Rate Change Study
– IRP (February 8, 2005)
As you’ve
hopefully heard, we are anticipating a rate increase at the end of 2006.
Last year we hired an engineering, economics, and environmental
consulting firm, E3 from San Francisco, to help us explore out power
supply options for this upcoming change. E3’s extensive Integrated
Resource Plan (IRP) evaluated the most feasible resources to meet our
energy needs and help guide us in our post-2006 power supply decisions.
The findings of the IRP were presented to the public on the 8th
and 9th of December. (Click here to read the entire IRP document.)
Lower Valley
Energy’s leadership among utilities in Wyoming and the Northwest in
providing low-cost quality service to our members is due in part to the
competitive wholesale power supply contracts we have been able to secure
over the years. In 1995 we negotiated the first of two long-term fixed
cost power supply contracts with the Bonneville Power Administration (BPA),
our main energy provider. Since that time, the power supply market has
been very volatile and we have been fortunate to avoid some very
significant rate increases experienced by many utilities across the
country. According to E3, based on these contracts and other cost-saving
measures, our very stable electric rates saves the average LVE member
$300 a year in electricity.
We have been working diligently to meet
our members post-2006 power supply needs by exploring the lowest cost,
most reliable mix of power supply resources. In addition to continuing
to work with BPA, we have been working with many potential supplemental
power suppliers to diversify our power supply portfolio and to meet some
of Lower Valley’s projected load growth. Lower Valley Energy already
added a successful wind power option for our customers and a slate of
innovative conservation programs. E3 found that the wholesale power
increase is certainly inevitable and that BPA is still the most
cost-effective option.
Besides power
supply resources, E3 recommends a residential rate structure change.
Currently, we are on a declining block rate structure, which essentially
means the rate is cheaper the more energy you use. A flat rate structure
is a possibility, with the rate being the same no matter how much energy
one uses. And then there is the more conservation-friendly inclining
block rate structure.
Essentially, E3
foresees a 25% increase in our rates by the beginning of 2007. Although
they still view our membership as in an excellent position rate-wise,
the rate structure along with our energy resources should be
scrutinized. In addition, renewable power resources and conservation
programs will likely play an important part of our power supply
portfolio long into the future.
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