By VERNON ROBISON
Moapa Valley Progress
The Overton Power District (OPD) Board of Directors approved a rate adjustment last week that will actually reduce power rates slightly for a majority of customers. The rate reduction; which received unanimous support from the board at a meeting held Wednesday, June 19 in Mesquite; gives back a projected $544,350 annually in OPD revenue to customers.
OPD General Manager Mendis Cooper explained that district staff had been working with the National Rural Utilities Cooperative Finance Corporation (CFC), over the past two years, on a comprehensive rate study for the OPD. The timing for the study coincided with major changes in district finances, Cooper said.
Two years ago, the district entered into a new power purchase contract with Morgan Stanley energy brokerage. The agreement was expected to reduce OPD’s cost of power making it more efficient and stable. In addition, the district has refinanced much of its debt at lower rates. These actions brought significant reduction to some of the districts highest cost centers.
“We knew our costs had come down from the way we had run in the past,” Cooper said. “But we wanted to monitor things in the new agreement for a couple of years to see what the real effects would be before we made a rate adjustment.”
Cooper said that in considering the rates it was important that district infrastructure needs continued to be met.
“It was important for us to pass some of our cost reductions back 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 reliability of our system. Those improvements we have planned are vital to the future of the district.”
To accomplish this, the CFC rate study recommended an increase to monthly base rates to cover the district’s fixed infrastructure costs. But because of energy cost decreases, OPD staff were able to offset these increases with reduced per kilowatt-hour kWh rates for customers.
The rate adjustment is focused on three main OPD rate classes including residential, small commercial and large commercial classes.
Residential customers will see a slight base rate increase of about $5 per momth. But their kWh usage rate will be reduced by about 5 percent. This is expected to bring a modest net saving to residential power users.
“The average customer should save around $15-20 per year on their power bills,” Cooper said. “I know that people would like to see more than that. But we wanted to give back all we could, while protecting revenues for maintaining reliability. I think that this is accomplished here.”
Small commercial customers are likely to see the most significant differences with the rate adjustment, according to Cooper.
Those in small commercial class who use more than 1,000 kWh per month will see their monthly base charge increase to $40; up from $21 per month previously. But their kWh usage charge will be reduced by about 20 percent. This should leave the customer seeing about 4 percent in net savings to their power bills.
Because this base rate increase would have significant impact on a few small commercial customers who use very little power, a new rate class was proposed. For commercial customers using less than 1,000 kWh per month, the base rate and power usage rate would remain unchanged.
Finally, even the large commercial rate class would receive a small adjustment. This class would also see an increase to the base rate and an offsetting decrease in power usage rate. But the percentage savings projected would be much smaller at only around .2 percent per month.
“That doesn’t sound like much,” Cooper admitted. “But for big customers like the casinos in Mesquite, that could add up to as much as $1,000 per month in savings. So it can be substantial.”
OPD Board members expressed general support for the rate adjustment.
“I think it is well thought out and I appreciate all the work that has gone into it; both by our staff and the assistance from CFC,” said OPD Board President Judy Metz.
Metz made a motion to approve the rate adjustment as presented, effective on September 1, 2019. The approval was unanimous.
