As Colorado River Tributaries Shrink, a Public Power System Frays

This story by Hank Lacey appeared on Colorado Newsline on July 15, 2026.

The Wayne N. Aspinall Unit, Colorado’s only stake in a federal hydropower system that sells power across the West, is on pace to generate nearly 30% less electricity than its historical average dating to 1978, according to the Bureau of Reclamation. The shortfall is the latest sign of a decades-long decline eroding a system that accounts for about 3% of Colorado’s energy supply.

The unit’s three dams on the Gunnison River — including Blue Mesa, Morrow Point and Crystal — make up Colorado’s only piece of the Colorado River Storage Project, a Depression-era network of federal dams selling power to municipalities, cooperatives, tribes and irrigation districts across the West. Blue Mesa Reservoir, the largest body of water entirely within Colorado, is expected to end the year at just 17% of its live storage capacity.

As the river shrinks under the stresses of climate change, so does the unit’s output. And the electricity that the waterway does not help to generate has to come from somewhere else, usually at a higher price.

Nationwide, residential electricity users have already seen an annual price increase of more than 7% in the year ending in March. Judging by Xcel Energy’s recent effort in Colorado to obtain rate increases that might exceed 50% by the end of the decade, additional hits to consumers’ budgets could become the most obvious consequence of the building crisis in the Colorado River Storage Project’s capacity to generate power.

That economic scenario is unfolding as the West braces for a surge in electricity demand from data centers built to power artificial intelligence. On June 18, the Federal Energy Regulatory Commission boosted the effort to hook up those large users when it ordered the nation’s six grid operators to speed transmission connections for AI data centers.

“We are setting the stage for a resilient, reliable, and forward-thinking grid that empowers communities and safeguards consumers by transforming the way large energy users access the grid,” agency chair Laura Swett said.

It’s a lopsided moment, since federal regulators are accelerating new demand onto a grid whose supply side, at least in Colorado, is apparently decaying.

A dangerous threshold
The mechanics of Colorado’s hydroelectricity system are straightforward, even if mostly invisible to consumers. Reclamation operates the dams. The Western Area Power Administration markets the power to “preference customers” at cost-based rates. The Aspinall Unit’s output is pooled with Glen Canyon, Flaming Gorge, and other project dams under the Salt Lake City Integrated Projects Area arrangement, so Colorado utilities hold a share of that pool, not an Aspinall-specific allocation.

Less water also means less pressure, or “hydraulic head,” through the turbines: At full pool, one megawatt-hour at Glen Canyon Dam on the Colorado River takes about 1.9 acre-feet of water and, at today’s lower elevations, roughly 2.9 acre feet, said Jen Pelz of the Flagstaff, Arizona-based Grand Canyon Trust, an environmental organization that advocates for conservation of Colorado Plateau natural resources.

The same mechanism plays out at Blue Mesa. At its current elevation of about 7,446 feet, the reservoir’s generating capacity is approximately 18% below the amount for which it was designed, said Nick Williams, Reclamation’s power manager for the Upper Colorado Basin. Electricity generation stops entirely at 7,393 feet, Blue Mesa’s minimum power pool.

Reclamation moved aggressively this spring to avoid a more dangerous threshold. In April, it projected inflow at Lake Powell, behind the Glen Canyon Dam, at just 29% of average and warned that without action, the reservoir could fall below its minimum power-pool elevation of 3,490 feet by August. That is the point at which Glen Canyon Dam’s turbines stop generating.

While the agency issued a more optimistic prediction in May, it nevertheless ordered additional emergency releases from Flaming Gorge Reservoir through April 2027 and cut Powell’s release to Lake Mead for the year by roughly 1.5 million acre-feet. That protects Glen Canyon’s generators, partly by drawing down Mead, which has in turn already cut Hoover Dam’s generating capacity by an estimated 5% to 8.5%. The Hoover Dam power production decline is already reflected in the agency’s June forecasts, according to Len Schilling, the Reclamation official overseeing dam operations in the Lower Colorado Basin. None of the agency’s moves solve the shortage. Instead, Reclamation decides, reservoir by reservoir, where the pain lands first.

