Reductions in Lamar Light Plant Electric Bills Coming in 2019

The Lamar Utilities Board took two steps during their final meeting of the year, December 11^th, to reduce utility rates to electricity customers.   Board members approved Resolution 18-12-03, adopting a modification to the Charter Appropriation Adjustment Tariff and they approved a 2019 Electric Cost Adjustment.  Both actions will start to bring down the cost of electricity to residential and commercial customers, based on per kilowatt hours of use beginning next year.

The first action determines the size of the Charter Appropriations Payment made to the City of Lamar by the Utilities Board. The rate modifications adopted in 2009 called for stabilizing the CAA by dividing the budgeted amount for the Charter Appropriations Adjustment by kilowatt hour (kWh) sales from the preceding 12 month’s energy sales, December 1st through November 30th.  For 2019 that amount is $1,705,057.

Light Plant Superintendent, Houssin Hourieh, explained that the City of Lamar approved Resolution 17-12-03, authorizing the payment of $350,000 a year from the City’s General Fund to the Lamar Utilities Board to reduce electric rates paid by Lamar Light and Power customers, with 2018 being prorated until the city had been fully reimbursed for litigation fees in their lawsuit against ARPA. This action came from the lawsuit the city filed against ARPA, Article 31, which was ruled in favor of the City of Lamar.  The $350,000 payment will be made each year for 26 years.  The 2018 prorated payment is $247,489.49 which will be effective with the January 1, 2019 billing and it will be $0.0169 per kWh.  Based on 500 kWh per month for a residential customer, the savings, according to Light Plant Superintendent, Houssin Hourieh, will be $1.30 per month.

The board also took action on the Electric Cost Adjustment based on analysis of the Light Plant’s rate study that reducing the ECA from $0.0184 per kWh to $0.0017 for 2019 will meet the city’s wind turbine bond’s minimum debt coverage ratio of 1.25%, so after 2019 there will be no need to adopt an ECA related to wind turbine bonds as the debt will be under the 1.25. In one year, he explained, this will generate $145,364 for a 130% coverage needed for the bond covenant.

Under this change, residential customers will see a reduction of their ECA each month from $9.20 to $0.85 based on 500 kWh usage per month, or an 11% reduction in their standard rate between the ECA and the Charter Appropriations. For the year beginning in 2019 with the January bills, an average residential customer will only pay $10.20 instead of $110.40 for an average year.

Commercial customers that use 20,000 kWh per month, Hourieh said, will have their ECA billing decrease from $368 a month to $34 on average. That decrease for the entire year will see their bills decrease by $4,416 beginning in 2019 to $408 for a 90% reduction.

Hourieh noted that improvements are underway for customers in the vicinity of the city between 2nd and 3rd Streets from Washington to Maple Street. Line crews are replacing poles and pole mount transfers.  The upgrade will help improve system efficiency and reliability.

The revenue report indicates that retail revenues through November are approximately 4.63% higher than 2017. Total kWh sales of electricity are approximately 2.47% higher than 2017.  YTD commercial/industrial sales are down 1.31%, Irrigation sales are 25.29% higher than 2017 and Residential sales are up approximately 4.96%.

The board was in executive session for just over an hour at the outset of the meeting to receive legal advice on specific legal questions regarding net metering policy and ARPA’s Power Supply Proposals. No action was taken on either issue.  The next Utility Board meeting will be held Tuesday, January 15, 2019.

By Russ Baldwin