Lamar Utility Board Explores Rate Options

 

 

The Lamar Utility Board spent the better part of their September 15th meeting discussing rate increase options with Andrew Ross, Director of Retail Utility Services and Member Relations from Nebraska Municipal Power Pool, the firm that conducted the rate analysis for a proposed rate increase to take effect January 1, 2021.

The proposed general rate increase is 1.4% which would be in effect for a five-year period. That increase for a general resident customer would amount to $1.65 per month, or $18.80 a year, according to the study. Light Plant Superintendent, Houssin Hourieh, explained that the increase will be used in lieu of any Electric Cost Adjustment, or ECA, which had been enacted several years ago. “The last rate increase took place in 2012,” he explained for the board, citing the need to adjust the rates to be in a better financial position to deal with any major equipment replacement to sustain the operation of the Light Plant.

Ross explained that delaying the increase for a year, would only necessitate a higher increase later in order to put the plant where it needed to be financially over a five-year period and offered two versions of the plant costs with and without the increase over that span. He gave the analogy comparing delaying rate increases to running a car for several extra years without a required oil change so while you might be saving on immediate costs, you’re setting yourself up for a potentially larger expense with future engine problems. An ECA would then become an alternative to developing needed funding for the plant’s operation although it would have more of an impact on large power users compared to a customer who uses less electricity.

He explained, “If we did not have a 2021 rate increase and delayed for a year, to get to your cash needs by 2025 it would take a 2.0% rate increase. If you do four years of 2% rate increases to get yourself to the same place, versus of doing five years of the proposed 1.4% increase, your rate using that 2% for four years would be 8.24% higher, but with the five years at 1.4% to get to the same place, your increase would be 7.2%, one full percentage point difference.”

The board has scheduled a public hearing at noon on Tuesday, September 29th to present the various options for rate increases and to hear comment from the public on the proposal. Following that, Hourieh said the board could take a vote on the matter at its October 13th meeting.

In other action, the Utilities Board approved purchase orders for August and September in the amount of $1,220,471.20 from a total of $1,250,676.49. The Arkansas River Power Authority estimate for electricity purchased in August was $1,190,091.94. The board also authorized payment of bills amounting to $179,869.75.

The board also approved the purchase of 40 replacement power poles from low bidder, Stella Jones Corporation for $30,455 for 40 and 35 foot class 2, red cedar poles.

Hourieh detailed the monthly system operating report for the board showing that sales of electricity through August 2020 are up 4.92% compared against 2019. Residential sales were up 8.28%, irrigation sales are up 20.51% and commercial sales are up approximately 1.2%. These three customer classes represent an estimated 96% of total system sales.

The Springfield wind turbine had been offline for a while and with G.E. Wind on location, the light plant’s wind turbine crew replaced the Blade Pitch Drive as of September 1st. The turbine faulted on August 8th, however other faults to the adjacent blade control boxes needed additional repairs and the turbine began generating electricity on September 8th.

By Russ Baldwin

Filed Under: City of LamarConsumer IssuesFeaturedPublic SafetyUtilities

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