Electricity rates soon might be headed lower for consumers in Southwest Colorado as member cooperatives look to pass on savings from a drop in the wholesale price of electricity.
La Plata Electric Association’s board of directors at its meeting Wednesday is expected to hear a motion to pass through savings of an estimated $1.5 million to members in the form of a one-time capital credit on their bills.
Britt Bassett, chairman of the LPEA board of directors, said if the motion is approved by the full board, members are likely to see savings in their monthly bills in late summer.
He estimated the average member will receive about an $18 credit on a monthly bill, if the capital credit is approved.
“It wouldn’t necessarily be the wisest move to give our members back something each month for a year or two and then have to raise rates again,” Bassett said. ”So we're saying, let's go ahead and give them back the full chunk of what we're receiving in one month.”
The Finance and Audit Committee unanimously recommended a one-time monthly capital credit be given through a line item on members’ bills, Bassett said.
The savings, if approved by the full board, likely will appear on members’ bills in either July, August or September.
“These are just recommendations, there will probably be a lot of board discussion,” he said.
Examining how to return savings from the drop in wholesale electricity rates to users must be balanced with anticipated rates of inflation in materials, services, labor and other expenses incurred by LPEA, Bassett said.
“But what we’re doing locally is, yes, we want to pass on the savings to our members,” he said.
The recommendation from the Finance and Audit Committee is that the board award capital credits on the basis that the last in as a member be the first to receive the capital credits. That means the savings are likely to be passed onto current members rather than people who lived in the area years ago and have since moved, Bassett said.
“We knew we needed to look at what the rate decrease Tri-State was providing us was going to mean and how we could deal with it,” he said.
The 2% reduction in wholesale electricity this year will be retroactive to March 1, and Tri-State is planning another 2% drop in wholesale rates in 2022.
Savings from those two wholesale rate reductions will be enough to cover the legal expenses LPEA has incurred as it explores a buyout of its power-supply contract with Tri-State, which runs until 2050, Bassett said.
Tri-State’s wholesale rate reduction for 2021 must still be approved by the Federal Energy Regulatory Commission.
The board of directors of Empire Electric, which provides electricity to Montezuma County and parts of southeast Utah, also is expected to hear a proposal for a rate reduction at its meeting June 11.
Empire Electric, which provides electricity to Cortez, Mancos, Dolores, Dove Creek, Towaoc and Monticello, Utah, estimates it will save about $1.7 million from a 2% drop in its wholesale electricity cost this year and another 2% drop next year.
David Sitton, a member of the Empire Electric board of directors, said the details of rate savings Empire’s members might see are yet to be worked out, but he indicated Tri-State had been moving at reducing its rates for at least a year.
The actual announcement of reductions in wholesale electricity rates had been anticipated.
“This really isn’t a big surprise,” Sitton said. “But we don't know the size of what it’s going to be. That’s the big question mark right now.”
If a rate reduction is approved by Empire, it will still have to go through a rate adjustment process with the Colorado Public Utility Commission.
“We’re always striving to keep rates down,” Sitton said.
parmijo@durangoherald.com
