Overton Power District Board Reduces Electricity Consumption Rates
By VERNON ROBISON
Moapa Valley Progress
The Overton Power District (OPD) Board last week approved a rate adjustment that will slightly reduce electricity rates for the majority of customers. The rate reduction; which received the unanimous support of the board at a meeting held Wednesday, June 19 in Mesquite; gives back to customers an expected OPD revenue of $544,350 per year.
OPD General Manager Mendis Cooper explained that district staff had worked with the National Rural Utilities Cooperative Finance Corporation (CFC) for the past two years on a comprehensive rate study for OPD. The timing of the study coincided with major changes in district finances, Cooper said.
Two years ago, the district entered into a new power purchase agreement with power brokerage firm Morgan Stanley. The agreement was to reduce OPD’s energy cost, making it more efficient and stable. In addition, the district refinanced much of its debt at lower rates. These actions have brought a significant reduction to some of the highest cost centers in the districts.
“We knew our costs had gone down compared to how we had operated in the past,” Cooper said. “But we wanted to watch things in the new deal for a few years to see what the real effects would be before making a tariff adjustment.”
Cooper said that with tariffs in mind, it was important that the district’s infrastructure needs continue to be met.
“It was important for us to pass on some of our cost reductions to customers,” Cooper said. “But we didn’t want to do so much that we would lose the ability to make the system improvements that will ensure the reliability of our system. These improvements we have planned are vital to the future of the neighborhood.
To accomplish this, the CFC tariff study recommended an increase in the monthly base tariffs to cover the fixed infrastructure costs of the district. But due to falling energy costs, OPD staff were able to offset these increases with reduced kWh-per-kilowatt-hour tariffs for customers.
The rate adjustment is focused on three main OPD rate categories, including residential, small and large commercial categories.
Residential customers will see a slight increase in the base rate of approximately $5 per month. But their kWh utilization rate will be reduced by around 5%. This should provide a modest net savings to residential electricity users.
“The average customer should save about $15 to $20 a year on their electric bills,” Cooper said. “I know people would like to see more than that. But we wanted to give back as much as we could, while protecting revenue to maintain reliability. I think it’s accomplished here.
According to Cooper, small business customers will likely see the most significant differences with the rate adjustment.
Those in the small commercial class who use more than 1,000 kWh per month will see their monthly base charge increase to $40; compared to $21 per month previously. But their kWh usage charges will be reduced by around 20%. This should allow the customer to see approximately 4% net savings on their electricity bills.
Since this base rate increase would have a significant impact on some small commercial customers who use very little electricity, a new rate class has been proposed. For commercial customers using less than 1,000 kWh per month, the base tariff and the electricity usage tariff would remain unchanged.
Finally, even the large commercial fare class would receive a small adjustment. This class would also see an increase in the base rate and a compensating reduction in the rate for the use of electricity. But the projected percentage savings would be much lower, at only about 0.2% per month.
“That doesn’t sound like much,” Cooper admitted. “But for large customers like Mesquite Casinos, it could be up to $1,000 in savings per month. So it can be substantial. »
OPD board members expressed general support for the rate adjustment.
“I think it’s well thought out and I appreciate all the work that has gone into it; both by our staff and the help of CFC,” said OPD Board Chair Judy Metz.
Metz filed a motion to approve the rate adjustment as presented, effective September 1, 2019. Approval was unanimous.