“Wholesale power represents about 70 percent of DMEA’s annual operating budget,” noted Dan McClendon, DMEA’s general manager. “Because our board has held the line on rates for the past three years despite earlier rate increases from Tri-State, we expect we’ll be forced to pass through the 2012 rate increase to our members.”
McClendon explained that to absorb the previous increases in wholesale power costs DMEA deferred some projects, drew down some of its equity, cut costs, and reduced staffing levels with early retirements and attrition. These management tools are no longer available close to the magnitude of Tri-State’s 2012 wholesale power cost increase.
McClendon noted that electric rates are rising in many parts of the country and that Tri-State is not alone in increasing the cost of the power it generates. Nationally, there are several pressures on the wholesale price of electricity including higher costs of compliance with government regulations, rising material costs, and investments needed to upgrade and expand transmission infrastructure, along with multiple increases in the cost of coal to the electric power sector stemming from high transportation costs.
“Following our rate hearing on Nov. 29, DMEA, will continue to promote energy efficiency and energy efficiency programs as the best way we can help our members,” said McClendon.
“I also encourage members to attend the upcoming ‘Smart Energy Living” conference October 21-22 at the Montrose Pavilion to learn more about ways they can save energy and money,” McClendon said.
On the brighter side of power generation, McClendon stated that progress is being made on DMEA’s Local Power Partnership, particularly with regard to the proposed six megawatt (MW) hydroelectric power plant at the South Canal east of Montrose. Recently DMEA and the Uncompahgre Valley Water Users Association (UVWUA) selected a design/build contractor, Mountain States Hydro LLC.
Pending the outcome of the Environmental Assessment (EA), construction of the approximately $22 million project could begin this winter, a small stimulus to the local economy. With the project’s completion, about 5% of DMEA’s power would have a fixed, economical long-term cost. The South Canal hydroelectric project is estimated to generate between 25-30 million kilowatt hours a year – roughly the amount of electricity that could power 3,000 homes annually.