September 27, 2007
LC Power Proposes Average Rate Increase of 8.3 Percent

By Dave Maxwell

Months of work has gone into the planning of necessary rate increases by Lincoln County Power, and it was all made public at a meeting Monday evening at the Courthouse in Pioche. No action was to be taken at the meeting. The purpose was simply for making the information known to the public. Another meeting for final action by the Board will be held Tuesday, October 9.

LC Power project director Dave Luttrell made a PowerPoint presentation to those in attendance and gave a detailed explanation of how and what the proposed rate increases are and how they were arrived at.

Lincoln County Power seeks to develop rate designs on a four-year plan, asking the questions: How much power is expected to be needed and what will costs be over a four-year period?

Begun in 1935, Lincoln County Power is a General Improvement District providing electric power for the entire county and is not a public utility. “It operates for the public benefit,” Luttrell said, “not for profit of shareholders.” The last rate increase was in October, 2004.

The new rate increase proposal is for existing customers in the newly created “Rural” classification and will be put at 8.3 percent beginning October 1, 2007. For residential customers this will result in about a $4.50 to $5.00 increase per month in electricity, and a bit more in the winter because of increased usage. Small commercial customers will have an increase of between $6 - $7 in fall, spring and summer, and maybe 10 percent more in winter.

During his presentation, Luttrell pointed out that the reasons for the proposed rate increases include: increased costs of buying power from Hoover Dam, overall general increase in costs, and cost of providing service to the Coyote Springs development.

Since becoming the electricity provider for Coyote Springs in February 2007, the Board decided that involvement with Coyote should have no impact on existing LC Power customers. In other words, existing customers would not have to pay for energy service to Coyote Springs. The total costs would be borne by CSI and any other “Urban rate customers.” Luttrell said the design has built-in safeguards so that the Rural system is insulated from the Urban system. The idea is to have Urban customers pay for all the extra costs they are causing to occur. In addition, Urban system rates will help reduce the cost to the Rural system about $275,000 in the four-year design.

Luttrell explained what’s included in the two new rate classifications. Rural classifications include residential, small commercial, commercial and industrial over 50kVA, large municipal water pumping, irrigation, small and large mixed agriculture uses and Sales for Resale to Alamo Power District, the City of Caliente, Pioche, and Penoyer Valley. The Urban classification includes single-phase residential, small commercial single phase, commercial and industrial of between 50 to 1000 kVA, large municipal water pumping and street lighting.

Other reasons for proposing to raise rates involve the increased demands throughout the county, which make it necessary to buy supplemental power from sources outside Hoover Dam to meet needs. However, the Board has decided that what power does come from Hoover Dam will be used first and foremost for existing customers. What is left over, including supplemental power, will be what is used for the Urban classification.

Luttrell said Coyote Springs is actually viewed as a benefit. Without Coyote Springs, rates increases for operation expenses would have to be higher. However, with Coyote Springs the increases are really only about 2%. At present though, from LC power’s perspective, Coyote Springs is still viewed as a risk. Therefore, the new rate classifications and proposed 8.3 percent increase takes into account what would be needed to operate effectively if Coyote fails to materialize, as unlikely as that event might be. On the other had, as Coyote continues to grow and feeds more money into LC Power, Luttrell said, “We can come back and lower our Rural system rates to reflect that.”

CSI projects to have a little over 2000 customers of LC Power by the year 2011. The power load growth figures are expected to rise from 2,300,000 kilowatt hours in 2008 to 68,300,000 kilowatt hours by 2011. A full-time power company office is possible there by 2012.

A planned upgrade of the current 69 kilovolt power transmission line to a 168kv line from the power plant at Glendale is being paid for by Coyote Springs and is expected to extend all the way to Delamar Valley.