La Plata Electric Association’s board of directors gave preliminary approval Nov. 19 for an average electric rate increase of 5.6 percent. Specific increases will depend on the rate classification of each residential, commercial and industrial customer.
The average residential customer is expected to notice an increase of 6.5 percent (or $5.35 per month), effective Jan. 1, 2009. The rise in rates is predominantly a result of a wholesale power rate increase of 4.1 percent from Tri-State Generation and Transmission, from which LPEA purchases the bulk of its electric power, as well as increase in LPEA’s cost of doing business.
“As everyone knows, costs are going up across the board,” said Greg Munro, LPEA CEO. “While we have continued to improve our efficiency, be more responsive and more environmentally friendly, we still must increase our rates to ensure we can meet our mission to provide safe, reliable electrical power to our members.”
According to Munro, Tri-State is experiencing higher costs for the fuel it needs to generate electricity, as well as a rise in price from the hydro power received from Western Area Power Administration and increased costs for electricity purchased from other generation sources such as Basin Electric Cooperative.
“And La Plata Electric has experienced a dramatic rise in costs to deliver that generated power to our customers,” said Munro, citing fuel, materials and labor increases.”“Funds also support improved reliability, energy efficiency programs and increases in Federal and State regulations.”
The electric industry in general is facing a shortage of both generation and transmission infrastructure, given the increased demand for power throughout the world. The good news is, according to Munro, consumers are being more energy efficient and utilities are implementing a growing number of “demand side management” programs, which lessen the strain on the entire system. Currently, more than 1 percent of LPEA’s annual revenues is being focused directly on efficiency and demand side programs, including facilitating use of CFL and LED lights, Electric Thermal Storage heating, highly efficient water heater efforts, energy audits, solar incentives, renewable energy opportunities, and more.
“Many people may have seen maps that have predicted the Western United States to be generation-short in 2009, but those predictions have changed due to demand side and efficiency efforts,” said Munro, noting that Tri-State anticipates being able to handle the demand out to 2013. “That may seem like a long time, but it’s not when permitting and sighting of new generation requires years before construction can even begin on a new power plant. And, then of course, the transmission line system needs to be improved to get that new power generated out to the customers.”
Construction of power generation — whether renewable or more traditional efforts — requires significant capital expenditures by Tri-State, as does transmission infrastructure to get that power on the grid, costs which LPEA shares.
“The LPEA board has approved a $49 million capital construction budget for 2009,” added Munro, “primarily funded by the natural gas industry, to enhance our transmission and distribution system for safety and reliability, and enable us to bring our customers the electricity they need.”
A mandatory 30-day comment period will be observed prior to the LPEA board’s final adoption of the new rate tariffs, which will take place at its regularly scheduled meeting on Dec. 17. Every effort is being made to inform co-op customers. The increases for each rate classification will be delineated in display advertisements in local newspapers, a direct mail notice and online at www.lpea.coop. For further information, call 247-5786.