A test of the cost gap
The clearest documented example of that pain in dollars comes from the Western Area Power Administration’s own numbers. From fiscal 2023 through 2025, the agency paid more per megawatt-hour for replacement power than it charges customers every year and roughly tripled its rate in 2023, narrowing to about 35% above it by 2025, according to a Colorado Newsline analysis of WAPA and federal energy data. WAPA also spent $18.9 million in 2024 and $6.5 million in 2025 on replacement power tied to “Cool Mix,” a protocol that bypasses Glen Canyon’s turbines to protect native fish downstream, according to a Colorado River Research Group report drawing on an Argonne National Laboratory analysis and figures from WAPA. That is a cost that Pelz, who supports the protocol, put at nearly $19 million over the same two years.

Platte River Power Authority, which supplies Fort Collins, Loveland, Longmont and Estes Park and holds a direct WAPA allocation, could be the clearest Front Range-based test of that cost gap. A spokesperson for the utility said it could not respond to questions before publication. A recent organization budget cited reduced federal deliveries and rising WAPA rates as adverse financial factors, but current estimated financial consequences for the power authority, and what it will mean for the utility’s customers, remain unclear. WAPA did not respond to requests for comment.

A smaller utility in the state offers a contrasting situation. La Plata Electric Association, the rural cooperative serving Colorado’s southwest corner, relies mostly on the Southwest Power Pool for its electricity supply after joining that regional transmission organization earlier this year. But the association’s chief executive officer, Chris Hansen, said the cooperative still relies on WAPA for a hydropower allocation tied to the Southern Ute Indian Tribe. That WAPA dependence amounts to about 3% of the association’s supply. Hansen said market access and a diversified portfolio buffer the small utility against hydrologic risk.

“Even if that 3% were to double in cost, which is possible, it would have a relatively small impact on our total cost of power purchases,” he said. “So we have low exposure. Other co-ops do not. For us it would be (a) relatively small change.”

Whether joining the Southwest Power Pool can give utilities facing more financial pressure much hedge against rising power costs is not yet clear. Sydney Welter, an energy markets policy advisor at Western Resource Advocates, explained that “with just three months of market operations and without having seen data from Colorado preference customers, I’m not certain what the long-term costs and benefits will be.” While the Brattle Group, an industry watcher, predicted that utilities would save tens of millions of dollars per year by joining power pools, it is not clear whether that is happening.

Rising demand
Colorado lawmakers considered a bill this year that would have imposed accountability requirements on data centers. Senate Bill 26-102 was killed before the General Assembly adjourned in May, though the issue isn’t likely to fade. Xcel Energy, the state’s largest utility, expects large industrial customers, mostly data centers, to drive roughly two-thirds of its new demand. Nationally, data centers consumed an estimated 4.7% of U.S. electricity, a figure that Lawrence Berkeley National Laboratory projects could reach nearly 12% by 2030. Increasing data center electricity use in Colorado would add pressure to a system that is already experiencing supply reductions caused by the loss of flows at the Aspinall Unit.

That framework also shapes the deeper risk involving a “compact call” to the Lower Basin states demanding delivery of more water from Colorado, New Mexico, Utah and Wyoming. That has never happened in the Colorado River Compact’s history, but it could increase pressure on Western Slope water and power as Front Range cities lease senior water rights across the Continental Divide, according to University of Wyoming law professor Jason Robison.

No one is predicting a call soon. But Pelz argues the standoff between electricity costs and environmental protection is a false choice: The Grand Canyon Protection Act of 1992 already requires dam operations consistent with the river ecosystem’s long-term sustainability, and Congress could have eased the cost pressure through diversified supply or a dedicated fund, but has not done so in the 30 years since that law was enacted. Reclamation is now studying a broader infrastructure fix at Glen Canyon Dam, with initial findings due in 2027.

That may be too late for the pressures already showing up this year at reservoirs like Blue Mesa.