Lamar Utility Board Rethinking ARPA Relationship

Prompted, perhaps in part by questions about high electric fees from Colorado Beef representatives, members of the Lamar Utility Board have decided they’ve reached the point where they need to discuss options regarding their contract relationship with ARPA, Arkansas River Power Authority. 

The Lamar Utility Board sat down with Doug Morris and Jim Mullins from Colorado Beef, Tuesday, March 27, over what the feedlot believed to be disproportionately high electric power rates at their facility west of Lamar.  Mullins said his figures show that of the 75 facilities they own in 27 states, their Lamar operation is charged the most per megawatt-hour, more than all the others.  They wanted the rates explained, and they wanted to know what Lamar Light and Power could do to help reduce their monthly billing rates.  Mullins said, “Excluding Colorado Beef, our companies operating costs are averaging almost half of what we are charged by you.”   (The exact figures are being kept confidential at the request of Colorado Beef-Editor)

While not saying the company has reached a point where they will pull up stakes and leave, Morris told the board, the rates are such that if there’s no reduction, they will have to seek other alternatives for a power supply source.  Mullins added the company wants to hear from Lamar Light and Power and discuss any alternatives before they begin to formulate their own options.  Mullins said if you can get these prices to my recommended amount, “it goes off our radar, and really, probably should go away.  It’s not a priority.”  But he and Morris were firm in their stance that if there cannot be any adjustments, their company will seek alternatives.  Mullins added that if the Light Plant could see its way financially, to retrofitting back to natural gas, he claimed that on a ten or twenty year commitment, he could find a source for low-cost natural gas for the plant. 

Light Plant Superintendent Houssin Hourieh explained  that in this region, the Light Plant will be the feedlot’s lowest cost power supplier, charging under their nearest competitors on a price per kilowatt-hour.  “Our backs are to the wall on our rates right now with little leeway,” he explained, continuing, “We have to charge 1.5 cents to the city for every kilowatt-hour sold, as that’s built into our charter agreement, and our ECA, (electric cost adjustment) is also 1.5 cents, and that’s really all we can do.” saying there could be some leeway with the ECA.  Board member Michael Bryant added,” If we make a concession for you, we’re going to have to do it for the hospital, Wal-Mart, Dragon, W.H.O., we’re dropping money right and left and for us, that’s not an option. We have to make money too.”  Board chairman Don Steerman explained to Morris and Mullins, “Our costs are significantly more than what you want to pay, and that to me is an issue for a potential problem.  We’re owned by the City of Lamar, so it’s not as if we’re making money on top of what our interests are, and the costs of our plant are significantly shot up over our initial budget.”  Hourieh told the Colorado Beef representatives he and the board will explore alternatives and meet to discuss options with them in the near future. 

Board member Ron Cook opened the door on LUB’s current and future situation with the feedlot, stating, “I think what we need to do is look at our options.  If we can figure out if there’s anything we can do for them, at all, cut it down to what figures we can do, and if we can’t do that, tell them we can’t do that, but Lamar Light and Power if going to have to look at why we’re so high.  We all know why we’re so high and now we’re going to have to do something about it.”  He added, “I think we need to look at how binded we are with that “ARPA” contract.  Obviously Raton had a picture, obviously Trinidad has a direction.  Maybe we oughta start looking at our directions.”  Regarding any litigation that could arise, or a timeline from legal actions, Cook said the board could consult with LUB attorney John Lefferdink for ramifications. 

Chairman Steerman added, “We can’t afford to not explore our options, and let the time limit run out.”  Hourieh expanded on the ARPA contract, indicating the agreement is that ARPA purchases power for the ARPA members, “We can’t go out and buy power on our own under the agreement.”  Steerman said, “I’m not planning on breaching our contract with ARPA, but I would like to have something in place if ARPA cannot perform.  As more expenses build up with ARPA, the more expensive our power is becoming.  Where is a reasonable point where we say this situation is becoming ludicrous?  Hourieh stated at that point in the discussion, that because of financial details, the board should discuss the situation during an executive session at the April board meeting.  The board is planning on two future executive sessions, one on April 10 to discuss their status with the ARPA contract, and the next on April 24, which should provide an update from ARPA General Manager Rick Rigel following his trip to Ohio to discuss the light plant’s repair status with Babcock and Wilcox, boiler manufacturers.  That trip was postponed from earlier this month.

By Russ Baldwin