LUB Approves Customer Rate Increase

Coal Storage Domes at Lamar Repowering Project

Lamar Utilities Board members approved a 2.5% rate increase effective November 1, 2011.  This will be combined with an Emergency ECA, Electric Cost Adjustment of 1.5 cents per kilowatt hour up to a 12 month period.  The increase for an average residential customer will amount to about $10 per month.  During the board’s meeting, Tuesday, August 23, Superintendent Rick Rigel said that without revenue increases the plant’s net operating income comes in under the recommended 5% return that had been forecast through 2013.  The cash balance of the plant will also be depleted by that year if no action is taken.  After the first 12 months, the plant will review the second 12 month ECA and the level of the adjustment will be considered in August 2012.  At this time, it has been recommended that the 2.5% rate increase be put into effect for June 2012 and in 2013.  Rigel said the level of the ECA will also be evaluated in the spring. 

Rigel added that the purchased power costs are up 19% over 2010 and costs are $1 million higher than proposed in the current budget.  The superintendent added that the light plant continues to purchase low cost hydro electric power from WAPA, but in amounts too low to make an impact on the proposed increase.  

In other news, in 2009, Lamar Light and Power ended a 1999 agreement with SECPA, South East Colorado Power Association due to conditions in the agreement and because of the construction of the Willow Creek ARPA/LUB line from Willow Creek to the Lamar Substation.  LLP offered an agreement to provide service to their Prowers substation and Dry Creek substation with a sub transmission service rate.  Rigel told the board at the meeting that SECPA declined the offer and removed their jumper cables which disconnected the systems from each other.  As of this article, those systems have not been reconnected.  Last Wednesday, August 17, SECPA had problems on the line serving the Prowers substation and Lamar Light and Power restored the connection, re-establishing power service.  Rigel said he would contact SECPA again to see if they were amenable to a new, ten year service agreement.  LUB attorney John Lefferdink will review the contract, which, when approved, will be forwarded to SECPA for action. 

Some preliminary budget figures for 2012 were discussed with the board members.  Rigel said he anticipates budget revenues for 2012 at $14.7 million, as well as an increase in personnel expenses of $800,000, mostly attributable to health insurance coverage.  Power production expenses are estimated for next year at $10,500,000 with most of that due to ARPA costs. 

The superintendent said units, 6 and 8 have been operating at 75 to 80% of load, but some vibrations along the main steam line required an inspection.  Unit 8 was at near full capacity. 

Recently, bills that ARPA received from their power supplier indicated an over-charge of $193,000 in May and June and the ECA from ARPA to its members was too large.  The over-charges will be credited back to ARPA customers in their September invoice.

by Russ Baldwin