Mountain Parks Electric board deliberating on 2019 rate changes following formal complaint
The Mountain Parks Electric board is deliberating on a rate change for the upcoming year following a formal complaint hearing on Thursday afternoon where two arguments were presented.
In December, Mountain Parks Electric announced they would be increasing the monthly service charge from $29 to $30.50 beginning Jan. 1. However, that decision has been stayed since Joe Smyth, a Fraser resident, filed a formal complaint asking that the board reconsider the rate increase and study other options.
“I’m not protesting the requirement to increase rates, (…) I’m really focused on the form of rate increase,” Smyth explained.
On Jan. 10 at the Mountain Parks Electric building in Granby, Smyth argued in the hearing that raising the monthly service fee would be unfair to members who use the least amount of energy and that raising rates through fixed fees hurts the customer’s ability to control their bill.
“They reduce customer control since customers must pay the fixed charge regardless of how much electricity they consume or generate,” he said. “Low usage customers are hit hardest. Customers who use less energy than average will experience the greatest percentage jump in their electric bills when fixed charges raise.”
This fee structure also disincentivizes people from reducing their electricity usage since it doesn’t impact their bill as much, Smyth argued. He encouraged the board to consider raising rates in a different way, suggesting a few ways, including increasing the fee per kilowatt hour or a minimum bill.
“You could have raised the same amount of money by raising the kilowatt charge by about one-fifth of a cent per kilowatt hour for residential and even smaller than that for commercial, which is just one way of raising the same revenue,” he explained. “That would more fairly portion increased revenue amongst members that are using the most electricity.”
However, Mike Searcy, the consultant Mountain Parks Electric hired to conduct a rate change study, argued that even for customers not using any electricity, the company still has a fixed service cost of $33.69.
He also cited the low number of customers per mile of line, which means Mountain Parks Electric makes less revenue per mile of line installed than other companies.
“No matter how low the customer usage is, we still have costs of getting them facilities,” Searcy explained.
Also, increasing fixed charges helps Mountain Parks Electric reduce the risk that lower sales will result in lower revenues, Searcy said.
Mountain Parks Electric originally cited the rising costs of maintaining power lines, recruiting and retaining workforce and the increased inflation rate as reasons for the rate increase.
Smyth also asked the board to consider ways it could cut the costs of purchased power to help avoid future rate increases. Currently, the cost of purchased power from Tri-State accounts for around 60 percent of Mountain Parks Electric’s budget.
Mountain Parks Electric Assistant General Manager Scott Simmons said the company does a number of things to try and reduce energy costs, citing a hydrology project in Granby, solar projects in the works and the company’s frequent energy audits.
In closing remarks, Smyth said he understands the challenges to this discussion and asked the board to consider advice from consumer advocacy experts about fair rate design.
Then Mountain Parks Electric General Manager Tom Sifers told the board they are moving slowly and trying to remain fair by only increasing the monthly service charge $1.50 instead of the $4 recommended by Searcy.
“In other words, it’s a step,” Sifers said. “We agree with the information provided in Searcy’s cost of service study that $1.50 increase in the monthly service charge is justified.”
The board has 45 days to decide whether to continue with the original rate increase or to look into other options.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.