Glenwood Springs prepares for high electrical demand as nation moves away from fossil fuels
Increased electrical rates could cushion growing infrastructure needs
Following a seven-year hiatus on rate increases, Glenwood Springs is exploring options for increasing electrical fees for city residents, Public Works Director Matt Langhorst said.
In 2019, the city began a study on potential increases for both water rates and electrical rates. While water rates increased during the pandemic, Langhorst said city staff didn’t want users to be pinched by increases to both utility rates at the height of a global pandemic.
Instead, city staff and Glenwood Springs’ wholesale electricity supplier, Municipal Energy Agency of Nebraska, worked on two pro formas — documents reviewing the city’s electrical system expenditures during the past five years and projecting potential costs in the next five years.
Langhorst and Nebraska Municipal Power Pool (NMPP) Energy spokesperson Andrew Ross, who works with municipalities on creating sustainable energy cost programs, introduced those pro formas to Glenwood Springs City Council April 7 during a work session.
Council cannot take action during work sessions, so the goal of the meeting was a discussion about the city’s options for increasing rates in the future.
Both pro formas suggest increasing electrical rates for the city’s grid users to accomplish two goals: Compensate for rising electrical generation costs and ensure Glenwood Springs maintains a cash reserve in case of electrical infrastructure emergencies.
The first pro forma includes a rate increase of 4.5% annually for two years.
Glenwood Springs currently sells electricity at a rate of 10.66 cents per kilowatt-hour (KWH). An increase of 4.5% could mean the KWH price would increase to 11.14 cents.
A 5.2% increase was included in the second pro forma, which could increase the KWH price to 11.21 cents.
While Glenwood Springs users experienced an increase in their electrical bills in 2017, the increase was due to the city ending a program that previously gave users the first 100 KWH free, Langhorst said.
The last time the city raised its electrical rates was 2015, he added.
Before presenting the pro formas to council, Langhorst reviewed Glenwood Springs electrical rates since 1991. Between 1991 and 2015, the city increased rates annually by an average of 1.75%, he said.
Not all of the increases were annual, however, and in 2013 and 2014, Langhorst said the city raised electrical rates more than 20%.
“We want to avoid a rate hike like that this time around,” he said.
If Glenwood Springs increased rates based on average increases since 1991, Langhorst said users could experience a single 12.75% increase in the first year, followed by a 1.75% increase the next.
The largest increase suggested by the pro formas is 10.4% in a two-year span, he explained.
“We wanted a good statistically driven goal to raise rates to what we need to maintain the system,” Langhorst said.
Ross told council that in addition to cash reserves being foundational to keeping the system up and running, transmission costs were increasing and in some cases doubling, which will eventually trickle down to the user.
Glenwood Springs electrical infrastructure includes four substations. Three of the substations are older structures maintained with the city’s electrical operations funding, and a fourth was built in 2021 with the same cash reserves the city is looking to replenish, Langhorst said.
Ross emphasized the importance of keeping a steady electrical fund cash reserve as inflation and supply chains continue to create challenges across every sector. Cash reserves are also used to determine loan and bonding eligibility if future electrical infrastructure projects cost more than the city’s on-hand reserves, he said.
Across the nation, “electrification” is growing rapidly, creating larger demands for current electrical infrastructure.
“We have entire developments coming in now that are no longer using gas to do anything — everything is electric,” Langhorst said. “You pile on top of that cars and buses that are becoming electrified, and we could see demands spike significantly in the near future.”
Currently, the city charges all users the same electrical rate, but Langhorst said another work session in May or June session could be focused on if the city wants to split those costs in the future between different types of users, different times of day or a number of other industry standard options.
“Our next step is to decide how that rate increase could be split between users,” he said.
Reporter Ike Fredregill can be reached at 970-384-9154 or by email at firstname.lastname@example.org.
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