Lamar Light Plant Could Remain Idle for Years

Lamar Light and Power Plant

Rick Rigel, General Manager for ARPA, addressed the Lamar Utility Board on the regional power supplier’s current financial status through this past August.  During the Tuesday, October 9 meeting, Rigel also outlined ARPA’s 2013 budget and discussed the challenges and goals the company will face next year.  Rigel mentioned the possibility that the Repowering Project, which has been offline since December before last, is realizing reduced power costs through a short term power purchase contract ending in early 2015.  Rigel said that is being reviewed and next year ARPA will identify and implement a lowest cost, long-term power supply option that could extend from between five and ten years in a new power purchase agreement.  In this scenario, the Lamar plant would be placed in “Cold Standby” status where some maintenance work would be continued at the site, but it would remain offline while power is sold to ARPA members by an outside source.   

Rigel said ARPA would look at the costs of outside power supply proposals versus generating power from the coal fired plant.  “We have enough operating data from the Repowering Project that we can identify the costs of the Project reasonably well.  So what we’ll do is we’ll analyze those costs compared to what these long term power supply costs are and we’ll look at what the lowest cost option is.  We believe the lowest cost option will be to do a long term purchase power agreement for a five to 10 year time period.  If that’s the case we hope to have contract negotiations complete and a contract executed early in 2013,” he explained.  Rigel said the long term planning will help bring rate stability to the ARPA membership.  Another goal is the establishment of a Rate Stabilization Fund which could be drawn down from instead of instituting an ECA which passes along fluctuating charges to customers as was the case in 2010 and 2011. 

The Lamar Utility Board discussed, but tabled action on the 2013 budget, which is divided into two different operations.  The first section, the Operations Report, determines the revenue requirements needed from retail sales of electricity from transmission and distribution activities.  The second potion of the 2013 budget covers the operation of the Lamar Repowering Project.  ARPA, Arkansas River Power Authority funds the expenses of the coal fired plant in an agreement among the City of Lamar, ARPA and LUB.  Following a brief review by Light Plant Superintendent, Houssin Hourieh, board member David Anderson recommended acceptance of the budget be tabled pending a more in-depth look at the figures and how they were arrived at.  Board member, Michael Bryant agreed and suggested that version of the budget be sent to NMPP for comment.  Nebraska Municipal Power Pool, a mid-west company that advises power producers, has been employed by Lamar Light and Power for several years.  

 As was outlined to the Lamar City Council during their Monday night meeting by Hourieh, the proposed 2013 budget eliminates a 12% ECA, Electric Cost Adjustment, in favor of a 2.5% increase of electricity which would go into effect in November.  Most of the balance, a 9.5% net decrease would be passed on to customers showing a 7% savings cost on per kilowatt hour of electricity used.   Board members and Mayor Roger Stagner asked how much leeway could be given to customers on their rates in the proposed budget.    There isn’t a lot, as Hourieh explained that 3% is earmarked for the ECA and for the city’s Charter Appropriation from the light plant, approximately 12% of retail sales for the year, or $1,551,910.  Board members suggested a budget work session or two to review the proposed finances, similar to the way the city council finalizes their annual budget. 

Total light plant operating revenue for August is $1,735,531 with total costs of $1,369,759 for gross operating income for the month at $365,772.  When the non-operating revenues and expenses are taken into consideration, the plant realized a net income for the month of $151,281.  Total revenues for the year are $9,999,121 and operating costs are $7,997,071.  With revenues and expenses factored in, the net income for the yea-to-date is $923,006.  August 2012 retail sales revenues are up 12% compared to August 2011.  

The light plant crews are replacing the east end circuit breaker that feeds Bristol, Hartman and Holly, as well as the southwest breaker that feeds the northern Lamar area at to the Ports to Plains Travel Plaza.  They are at least 50 years old and replacement parts are not available.  The light plant is heading off the inevitable with replacements now.  Wind Turbine crews are performing annual maintenance programs and the light plant is conducting five year tests on all plant and substation relays. 

Board members went into executive session regarding boiler manufacturer negotiations as well as to receive legal advice on the WildEarth Guardian lawsuit.

By Russ Baldwin