LPEA is a not-for-profit utility – owned by our members – that delivers power at cost. The purpose of LPEA’s 12 rate classes are to recover the cost of providing electric service to each of our different customer types. These expenses primarily consist of two components:
- The first component of each rate is the cost of delivering the power. This is determined based on the amount of infrastructure and services needed to deliver the required power from our power provider (Tri-State) to the members in each rate class. For example, LPEA’s large industrial customers pull their electric service straight from our transmission lines so their rate is lower per kilowatt hour. LPEA’s residential customers require more infrastructure (i.e. substations and equipment to decrease the electric voltage to usable levels), and poles and wires to deliver that electricity to each home. Accordingly, their rate is higher per kilowatt hour.
- The second component of each rate is the cost of the power itself. LPEA currently procures 95% of its power from Tri-State. About half of LPEA’s Tri-State bill is the energy charge – which is currently 4.2¢ per kilowatt hour. The other half – the demand charge – is charged based on the ONE HOUR each month when LPEA’s energy demands are the highest. In industry parlance, this is referred to as “peak load”. Tri-State charges LPEA $19.34 per kilowatt for this peak load. That is 460 times higher than what they charge for normal or “off peak” power.
That means that LPEA, and its members, can save a lot of money by spreading out our collective power usage and decreasing that peak load.
LPEA’s board voted in January 2020 (Resolution 2020-01) to raise rates – for the first time in four years – to adjust for the cost of inflation and to finance system improvement projects needed to maintain LPEA’s reliability and proactively prevent outages. LPEA has been financing its infrastructure improvement projects via cash reserves for more than five years, and now cash reserves are running low. The board approved the increase to generate additional needed funds. This was done in lieu of borrowing (to avoid interest) and was done only after LPEA trimmed nearly 1 million dollars from its budget.
LPEA has budgeted for a total of $16.2 million in capital improvements to our facilities in 2020. These project include: Animas Substation rebuild, addition of a 47 kV mobile substation, addition of 115 kV switches, general substation improvements/upgrades, cable replacements, reconductors, enhanced substation communication (SCADA), new underground and overhead services, new transformers and meters, enhanced smart metering load control, Bayfield to Pagosa transmission line, and a new replacement transmission line.
If you have questions or concerns on LPEA’s budget, we welcome you to attend our monthly Finance and Audit Committee meetings, which are live streamed and open to the public.
Options for the rate increase were first discussed in LPEA’s Finance and Audit Committee, composed of LPEA board members and staff. This group did a deep dive into all options during its public meeting and developed recommendations. The Chair of the Finance and Audit Committee then shared the recommendations with the full Board of Directors during their public meeting. The ultimate rate increase structure was unanimously approved by the board in January 2020 (Resolution 2020-01).
The LPEA Board of Directors had several options in choosing how to apply the increase to this rate class:
It could have been added to the base charge, which members cannot affect.
It could have been added to the energy charge, which members can only affect by using less electricity overall (and we encourage the use of electricity as a clean, efficient, power source).
Instead, it was added in the form of a Peak Power Charge, which members CAN affect by shifting some of their electricity usage to avoid the on-peak hours from 4-9 p.m. LPEA’s other rate classes already have similar mechanisms to help reduce peak load.
LPEA is charged 460 times more for the ONE HOUR per month when our system uses the most power. That means that LPEA, and its members, can save a lot of money by spreading out our collective power use and decreasing that peak load.
To help spread out that power usage and incentivize our members to shift some of their electricity usage to outside peak hours (4-9 p.m.), LPEA introduced the Peak Power Charge to its residential and small business (i.e. general service) rate class. LPEA’s other rate classes already have similar mechanisms to help reduce peak load.
Similar to how TriState charges LPEA for the power we buy from them, we calculate this Peak Power Charge based on the ONE HOUR per monthly billing cycle, between the peak hours of 4-9 p.m., where a member uses the most electricity. We take the load during that ONE HOUR and charge $1.50 per kilowatt used.
For example, LPEA’s average member with a $105 monthly bill will see a peak power reading of approximately 3.2 kW resulting in a $4.80 Peak Power Charge. For an all-electric home with a monthly power bill of $200, the peak power reading might be 6 kW resulting in a $9.00 Peak Power Charge.
All members contribute to LPEA’s Peak Power kW (Load) and the costs associated with that. In turn, all members can help to reduce this load and cost by shifting usage away from the 4-9 p.m. timeframe.
