DMEA Shelters Members from Tri-State Rate Increase, for Now
by Watch Staff
Dec 10, 2012 | 1014 views | 0 0 comments | 5 5 recommendations | email to a friend | print

MONTROSE - The Delta-Montrose Electric Association the Board of Directors unanimously approved the cooperative’s 2013 budget, recommending that the cooperative does not pass along any of the latest rate increase from Tri-State Generation and Transmission Association, Inc., DMEA’s wholesale power provider. 

The budget, approved last month, has a provision allowing the board to re-evaluate the effect of the Tri-State rate increase, and make any adjustments deemed necessary, after the first quarter of next year.

In October, Tri-State announced that it would impose a 4.9 percent rate increase (over $2.4 million) to its member distribution cooperatives, including DMEA for 2013.  This increase follows a 5 percent (over $2 million) increase in 2012, which was added to the 4.1 percent  ($1.8 million) increase that first appeared in 2008 and has continued since then.  According to Tri-State spokesman Jim VanSomeren, the Tri-State BOD elected to impose the latest increases to meet, among other needs, rising fuel costs, regulatory costs and its own set of financial goals.

When formulating the budget, DMEA considered the impact of the Tri-State increases, current economic conditions and the cost of maintaining the high level of services and reliability to which DMEA’s members are accustomed.  “Although DMEA’s controllable costs have remained relatively flat, DMEA continues to try and minimize the effect of increasing costs from our wholesale power supplier Tri-State,”  said DMEA Chief Financial Officer Bill Mertz. “We’ve achieved this by finding other measures to help contain or manage those costs upon which DMEA does have direct influence.”

Over the years, DMEA has been able to achieve substantial savings through the advancement of technology, saving members money through energy efficiency programs and diversifying DMEA’s energy sources with renewable projects such as the South Canal hydroelectric project and the community solar array.  “We’re pinning a good deal on the South Canal,” noted Board Director Tony Prendergast.  Initial analysis indicates that as much as $1,188,000 of cost savings may be achieved by the power production from the South Canal hydroelectric plant.  Several factors including weather may influence generation, but Jim Heneghan, DMEA’s Renewable Energy Engineer and South Canal Hydroelectric Project manager, is optimistic. “Thanks to some really diligent work on the part of Mountain States Hydro, our facility at Site 1 is on schedule for completion right about the time of irrigation flows.  That’s good news.  I know a lot of people are concerned about lower water flows next year, but what’s nice about the design of these systems is that we’ll be producing power even if the flows are lower than the historical average.”

In addition to the benefits projected from the South Canal Hydro Plant, DMEA took other cost containment measures to help absorb an additional $580,000 of the Tri-State rate hike.  Expenses including travel, training, outside services, materials and supplies were carefully evaluated and budgeted to levels that helped to maintain mission critical operations.  Also, DMEA expects to achieve savings by not filling a number of recently vacated positions, and management employees will experience a salary freeze and caps on medical and retirement plans.

These cost-cutting measures have caused concern for the DMEA Member Advisory Council, a volunteer group that serves as a liaison between the DMEA board and staff and the broader communities of the service territory.  In a letter to the board, the MAC expressed concerns,“...that reliance on probable future offsets and continued belt-tightening... may negatively affect services and programs, as well as the maintenance of necessary, qualified, and experienced staff.”  The letter went on to say, “Such methods, we feel, used in order to prevent or postpone passing along... these externally-imposed rate hikes may be approaching a ‘too-close-to-the-bone’ situation.”

Both DMEA staff and BOD members says they have carefully considered the effects of cost containment measures on the cooperative, and that the challenge is to balance both the short- and long-term needs of the cooperative while striving to maintain high levels of customer service and keeping rates as competitive as possible despite the increasing pressures from wholesale purchase power. “A lot of things could go wrong,” said Board Director Marshall Collins, “but a lot of things could go right.”  

So for now, DMEA members can count on their rates to remain the same.

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