate for Electricity, Are Building Their Own Power Plants,” noted the problems of building transmission and other infrastructure.
“Tech companies in the AI race need power, and lots of it. They aren’t waiting around for the archaic U.S. power grid to catch up,” reports Jennifer Hlller.
Data centers long took power for granted, a consultant told the Journal. “But that’s no longer possible given the city-sized amounts of electricity needed to train AI models. One data center can devour as much electricity as 1,000 Walmart stores, and an AI search can use 10 times the amount of energy as a Google search,” Hiller said.
Hence, they have taken to building their own power generating sources, often gas plants.
The downside to that, as Hansen pointed out, is that the data center developers could still need the reliability of the broader grid. “It’s a balancing act,” he said.
While Hansen in Durango has just started getting inquiries from data center developers, Mark Gabriel, chief executive of Brighton-based United Power, has been fielding inquires for two or three years.
The electrical cooperative covers 900-plus square miles from the foothills of the Rockies to the oil and gas territory of the Wattenberg Field. But it also serves land near DIA as well as along the fast-developing I-76 and I-25 corridors.
As such, United has been getting lots of “tire kickers.” Now, says Gabriel, United actually expects something to come of the talk. Two operators with large load demands have committed to the $650,000 up-front fees, two more are in active negotiations, and several others are talking with United.
“We anticipate at least one to come to fruition,” said Gabriel.
Allen Best publishes the e-journal Big Pivots, which chronicles the energy transition in Colorado and beyond.