If the average LPEA residential and small business member does everything the same as they always have, they will see their bill increase around $4.80 per month. But, if members shift some of their electricity usage to hours before 4 p.m. and after 9 p.m. (i.e. drying clothes, or running the dishwasher, or charging an electric vehicle), the increase will be less.
In this way, we are giving members some control in how much the rate increase impacts them directly AND, we are incentivizing the use of electricity during off peak hours, when the cost of procuring power is cheaper.
For LPEA members currently on Time of Use rates, most everything will stay the same except the charge for electricity usage during Time of Use on-peak hours (6-9 a.m. and 5-10 p.m.) will increase, resulting in an average 4.5% increase per month. The charge for off-peak hours remains the same. In this way, LPEA is giving an even-deeper incentive to use electricity during off-peak hours.
Time of Use on-peak and off-peak times will NOT change. They will remain the same as what you are used to. Time of Use members are also NOT affected by the new residential Peak Power Charge.
LPEA has roughly 1,400 members who are generating all or some of their own power needs during daytime hours, mostly through solar installations. As with other residential members, we did not add the increase to the base charge, or the energy charge. Instead, we added the increase in the form of a Peak Power Charge, which customers can affect by shifting some of their electricity usage to avoid the on-peak hours from 4-9 p.m.
LPEA offers free access to detailed information about your electricity use, and tools to analyze and manage it, through the SmartHub Mobile and Web apps. You can access real-time usage data, manage your account, pay your bill, report issues, and set up notifications regarding your electric usage all via your phone or computer. Sign up today by creating an account online, or speaking to a customer service representative at 970-247-5786.
- Log into SmartHub. When do you use the most power in a typical day? What is your average daily use? Analyze your electricity usage patterns, update your account details, pay your bill, report outages, and more on LPEA’s SmartHub app. Create an account online or call us at 970-247-5786 to get set up.
- Get a rate comparison. LPEA offers an opt-in Time of Use rate that may save you money. Call us at 970-247-5786! We can analyze your account, predict potential cost savings, and advise on the best rate structure for you.
- Get a timer. Timers allow you to automatically set appliances to turn off during peak hours. For example, turning off your water heater from 4 to 9 p.m. can save $7.00 per month on your bill. BONUS: LPEA offers a $25.00 rebate on the purchase of any timer.
- Get a programmable thermostat. Programmable thermostats can help you adjust your heating and cooling settings to use less energy between 4 and 9 p.m. During these hours, increase (during cooling season) or decrease (during heating season) your set temperature a few degrees to save energy.
- Wash and dry later. Load your dishwasher after dinner and then start the cycle after 9 p.m. and dry your clothes outside peak hours. Shifting these two activities to different times of the day can make a real difference in your electric bill.
- Make the switch to LED. If you haven’t already, switch your home lighting to LED. They last 25 times longer and use 75% less energy than standard incandescent lighting. BONUS: LPEA offers rebates for LED lighting purchases
- Charge overnight. If you are one of an increasing number of LPEA members with an electric vehicle, make sure to charge it overnight. BONUS: LPEA offers electric vehicle chargers free-of-charge to our members ($600 value).
To help shave this peak load and decrease power costs for LPEA and our members, LPEA began offering Time of Use rates to members in 1990. This optional program charges members different rates for their power based on the time of day. They are charged a higher rate during the “on-peak” hours. LPEA currently has more than 4,000 members who have opted-in to Time of Use rates, some of which save $100+ per month on their bill by shifting their electric usage to different times of the day.
Call us at (970) 247-5786 to get a rate comparison, based on your specific usage, to see if Time of Use rates may save you money.
If you’re having trouble paying your bill, please call us directly at 970-247-5786. We can evaluate your situation and suggest payment plans, budget billing options, and also refer you to local agencies with funds available for utility bill assistance.
Southwest Colorado Disaster Assistance: swcoda.org
Pine River Shares: pinerivershares.org 970-884-6040
Housing Solutions of the Southwest: swhousingsolutions.com 970-259-1086
Durango/Bayfield Family Center: lpfcc.org 970-385-4747
Low Income Energy Assist: colorado.gov/pacific/cdhs/how-do-i-apply 866-432-8435
Discovery Goodwill: LEAPHELP@discovermygoodwill.org 719-635-4483