“Get your facts first, and then you can distort them as much as you please.” – Mark Twain
The electric utility industry is far from simple. Challenges are ever-present, some based on agendas or misunderstandings, resulting in confusion among LPEA members.
A concentrated effort of misinformation by the San Juan Citizens Alliance has been underway, and we would like to debunk several of their assertions with FACTS (provided by the LPEA)
Assertion: LPEA members pay considerably more than other Colorado communities?
FACT: For a member who uses 700 kWh monthly, LPEA rates fall in the middle compared to other utilities in Colorado according to an annual study performed by Colorado Association of Municipal Utilities (CAMU). LPEA’s average member now uses slightly more than 650 kWh.
A variety of variables must be considered when comparing LPEA to other utilities. One of the greatest challenges when comparing a Cooperative rate to Municipalities or Investor (Xcel) is the idea of density. Municipalities and Investor-owned typical have more customers per line miles invested. The higher the density of customers leads to lower bills since the costs for that same line is shared by many.
The other consideration to remember is the interaction of different rate classes (residential, commercial, industrial) and how a utility recovers costs. LPEA strives for each rate class to pay its cost and not subsidize the costs of another rate class. LPEA’s Board Policy 214 addresses this. This might not be the case for other utilities who might have high commercial rates to maintain lower residential rates.
Assertion: Xcel received bids for new wind (1.8 ₵/kWh) and solar energy (2₵/kWh) that undercut Tri-State Generation and Transmission (TSGT) pricing (7.5 ₵/kWh).
FACT: Yes, Xcel did receive dynamic pricing for new extremely large-scale projects (700 MegaWatts (MW) or greater). For reference LPEA’s peak is approximately 150 MW’s during the winter. Scale matters.
Also, there remain some outstanding costs that might need to be included in the analysis.
More importantly, comparing the 2₵ from the bids to the 7.5₵ is not an “apples to apples” comparison. The 7.5₵ is a blended cost to both generate and deliver the power from the power plants to our corner of Colorado. To make it an “apples to apples” comparison, the number that should be used is not 7.5 ₵/kWh but rather something closer to 5.7₵/kWh (3.2₵ to own it and 2.5₵ to run it).
In the end we are pleased to see these numbers for generation and the rapid pace of change to a better future when it comes to power supply options.
Assertion: LPEA’s residential rate has increased more than 80% over the past 15 years.
FACT: In 2003, a member using 700 kWh in a month would have paid an electric bill of $84.46. In 2018, that same usage would produce an electric bill of $109.42. That is a 59% increase over a 15-year period which is equivalent to only a 3.14% increase each year.
Assertion: Tri-State is 93% coal and 7% natural gas according to a CERES report (June 2017 Benchmarking Air Emissions – of the 100 Largest Electric Power Producers in the United States2) – page 11 of the report.
FACT: One must consider the entire report and the total emissions and how values are assigned.
The graph/stat referenced, considers only facilities that are directly owned by the utility and doesn’t consider any other generation purchases through purchase power agreements, much like the agreement we have with TSGT. Much like Xcel, TSGT acquires other generation through purchase power agreements with private generation owners. The company does this to secure better pricing, which TSGT couldn’t do if they own it directly, primarily due to tax incentives for which TSGT isn’t eligible.
Additionally, in the same report Table 2 – Emissions Date for 100 Largest Power Producers, it ranks TSGT at 64th and Xcel at 14th. We advise review of TSGT’s information on renewables. TSGT is delivering up to 30% carbon-free renewable energy.
Assertion: TSGT is going to go bankrupt (due to coal).
FACT: TSGT is financially strong. Last year the company returned $20 million in patronage capital. TSGT also has the highest credit rating of any Colorado-based entity aside from municipal utilities.
TSGT is also adapting to new market trends. While coal plants are being closed for many reasons, the company continues to bring diversity in its generation mix through request for proposals. The graphic below is from a presentation by TSGT at LPEA’s renewable workshops.
Assertion: LPEA’s contract with TSGT limits LPEA from doing more renewables – the 5% discussion.
FACT: While LPEA is nearing maxing out its 5% with larger projects, this doesn’t close the door for more local renewable projects.
First, net metered accounts do not count towards the 5%, assuming they don’t overproduce on an annual basis. Continuing to support our members who are able install solar panels on their homes, we can grow our local renewable foot print, reducing purchases from TSGT and supporting the local economy.
Second Qualifying Facilities through PUPRA legislation are still allowed outside the 5% according to recent FERC decisions.
Assertion: LPEA should follow the Kit Carson model and buy out of TSGT.
FACT: Ok, this isn’t a fast fact. The Kit Carson model works for what Kit Carson’s membership desired. Whether or not the Kit Carson model would work for LPEA and our endeavor to move to a better future when it comes to our power supply is very complex.
It has been said that Kit Carson’s contract is a fixed price contract, and while it’s possible that LPEA could achieve a similar offering, the truth at this current juncture is, we have to mitigate the buyout cost, which could be substantial. For every $100 million in estimated unmitigated buyout costs, we project it raises members’ rates 1.5 cents per KWh. Thus, if LPEA moves forward with a buyout at some point, there are many things to consider, not the least of which is the development of the Regional Transmission Market (RTO) underway in Colorado.