Monday, May 19, 2014

HL&P 4.5% Rate Increase

Heber Light & Power is proposing a RATE INCREASE for all users.    (Well, it may be for all users, except the large ones.)  

Apparently , this increase was approved in the budget by the previous Board (You know the one with the faux PAY increase, which they were required to return.)

While analyzing the proposed rate structure a few questions arise:

Why are rates for residential going up by 4.5%, while commercial seems to be less?

In the rate examples given, residential rates are a constant 4.5%, 'small' commercial increases 4.5%, but that percentage decreases with increases usage above the 3,600 Kwh example.   The 'large' commercial' example at 4.3% increase also appears to decease with increase usage.   In fact, in the given "large" commercial example showed a peak of 250 kW vice the 370 kW used the monthly rate

I'm unsure of the rate increase goals (except for revenue increase) of this complex rate structure are (other than the general "shift demand, green energy supply, economic development"), nor am I certain how, when or if the proposed changes will accomplish those goals.

It appears the examples given might have been chosen to demonstrate an 'equal' % increase, but usage will modify that.  The rate increase appears to benefit increased usage.

(HL & P  Interactive rate computer  This spreadsheet should allow you to create your own suggested rate structure and SEE the results.)

Columns K, L and M of the rate spreadsheet, compiled from the proposed rates, offer a simple two tiered systems which creates a similar proposed rate schedule and a third tier could be added to further reduce the high end users' costs, if needed for 'economic development' and accomplishing your goals.   (Various cells can be modified to determine the results.  As the formulas achieved the same results as the HLP presentation, I assume they are correct.).

It appears the intent is to lower modify the peak DEMAND, but not necessarily the usage.  There could be a HUGE disparity between a 249kW demand and a 251kW (small vs large) bill at marginal rates of $0.0805 vs $0.037 per kWh, thus benefiting a larger peak demand.

It seems like the small households get the most relative dollar hurt - mainly because of the Service charge. 

Rather than raising that service charge by 4.5%, lowering it to, say $5, would help out the 'average' resident by 10 to 20%, -  AND would only decrease HLP revenues by $70K (assuming 10K accounts)

Last comment/question: do hookup, or impact, fees for new connections cover the actually increased cost or is new growth being subsidized by current residents?

One response: "For infrastructure projects beginning in 2012 through 2015 amounting to $6,959,000, only $3,542,000 is eligible for impact fees.  Of this eligible figure only about 41% is being recovered in impact fees This is the same percent impact fee recovery for new businesses, subdivisions etc.  We would never charge %100 because at least 25% of necessary upgrades for these new builds benefits the whole system."
If HLP had NOT spent $200 (?) for the new "super" meters ($2,000,000), it may not have needed a rate increase.   Are they really paying for themselves?  If so, how?

My second guess is that there are areas are continuing costs that might be reduced.   Has the money from the loans and credit cards misuse been recovered? 

Reports are circulating that some higher echelon employees receive high six-figure salaries with bonus and 'comfortable' benefit packages.

If HLP had NOT spent $200 each (?) for the new "smart" meters ($2,000,000?), it may not have needed a rate increase.  Have they actually proven their value?  If so, how?

Have the dividends to the cities increased for 2014?   (apparently not = $300K)

Who is actually paying for street lights?   Is the $73,819 'donated' by HLP?  For what lights? What determine who pays the other $20K? (see *below)   Do 'rural' developments get donated light electricity?   If so, why not let the HOA pay?

 *WHEREAS the Heber Light & Power Company (“the Company”) practice is not to
charge municipalities or the county for the energy charges for street lights (“energy charges for
street lights”).
 WHEREAS, to implement this practice, the Company records the estimated energy
charges for street lights but annually writes-off these charges.
 The Company hereby writes-off the 2013 energy charges for street lights in the amount of

 I appreciate slide 29 ("? ? ?") pg 54

In short, my suggestions are reduce expenses, eliminate the service charges, implement a simpler rate structure and ensure that growth is covering its costs.   All these proposals for no extra cost.

PUBLIC HEARING   May 29 6:00 PM,   Heber City Council Room      Click on the link for MORE info.

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