Utility Board Okays Electric Cost Adjustment



The Lamar Utility Board, in their final meeting of the year, approved an Electric Cost Adjustment, ECA, as an action that will be carried into 2018.

Light Plant Superintendent, Houssin Hourieh, explained that the increase will be required to keep the plant from incurring a technical default with the bond covenant on the plant’s wind turbines and that although customer bills will see an increase, the action is not specifically a rate increase. The action is in line with recommendations made by NMPP, Nebraska Municipal Power Pool, which advises the utility on its rate structure.  Hourieh explained the increase will be for only one year which comes on the heels on a similar action taken by the board the year before.

The hike is required to meet the debt coverage ratio (DCR) of 1.25 with an increase to 1.32 and the board has authorization to act when the cost of power or other emergencies are greater that 10% of the budgeted purchased power cost. The current ECA is $0.0145 per kWh and next year it will be increased to $0.0184 per kWh for all rate schedules.  Hourieh explained the adjustment translates to $1.95 per customer per month, based on the use of 500 kWh per household.

Several board members expressed concerns about the impact the adjustment will make on the light plant’s customer base with Michael Horning voting against the action.

In another financial move, the board approved resolution 17-12-02 regarding the continuing Charter Appropriation Adjustment (CAA). Hourieh explained the adjustment is similar to a ‘franchise fee’ between the City of Lamar and the Light Plant.  Established years ago, the Light Plant contributes to the city’s general fund each year through the CAA.  The 2018 Appropriation will be $1,647,903 which is determined by a formula that divides the budgeted amount for the CAA by kilowatt hour sales from the preceding 12 months energy sales.  The rate will be $0.0195 based on the annual power sales of $84,602,539.  This translates to an additional $0.40 per month which will be included in customer’s bills.

The board voted to cancel the LRP Title V Air Quality Permit for the Lamar Repowering Project as it is no longer needed and will forward the action to the EPA and Colorado Department of Health and Environment.

An extra item was added to the December 12th agenda pertaining to the pipeline agreement lease between the Light Plant and Strachan Exploration, Inc.  Several months ago, representatives from the oil company suggested a 10 year agreement to take over some of the gas pipelines that are no longer used by the light plant.  In a follow-up email, the lease agreement calls for using approximately 23 miles of six inch pipeline to transport gas from six wells that are located in the Barrel Springs area.  The lease calls for an annual payment to be made to the Light Plant of $13,000.

The specifics include:

SEI’s obligations are to continue the maintenance, repairs of the pipeline and repair or replacement of the Cathodic System, and maintenance of the Cathodic System to standards meeting applicable regulations.

Maintain all metering equipment including meter calibration.

Cooperate with LUB to allow both to use the pipeline to transport gas owned or controlled by either party.

Operate the pipeline in accordance with applicable Colorado Oil and Gas Conservation Commission Safety rules and procedures.

Provide LUB with biannual summaries of operations, repairs and maintenance of the pipeline and expenditures incurred in connection with such activity.

Provide General Liability and Pollution Liability insurance and have LUB as an additional insured on the policy.  The light plant was represented by Attorney Don Steerman in the negotiations.
By Russ Baldwin

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