ARPA Considers a New Rate Structure


Municipal member communities of ARPA, Arkansas River Power Authority, may see a change in their electric rate structure pending the outcome of a cost of service electric rate study commissioned by the organization. During the group’s monthly meeting held in Las Animas last month, members hired JK Energy Consulting to conduct a study which provided two scenarios for consideration. The press release issued by ARPA stated it, “…would focus on keeping member’s rates stable and include the potential of developing an incremental rate that would encourage load growth. The COS, Cost of Service study identified options that would be revenue neutral to ARPA and its members (based on historic sales) but would include an ‘Incremental Rate’ for sales above approximately 80% of the member’s average usage. A base rate would be implemented that would capture the majority of ARPA’s fixed costs and an incremental rate would be implemented that would capture the marginal costs of power supply and transmission above the 80% threshold.”

Houssin Hourieh, Lamar Light Plant Superintendent, explained the two scenarios for LUB members during their August 11 meeting. He said there were a lot of questions still to be answered before ARPA makes a decision, especially from member communities. Essentially the more electricity a member buys above an historic base load of 80%, the better their rates. Rates would be higher if a purchase falls below the 80% tipping point. Hourieh said each individual member would have their energy consumption adjusted to result in a revenue neutral rate as the first part of the proposal.

He explained, “ARPA is inclined to the second scenario because it doesn’t affect ARPA as a whole, but it affects each member city. If you sell more electricity you get a break, if you sell less, then your rate’s going to go up and that will become a problem.” He gave an example of a larger load for Holly because of the power demand for their area’s irrigation schedules. “Then they’ll get a special rate and we’ll be subsidizing it, the way I see it.” He said there would be a special rate for new customers in the area, but added it would be difficult to explain the different rate structures to an existing customer who may wind up paying a higher rate. He explained that it would be put into effect in stages if adopted by ARPA, but it would lie with an individual town to deal with it.

There may still be a rate hike to contend with as last September, the ARPA board approved a resolution finding that it would be beneficial to either dispose or decommission the Repowering Project rather than maintain it in cold standby. The finding was based on a projection that ARPA’s electric rates would be 9% higher in cold standby as opposed to selling the plant. Over the past year, ARPA has begun the process of advertising for bids for companies that would purchase the facility intact or in sections, preferring to see it go all at once. The City of Lamar, currently engaged in a lawsuit with ARPA, wants to delay any sale, believing that a higher price is available for the coal fired plant.

ARPA’s next monthly meeting will be held Thursday, August 27 at 10am at the Cultural Events Center in Lamar. A lighting dedication ceremony will precede the meeting, also in the Center at 9am and both are open to the public.

By Russ Baldwin



Filed Under: AgricultureBusinessCitycommunityEconomyEnergyFeaturedHollyLamarUtilitiesWiley


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