Commissioners Hear Businessmen’s Concerns over Electric Rates

Doug Morris of JBS Five Rivers & Rick Robbins of Colorado Mills

Going to ARPA for Answers 

Several of the county’s major commercial electric users addressed their concerns regarding the high cost of local utilities and its potential negative impact on new and current businesses to the Prowers County Commissioners during their Thursday, February 21 meeting.  Doug Morris of JBS Five Rivers,  and Rick Robbins of Colorado Mills, appeared in person and presented letters from Jim Miller, owner of Ports to Plains Travel Plaza and Doug Thrall of the Rodeway Cow Palace Inn.  They requested support from the Prowers County Commissioners in conducting a fact-finding audit of the Repowering Project and parent company ARPA.  The gist of their message to the commissioners was, we aren’t here to lay blame on anyone, but we’re at the point where we need to find out why the Repowering Project is not on-line, what caused the cost over-runs and just who is responsible for these high rates each customer is paying. 

Doug Morris stated, “Throwing around blame is not going to solve the problem,” and Rick Robbins of Colorado Mills said, “We have options but we really don’t want to use them.  I don’t want to get into the utility business and start worrying if my generator is going to work.”  The letter from Doug Thrall of the Cow Palace Inn stated in part, “We would like to have a clear understanding of how this project came together from start through today in terms of contracts, contractors, bond holders, engineers, consultants and construction performance bonds to name a few.  I believe we have the ability to assist ARPA in finding solutions to the issue of excessive electric rates as long as we have the complete story and all the facts of this project.”  The letter continues, “We pay more for electric than we do for our mortgage by almost double.”  The letter from Jim Miller, owner of Ports-to-Plains Travel Plaza echoes Thrall’s concerns and utility rate problems and states that he has not really been given answers to his questions to the Lamar Utility Board on the rate structure and lack of performance for the Repowering Project.  A portion reads, “It seems that the more questions I asked such as: who made these decisions, who were the consultants, engineers, contractors, who are the bond holders, what are the terms, the more I got blank stares and finger-pointing.”  Robbins said, “Someone has to be responsible for these increased rates and it shouldn’t have to be the customer.”  Morris said we have to figure out who is making the decisions and why we’re where we’re at.  He added that his bosses look at his figures and tell him that in order to cut costs, he may have to reduce the number of cattle by ten to 20,000 in the yard and feed them somewhere else.  Morris said were that to happen, he’s  having to reduce his employee staff and cut back on his feed grain purchases which is about $20 million locally a year.  Robbins said his grain purchases come to about $18 million a year with a staff of 38 employees and an annual payroll of $1.5 million.   

Robbins explained that his utilities at Colorado Mills have been steadily climbing, stating that his daily utility cost of operation in 2004 was about $800 and it’s currently up to $2,000.  He said that when his operation runs at full capacity, he’s paying as much as $50,000 a month for electricity.  At almost half that cost, Robbins claimed he could probably amortize his own private electric operation and pay it off in about three years.  Morris said his utility costs at JBS Five Rivers are about twice the rate of the next highest similar cow feeding operation in his company, and he too, has considered finding an outside power source.  Morris said his company has a 75% manager trainee turnover rate, somewhat attributable to the utilities.  “We have people move to town, rent a house and find out their utility rates are $100 more than the monthly rate.  They don’t stay here very long at that rate,” he explained.  Morris added, “I love it here, I don’t want that yard to go away, but we’re getting close.”  He stated that he too, could develop an alternate power source, “But that still leaves my employees on the hook and it’s not a solution to the overall problem.”

Miller, from the Travel Plaza, told the Utility Board several months ago, he was visiting with a power production company for an independent source for his operation.  Each of the three businessmen said in common though, that they want to remain in Lamar, maintain their business in the community but they were concerned about how the inordinately high rates would only serve to kill the economic climate of the community in years to come.  Miller’s letter said if large power users chose to opt out for another electric source, Lamar Light and Power could lose 25—40% of its revenue, spreading out the bond cost among the remaining rate payers.  He believed if that came to pass, those employees and customers will be damaged even more by absorbing the additional cost.  Robbins noted Lisa Nolder, Prowers County Economic Development Director, who was at the meeting, stating that because of the utility rates everyone is paying, she has to spend more time trying to keep current businesses to remain in this town, than she is attracting new businesses to the area.  Nolder said she is working on a study regarding the utility rates and how they impact business growth in Lamar and Prowers County.  Nolder was in agreement with the need for a comprehensive fact-finding study, saying, “The discussion over rates has gone on long enough.” 

When asked if there were grants available to convert the coal fired plant back to cheaper natural gas, commissioner Joe Marble replied it was his understanding that it would take another $40 million and that would only be tacked on to the current $166 million in bonds now used to finance the Repowering Project. For the past two years, the Repowering Project has been off-line and purchasing electric power off the grid and there is no longer a contract with coal companies to supply the plant with coal.  The plant boilers are under going modifications and tests for a successful run are scheduled for sometime this summer.  One suggestion about the conversion cost would be to explore the performance bonds associated with the project and take that money and apply it to getting the plant back on-line again using natural gas. 

Jillane Hixson, who attended the meeting, stated the commissioners have the authority to launch an audit and complete investigation into the entire situation.  She added, “We need a team of professionals outside the region who are experienced in utilities and contracts, to crawl through every single contract and performance bond to see what the situation is.  There are just too many unanswered questions.”  She said she doesn’t believe anyone will ever get all the answers by going to ARPA.  When asked about the statute that grants the commissioners the authority to investigate, Hixson said she’d get the specific information to the commissioners.  Commissioner Henry Schnabel said he believed any inquiry or information on bonding or grants for financial relief would still have to be made through ARPA. 

Robbins put the rate impact situation in perspective stating, “The problem is, we’re in just the first three or four years of this and it’s getting worse, and if they say it’s thirty years, I can’t even comprehend what this will do over that time.”  The commissioners assured the businessmen they would accompany them at the next opportunity to attend a monthly ARPA meeting and be placed on their agenda for a discussion of the rate situation and Repowering Project status.
By Russ Baldwin