A rate increase on wholesale power could result in higher costs for
LPEA, which has more than 30,000 members, purchases 95 percent of its power from wholesale provider Tri-State Generation and Transmission.
In 2017, Tri-State rates will increase by 4.33 percent from 7.5 cents per kilowatt hour. That percentage represents the overall impact to Tri-State’s 43 member cooperatives. For retail members, if no other costs increase, it would translate to about a 2.6 percent increase on power, said Dan Harms, LPEA manager of rates, technology and energy policy.
Whether LPEA can absorb that increase, or the cooperative’s customers will pay for it, will be discussed at a board committee meeting this month.
LPEA staff members and board members have spent much of the year weighing rate structures, including a time-of-use program in which customers pay a lower rate by using electricity in off-peak hours, which are between 11 p.m. and 7 a.m., and 1 p.m. and 5 p.m. Monday through Saturday.
Customers save money because Tri-State offers a lower rate for power purchased in off-peak hours.
The off-peak rate, which was lowered in January from 7.7 cents, is 5.9 cents per kilowatt hour, compared with the on-peak rate of 16.8 cents.
The general service rate for households that aren’t participating in the time-of-use program is 12.5 cents with a base rate of $21.50.
Three years ago, about 5,000 meters were enrolled in the time-of-use program. But when Tri-State changed its rate structure in 2013, many customers left. Today, LPEA serves 2,500 meters on the time-of-use structure.
Harms said LPEA aims to get more customers involved with the program because the cooperative is more likely to be able to absorb the costs of spiking wholesale prices if it makes gains in efficiency.
Harms said that based on past customer usage, a household that moves from the general rate structure to time-of-use can save between 5 and 40 percent, depending when and how much the customer uses power.
The LPEA board of directors will discuss the budget and rate structures at 9 a.m. Oct. 17 at First Southwest Bank, 249 Navajo Trail, in Pagosa Springs.
Next year’s rates will be adopted in November.
Tri-State initially proposed a 6.78 percent increase on the price of wholesale power, but the provider eventually decided to use deferred revenue to offset the rate increase and agreed to 4.33 percent.
jpace@durangoherald.com
