Mountain Parks Electric Inc, (MPE) board of directors voted November 8, 2018 to raise 2019 rates by 1.1% on average.
If you own a home, you’ve probably experienced the shock of opening your monthly electricity bill in the mail and seeing a dollar total that is higher than you expect. It’s a common part of home ownership, and one that you can hear homeowners lamenting as electricity rates increase – “Why is my electric bill so high? Why does it keep going up?”.
Mountain Parks Electric,(MPE) is our local cooperative non-profit energy provider. All profits are reinvested in MPE’s electric plant or returned to the member-owners. Tom Sifers, General Manager for Mountain Parks Electric, said ”Our goal is to provide 99% reliability in our service territory. Last year, we had a little more than one hour, per customer, of outage for the entire year.” That equates to about 99.6% reliability. “We are proud of the work we do, considering the size and terrain within our system.”
Mountain Parks Electric serves 20,600 meters on about 4,000 miles of service territory. The MPE system is a long distance, low population system which comes with a higher per person user cost to maintain. Sifers said “The mountain region we service is challenging.”
According to Rob Taylor, Manager of Communications and Member Services, “We (MPE) have done several things to cut our costs. Over the past 10 years, MPE has downsized its workforce from more than 74 employees to 60 employees, despite delivering electricity to more than 1,500 new services.” Taylor added, ”Recently, MPE has adopted numerous cost-cutting initiatives that have reduced our operating costs $300,000 a year.”
MPE hires a consultant to provide a Cost of Service Study every 5-6 years. Sifers said, “We took a look at the 2018 study, went through operating budget and realized we needed a better margin to operate efficiently.”
According to Sifers, “It has been six years since we raised the monthly service charge.” The consultant recommended a monthly service charge rate adjustment of $4, from $29 -$33, but the Mountain Parks Electric Board of Directors felt that was too much.
According to the Notice of Change in Tariffs and 2019 Electric Rate Adjustment Explanation published on the Mountain Parks Electric website, the board of directors will increase the monthly service charge for residential customers by $1.50. That will mean an increase from the current residential service charge of $29/month to $30.50/month.
This new rate increase is targeting your fixed monthly service fee and not your usage fees. According to MPE, the rising costs of maintaining power lines, recruiting and retaining workforce and the increased inflation rate are some factors behind this new rate increase.
Rob Taylor wanted to point out, “MPE is selling less electricity per customer than in years past.” This is partly due to MPE’s promotion of energy efficiency. Since 2011, MPE has issued more than 1,500 appliance and 10,000 LED light bulb rebates and provided free energy audits to its customers. Taylor said, ‘“We believe in promoting energy efficiency. However, energy efficiency improvements result in lower energy sales.”
Like most electric cooperatives in Colorado, Mountain Parks Electric buys power from Tri-State Generation and Transmission Association, which has significantly increased its rates over the last decade. Other co-ops in Colorado have taken steps to try and reduce the high costs of power from Tri-State, such as shopping for other power suppliers or urging Tri-State to become a more modern, flexible power supplier and take advantage of current low renewable energy prices. Sifers said, “We have an all power contract with Tri-state. They have taken steps to keep their costs under control. They have not raised rates in the last two years. We realize they are not moving as fast as some would like, but they should reach a 33% renewable supply by the end of 2019.”
According to Mountain Parks Electric 2016 990 filing with the Internal Revenue Service, the
co-op spent $21,344,768 on purchased power costs – 58% of its total expenses of $36,740,847.
According to Sifers, the Tri-State all-requirements power contract, allows independent Co-ops to invest in local alternative energy sources up to 5% of usage. MPE currently has two projects that fall into this category, amounting to about 2% of agreement maximum. These projects will help offset some operating expenses but come with a price tag.
Granby Hydro and Walden Solar projects coming on next year will get MPE to about 2% of the 5% maximum the Tri-State contract will allow. Sifers said, “We are currently negotiating to increase our local renewable power supply.” MPE would like to invest in new renewable systems to reach their 5% maximum allotment in the coming years.
As for the current rate increase, higher monthly service charges – fixed charges that are independent of how much electricity a customer uses – impact those that use the least electricity, as the Regulatory Assistance Project explains in an recent article:
Small-use customers, such as apartment dwellers, low-income households, and second homes will receive much higher electric bills; the vast majority of low-income consumers are also low-use consumers. This goes against public policy objectives that normally tend to protect low-income customers and/or reward low usage.
The Colorado Public Utilities Commission has agreed with those assessments, and Utility Dive reported in August 2018: Colorado Public Utilities Commission (CPUC) rejected the Black Hills Energy (BHE) request for a fixed charge increase from $16.50/month to $20.13/month and recommended lowering it to $8.77/month. Black Hills Energy is an investor-owned urban utility with a much higher customer density than MPE. As such, their fixed costs per customer are lower than utilities that serve rural areas. The Colorado PUC explained its decision to reduce Black Hills Energy fixed charge, “an increased customer fixed charge has not been shown to outweigh the public interest of allowing customers to control their utility bills and energy efficiency” while adding that “public policy considerations regarding low-income customers and energy conservation require consideration of the reasonableness of level of fixed charges”.
Xcel Energy Colorado’s current monthly service charge for residential customers is $5.41. Some electric cooperatives in Colorado also keep monthly service charges minimal, for example Holy Cross Energy charges residential customers $9/month.
According to Taylor, although MPE doesn’t have income data of each of our member-owners, it knows, anecdotally, that a significant number of people who request energy audits (who tell us that they are on low or fixed incomes) also have electric heat. Those with electric heat tend to have higher than average electric usage. “For them, increasing the kilowatt-hour charge (energy charge) as opposed to the monthly service charge would have had a financial impact.”
Rob Taylor explains that there are 43 Co-ops in Colorado. Each with their own challenges. Several factors weigh in on the MPE fee structure. “Two thirds of our homes are second homes and have low usage per customer, long lines with small density, seasonal tourist usage, customer usage trending downward and the weather.” Those variables come with a higher fee structure per customer. “We are working hard to keep our cost down and are continually looking for ways to improve our system.”