The board of directors of La Plata Electric Association approved a preliminary average rate increase of 11 percent Monday. It is scheduled to go into effect Jan. 1.
In a news release, LPEA said the average residential bill of $88.40 will increase approximately $11.20 a month.
LPEA attributed most of the increase to changes Tri-State Generation and Transmission Association, its wholesale power supplier, made in its rate structure and its increased costs in the generation of electricity.
“Our board approved a new budget, new rate structure and rate increase of 4.9 percent in September,” Tri-State spokesman Jim Van Someren said. “It’s primarily due to an increase in costs, from fuel costs to transmission costs.”
The rate structure changes are having as much of an impact as Tri-State’s rate increase on LPEA members.
“Tri-State’s new rate structure has been in the works for almost two years,” said Greg Munro, La Plata Electric CEO. “The distribution cooperatives, including LPEA, have done our best to be involved to not only try to understand the new rate structure, but to also try to make it the right ‘type’ of structure. It has been a long and challenging task.”
Van Someren said a goal of Tri-State’s rate structure change is to be more fair to residential and small-business customers, ratepayers that have been carrying more of the cost than they should have because some large electricity users have been avoiding peak demand charges in many of the 44 co-ops it serves. But what’s good for residential and small-business customers in those co-ops is penalizing those in Southwest Colorado who have actively managed the time and amount of their usage.
“We’ve been one of the leaders in getting our members to use energy during off-peak hours, and now all of our timely use programs that we’ve tried to teach people are kind of moot,” Munro said. “Because we’ve been so good at that, LPEA is one of about 10 co-ops served by Tri-State that’s seeing greater increases than the 4.9 percent.”
The rate increase is resulting in almost a flat energy rate, instead of lower rates for off-peak usage, he said.
“This new rate structure is basically geared to sell electricity no matter what time you use it,” Munro said. “It seems like we’re going the opposite direction. We think we should be as efficient as we can, or pretty soon we’re going to have to build a new power plant, and we don’t want to do that.”
Munro said while there are still some minor off-peak usage incentives, adding insulation and buying more energy-efficient appliances are going to be the best ways to save money on electricity bills starting at the beginning of the year.
“At LPEA, we’ve reduced costs with the use of new technologies, reduced programs, refinanced debt and are now about as lean as we can get without impacting quality, reliable service to our members,” Munro said. He added that the co-op also paid for an independent cost-of-service study to determine what it actually costs to deliver electricity to its customers. “Based on the cost-of-service study, and to maintain all of our financial requirements, we estimate we need an additional $10.3 million in 2013. We have forecasted as tight as we can and will still have to work hard in 2013 to find more savings.”
The electricity co-op will hold three public meetings in December to explain the rate increase to members, before the board takes a final vote on the increase at its meeting Dec. 19.
“The meetings are to tell our members why this has happened,” Munro said. “It can get very confusing.”