BPU votes for electric rate hike

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Utilities> Eight percent increase would cover energy costs and infrastructure replacement

By Arin McKenna

The Los Alamos Board of Public Utilities unanimously approved an ordinance which would raise electric rates by eight percent across the board. The proposed ordinance goes before council for a public hearing on Dec. 17.
The rate increase, along with a proposed six percent increase in FY2015, is designed to cover the costs of a 10-year capital improvements projects plan to replace aging infrastructure and cover rising energy prices and inflationary increases in operations and maintenance costs.
DPU had requested a 10 percent increase in 2011, but council asked the utility to revise the plan to spread the increase out over time. DPU returned with a plan for a five percent increase in 2011 and the proposed increases for FY2014 and FY2015.
Following infrastructure needs, an increased cost of power is the biggest issue. Most of the increase is due to required environmental improvements at the San Juan Generating Station.
Some of those commenting on the Open Forum mistakenly assumed the Smart Grid and the Smart Meter Project are driving the cost increase. Those projects were almost entirely paid for by Japan’s technology ministry, NEDO (New Energy and Industrial Technology and Development Corporation).
The proposed rate increases are:
• Residential: The consumption charge would increase from $0.0952/kWh to $0.1028/kWh. The service charge would increase from $5.95/mo to $6.43/mo.
• Small Commercial: consumption charge from $0.0902/kWh to $0.0974/kWh, service from $16.80/mo to $18.14/mo.
• Large Commercial: consumption charge from $0.0646/kWh to $0.0698/kWh. Demand charge from $9.35/kW/mo to $10.098/kW/mo.
A typical residential customer that uses 500 kWh could expect to see an additional $4.28 on their monthly electric bill. A small businesses using 500 kWh could expect to see an additional $4.94on its monthly electric bill.
Los Alamos’ electrical rates are currently at 77 percent of PNM and neighboring utilities. The proposed increase would place the county at 82.9 percent of the local market rate and lower than rates for most of the nation. In fact, rates for many of New Mexico’s cooperatives are 50 percent or more higher than the proposed charges.
“What’s significant is, most of them (electricity providers) had increases in the 2012-2013 time frame,” Utilities Manager John Arrowsmith said. “We’re still lower than the industry, but our rate increases are falling right in line with the industry as a whole.”
“When we started the electric acquisition process in the mid-’80s, we were projecting cost of power at about .24 or .25 cents a kilowatt by now. Thank goodness it hasn’t come to pass,” board member Chris Ortega said.
The CIP budget includes funding for a new substation and underground loops to help prevent prolonged blackouts.
“We’re one broken pole away from being blacked out for over an hour. The way to reduce that probability is to have another substation,” Arrowsmith said.
“We came very close to that happening this summer when we had the big rains, and one of the feeders from the laboratory feeding the town site was out of service for a week, and both feeders are in the same conduit. If the other feeder had failed, we could have had an outage for two or three days. Another substation would alleviate that problem.”
DPU had intended to have a comprehensive electric rate study and possible restructuring before coming forward with a rate increase, but received no responses to an RFP for a qualified consultant to conduct the study.
The RFP will be put out again, with hopes of proposing a new rate structure for FY2015. The study will assess such issues as incentives for decreased usage during peak load and other cost saving measures.
Staff hopes such a restructuring could address some of the concerns raised by Los Alamos Public Schools Purchasing Manager June Gladney.
“I’m here representing the students of Los Alamos County, and this eight percent rate increase equates to about $24,000 a year for us. And that’s an instructional assistant position for us,” Gladney said.
“And if we add the six percent increase that’s going to be coming July 1 on top of this, that’s going to be a teaching position.
“I just want to keep it in front of everybody that the $2 my bill at home will go up is not a big deal. But when you have over $300,000 of electricity billed in a year, eight percent and six percent is a very significant amount.”
Chair David Powell asked if staff could address Gladney’s concerns.
“My anticipation would be, if they can do some really efficient energy management systems in their new buildings, they might be able to achieve some economies,” said Deputy Utilities Manager for Finance and Administration Bob Westervelt. “Those will probably be identified when we do a comprehensive rate study and a rate structure that accommodates that sort of partnership.”
“We certainly will commit to work with the schools not only on the electric rate but on all the utility services that we provide. We’re happy to sit down with the schools and try to work out what is the best, most economical way to provide them the services they need at the best pricing we can come to terms with.”
“Often new buildings have the ability to manage the peak load, so we can work with them to see if that’s a possibility to shave their peaks to reduce the demand charge and decrease their load, which could result in a lower cost to them,” Arrowsmith added.
The ordinance and supporting documentation can be read at www.losalamosnm.us/utilities. Hard copies are available at the 311 Customer Care Center and White Rock or Mesa Public Libraries.
The ordinance will be introduced at council on Nov. 26 and is scheduled for a public hearing at council’s Dec. 17 meeting.