The ability to flip a switch and have the lights come on is something people often take for granted. But in the Estes Valley, the infrastructure required to provide this reliability covers 350 square miles of rural, forested land.
While new electric customers are required to pay for the installation of all utility infrastructure, the Town of Estes Park’s electric utility maintains the power lines and transformers throughout its entire system.
Last year, a 5% stopgap increase for all electric rate classes was approved while waiting for the results of a new rate study. The increases being recommended in the completed study are structured differently this time, said Reuben Bergsten, utilities director for the Town of Estes Park.
The consultants were asked to figure out how much it costs to provide and maintain electric services for each of the customer classes. Based on these conclusions, there will be varying increases for the customer classes within the electric utility, based on their individual needs for infrastructure and maintenance, Bergsten summarized in an interview with the Estes Valley Voice.
The collective income requirement to keep up with rising equipment costs, maintenance, and repair of the system is an additional 3.5% annually among all rate classes for the next three years at which point, another rate study will take place, he said.
The public will have another chance to hear about the rate increases in detail at a public hearing scheduled for this evening during the regular meeting of the Town of Estes Park board of trustees. Another hearing will be held on June 24 before the rates are adopted.
Wholesale power is transmitted to Estes Park from Platte River Power Authority via the large transmission lines that are visible over Lake Estes which were originally built to transmit power from the Lake Estes Hydroplant. About 15% of the energy consumed in the local area is provided by the hydroplant, but this plant is part of a larger system, the Colorado/Big Thompson water project.
For the remainder of Estes Valley’s electricity needs, the Town buys energy from PRPA, which is jointly owned by the four municipalities it serves, Fort Collins, Loveland, Longmont, and Estes Park.
The cost of the wholesale energy generated at PRPA facilities is handled as a passthrough part of the Wholesale Power Cost Adjustment, said Bergsten, but increases in distribution costs are affected by various things:
- Compared to Loveland, for example, the Town’s electric utility serves 1/3 the number of customers in an area that is three times larger, said Bergsten.
- Compared to any of the other four member cities, the local utility does not have any large industrial or manufacturing customers. They consume a lot more energy than a small business, retail store, or residence, Bergsten said.
- To get electricity to remote places, which make up most of the service area, crews must work on forested and rocky slopes which require additional equipment and crew members.
- The cost of equipment, including transformers and vehicles, has risen dramatically over the past five years. A transformer costs anywhere between 60-80% more today than it did in 2020, for example.
- Much of electric utility’s service area is located within high fire danger zones, and tree trimming makes up a big part of the utility’s line work.
Another expense for the utility is the general fund transfer, money that is transferred yearly to the Town of Estes Park. This transfer has been happening “as far back as I can easily find budget information (1976 actuals in the 1978 budget),” said Travis Machalek, who explained that such a transfer is “not abnormal” in a municipal utility and the idea of this type of transfer has been discussed since the Town established its own utility in the early 1940s.
Bergsten said it’s “just the cost of doing business, a return on the Town’s investment” from when they purchased existing infrastructure from Public Service of Colorado in 1943.
But, “we have been working to reduce the transfer from the power and communications fund to the general fund since 2019. Since then, we’ve reduced the transfer by $422,928, a 24% decrease from the 2019 peak,” said Machalek.
“While this brings us in line with the market, I do intend to continue recommending reductions to this transfer as part of the town administrator’s recommended budget each year,” he said.
When asked if income from electricity customers is being used to pay infrastructure costs for the Town’s broadband utility, a reasonable question considering that the name of the utility is Town of Estes Park Power and Communications, Bergsten said this is not the case. Trailblazer Broadband operates as its own business, separate from the electric utility. And while Broadband operates as a separate business, Power/Electric does fund the portion of the fiber infrastructure that is necessary to operate the smart grid.
The Town of Estes Park board meeting, during which the first public hearing on new electric rates will be held at 7 p.m. tonight in Town Hall, 170 MacGregor Avenue.