Oak Creek to increase power rates | SteamboatToday.com

Oak Creek to increase power rates

— The Oak Creek Town Board voted recently to increase the rates it charges residential and commercial electricity users, both to ensure it will be able to maintain and invest in infrastructure for the town’s system and to restore balance to the rates different categories of consumers pay to keep the lights on.

Residential electricity consumers will see a 4.2 percent rate increase this year and a similar increase in 2016, and likely beyond, as the town electrical system prepares for $1 million in necessary capital projects to be undertaken in coming decades. Some commercial users will also see lower increases and some, higher, as the town shoots for an overall 4.2 percent increase in revenues.

“We have unmet maintenance and capital needs that the town has not taken a lot of strides in meeting … It’s been neglected for many years,” Town Administrator and Clerk Mary Alice Page-Allen said. “We’ve taken steps over the last three years, working with Exponential Engineering so we can understand what real capital needs are out in front of us over the next 20 years.”

In addition to keeping the system afloat, the rate increases are also being initiated to restore balance between the cost of supplying electricity to different categories of customers relative to the revenue they generate, Page-Allen said this week.

Oak Creek residents do not get their electricity from a rural cooperative like Yampa Valley Electric Association, which serves Steamboat Springs and much of Northwest Colorado. Instead, it operates its own electrical distribution facility.

Even with the rate increases, the town will borrow $500,000 next year to maintain adequate cash to debt ratios. Without the loan, a series of annual increases of 5.9 percent would be needed to meet financial targets, according to a consultant retained to study the fiscal needs of the town’s electrical system.

The rate increases were among the recommendations contained in a detailed financial plan the town commissioned from the Nebraska Municipal Power Pool.

The rate survey by the Power Pool determined that commercial accounts using relatively modest kilowatt hours of electricity annually were paying more, as a group, in electric bills than the amount it cost to provide them with service, while residential and industrial customers were paying less than the cost to provide service.

Page-Allen explained that the town bills electric customers in four different rate classes based upon how much electricity they use. What the rate study showed is that residential customers, who represent more than half the annual revenue of just over $800,000, were generating $475,254 in revenues — about $30,000 less than the cost to provide service — $505,430.

In contrast, customers in the light commercial and commercial rate classes have, as a group, been paying electric bills that amounted to more than the cost of providing service, according to the survey. In essence, Page-Allen said, they were effectively subsidizing the residential and industrial customers.

They will still see 2015 rate increases of 3.8 percent and 3.7 percent, respectively. And the Power Poll suggests that rate parity be restored gradually to the different customer classes.

A typical residential user in Oak Creek consumes about 500 kilowatt hours of electricity per month, and the largest category of users consume 25,000 kilowatt hours per month, Page-Allen said. A large cannabis grow facility in Oak Creek fits into that category, she added. That user will see a 6.2 percent rate increase this year. A second, large grow facility due to come on line is expected to be in the general service demand category. Smaller grow facilities in Oak Creek are not at that threshold.

The rate study reports revenue from “cultivation customers” is expected to contribute $54,395 to electric utility revenues in 2015 and predicts the number will reach $83,393 in 2016.

To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1

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