La Plata Electric Association members could see a rate increase beginning in 2024.
Tri-State Generation and Transmission Association announced earlier this week it submitted a new formula rate filing to the Federal Energy Regulatory Commission that would increase LPEA rates by at least 6.2%.
LPEA has declined to put a dollar value on what the minimum rate increase would mean for average residential customers, saying too many variables are in play.
Tri-State, which is LPEA’s wholesale electricity provider, must obtain rate approvals from FERC rather than through its local Board of Directors. If approved by FERC, the new rates will take effect Jan. 1.
LPEA services about 36,000 members across La Plata and Archuleta counties with segments in Hinsdale, Mineral and San Juan counties.
LPEA CEO Jessica Matlock said the rate increase was proposed to account for inflationary costs. The cost of equipment Tri-State needs to operate has increased by more than 50%.
This includes the cost of poles, wire and transformers. She also said the increase cost of fuel was a factor in the raised rates.
“For the first time since 2017, Tri-State is proposing a rate increase, driven by factors including inflation, increased fuel and energy costs, and supply chain pressures, and notably, the proposed wholesale rate increase remains below the rate of inflation over the past seven years,” said Tri-State CEO Duane Highly in the company’s June 16 announcement.
Tri-State is expecting to receive a response from FERC within 60 days about whether the proposed rate increase is accepted. Once FERC accepts the rate, Tri-State will raise its rates to its members.
Matlock said that the 6.2% increase will be the bare minimum for what the rate increase could be, and it could be more.
“Even though FERC accepts the rate, it doesn’t mean that is going to be the actual approved rate because then people can file objections to the rate,” she said.
This means if FERC accepts the rate, it can be challenged by Tri-State’s members. Upon review, if FERC believes the rate is too high, Tri-State would have to refund the impacted members.
But FERC can also rule that the initial rate was too low and then members could face a surcharge on their bill.
“LPEA will continue to closely monitor the decision from FERC and the impact this rate increase from Tri-State will have on our members,” Matlock said.
Because LPEA has not received cost breakdown from Tri-State, Matlock cannot quantify what the estimated charge would be to local residential, commercial and industrial members.
How the rate is applied to each member is based on whether the electricity is being used for residential, commercial or industrial purposes.
This is because there is a flat energy charge and a demand charge. LPEA is charged more during the hours from noon to 9 p.m. because it is considered a peak energy usage time.
tbrown@durangoherald.com
