Lamar Utility Board Holds Public Hearing on Proposed Rate Hike

Andrew Ross, Rate Consultant of Nebraska Municipal Power Pool, provided an updated cost of service and rate design presentation for the Lamar Utility Board prior to its move into a public hearing for proposed changes to the current electric rate schedule on Tuesday, September 29, 2020. He, along with Lamar Light Plant Superintendent, Houssin Hourieh provided information during the public hearing on the rate modification proposals. The last rate increase was in 2012.

As outlined, the recommendations from NMPP include:

Increased rates generally by 1.4% per year for five years. This includes a rate shift among customer classes that varies between 1.2% to 2.4%, which is based on the cost of service for each class. The study proposes that revenues will continue to decline by about $345,736 or 3.5% in 2021, $246,943 or 2,6% in 2022, $164,786 or 1.8% in 2023 and in 2024-2025 revenue will start to see a positive increase of about 2.6% or $233,652. There is a 12% Charter Appropriation fee that includes a transfer from the city’s general fund of $350,000 per year for the next 24 years to help reduce the fee to customers per the ARPA’s settlement agreement with the City of Lamar.

The cost of service projections includes establishing a cash reserve policy, establishing targets for a return on investment and a 3-4% annual inflation increase for general operating costs.

Superintendent Hourieh noted some of the cost increases for basic supplies such as wooden or steel power poles indicated from between a 40% to 52% cost increase from 2012 to 2020. Other increases ranged from 30% to 73% for other types of equipment and the plant’s basic power purchases.

Earlier in the month, the Lamar City Council had passed a resolution opposing the rate increases as outlined by NMPP, stating in part that such increases would provide a financial hardship to local customers due to a general economic downturn due to the on-going pandemic, make it more difficult to attract or develop new business interests within the service area of the Light Plant and financial figures provided by the council indicated the utility board had a surplus of funds at its disposal.

Doug Thrall, board chairman, opened the meeting to any pros or cons from the public during the hearing, which, due to COVID protocols, had to be brought in via a phone call. As required, the date and time of the public hearing was published in local print outlets. There were no comments and as such, Thrall closed the hearing, stating that the information that was presented to the board would be under review and a decision would be made at the next board meeting at noon on Tuesday, October 13^th.

In other action, the board voted to pay $82,178 in purchase orders of which $65,730.25 required approval. Bills were also approved for payment at $1,171,038.88 of which $1,062,345 was for power purchases from Arkansas River Power Authority.

The August 2020 financial report showed that total operating revenue for the month is $1,597,425 and operating costs are $1,319,246 for gross operating income of $278,180. When the non-operating revenues and expenses are factored, there is a monthly net income of $119,147.

Total operating revenues for the year are $9,577,055 and total operating costs are $8,859,434 for gross operating income of $717,622. With non-operating revenues and expenses factored, there is a net loss of $624,277, year-to-date.

By Russ Baldwin