[This article was updated on August 15 to correct the number of people who made public comments during the public hearing. Three people offered public comments on the utility rates. The initial reporting indicated that two people made public comments. Editor]
After a lively discussion Tuesday night, the Town of Estes Park Board approved a 5% increase in electric rates for Estes Park Power and Communications (EPP&C) customers. The rate hike will take effect starting in October.
“I really wish we didn’t live in this environment, where it seems like everything’s constantly increasing,” said Trustee Kirby Hazelton during last night’s public hearing on electric rate increases included in the Town of Estes Park regular board meeting, “but I’m ready to make a motion tonight.”
Hazelton’s comments were in direct response to fellow board member Frank Lancaster’s suggestion that another public hearing be held before the vote, so the public can properly understand the reasons for the increase.
Discussions about the rate increase began in March, said Hazelton. “This is something that we do regularly,” she said, referring to periodic rate increases. ‘We’re always extremely cognizant of how it’s done, to have the least amount of impact on our community at the end of the day.”
Nevertheless, “better marketing” needed to happen on this subject, said Lancaster. Trustee Cindy Younglund noted that many of questions received from public comments were answered in the updated presentation.
Public comments were received via email before this final public hearing on the subject, and three members of the public spoke during the proceedings. In summary, the following concerns were expressed:
- Estes Park already has one of the highest electric rates in the state and higher than the three other Platte River Power Authority communities: Loveland, Longmont, and Fort Collins. Why?
- EPP&C contributes a significant amount in a “general fund transfer” to the Town of Estes Park annually. Why?
- How much of this increase is going to fund the Integrated Resource Plan transition to green energy at Platte River Power Authority?
- Is this increase going to fund debt service incurred by establishing Trailblazer Broadband, the Town’s broadband utility and if so, why are electric customers being asked to foot this bill?
- Sales tax on electric rates were questioned, how much revenue does the Town get from the sales tax on electric rates?
EPP&C Director Reuben Bergsten offered an updated presentation that addressed most of these concerns.
- One of the reasons Estes Park has one of the highest electric rates in the state is because of the service area versus the number of people served in that area. “Our service area is almost three times the size of Loveland’s,” said Bergsten; however, Estes Park has 11,290 electric meters (by which kilowatt hours are measured) and Loveland has 49,005. A greater service area means more power poles, longer power lines, and additional transformers need to be maintained each year. Because of our forested environment, considerable costs go into tree-trimming, as well. Another reason is that EPP&C has no industrial customers and very few large customers, said Bergsten. In fact, of those who have electric meters in the service area, many have second homes in Estes Park that consume little if any electricity while those homes sit vacant. But the meters, lines, and transformers still need to be maintained. When asked if an increase in the service fee (the base rate that all customers pay) would meet those fixed costs, Bergsten replied, “it’s not even close” to enough funding. Inflation and increases in the costs of supplies, like transformers, is another factor driving the rates upward, as is the ability to keep 90 days of operating funds in reserve.
- The general fund transfer to the Town of Estes Park from the enterprise fund (EPP&C) is what is given in lieu of a “franchise fee” to the Town, explained Town Administrator Travis Machalek. This type of funds transfer exists in all the other PRPA communities, “where the publicly owned nonprofit utility is paying a fee” instead of paying what a private company would pay to operate within the area, he said. This amount has decreased from its peak where 10.8% of the utility’s “budgeted charges for services” was transferred to the general fund in 2017, said Machalek; this transfer has been decreased to 6.6% for this year’s budget and is not a direct factor driving rates upward, he said.
- The rate increase does not include any increases to wholesale power purchases and as such, will not directly fund the transition to green energy at PRPA, said Bergsten. Any increases on the wholesale level are passed through directly to the consumer without markup, under the line item “power rider.” Indirect benefits to support the transition to green energy include investments in smart-grid infrastructure, which would be required anyway with evolving technology.
- Since Power & Communications have one budget, it is hard to see how funds are allocated, but the debt service outlined in the rate study would only go toward debt incurred by the electric utility, said Machalek. “We have to do extra work on our side to break those costs out,” he said, adding that a report that shows Trailblazer is paying its own way is forthcoming. “If there is an intermixing of those funds at some level, it is because they’re coming out of the same enterprise, but we do account for them separately, and are able to break out those expenses,” he said.
- Town sales tax is charged on electricity for consumers who live within the Town limits, but Federal and State taxes are not. “Water is considered a property right, so it cannot be taxed at all,” said Duane Hudson, interim finance director for the Town. But the provision of electricity is taxable for statutory towns within the state. Information about exactly how much would be received by the town via sales tax on electric rates, or how those funds would be used was not given at this meeting.
“We’re proposing a 5% rate increase make sure we’re keeping up with our costs,” said Bergsten.
Ultimately, the board voted 5 to 2 to approve the rate increase for this year only. Trustees Marie Cenac and Mark Igel voted against the rate hike. Another rate study will be presented next year in consideration of additional adjustments in electric rates.