Archive for the ‘Monthly Summary’ Category

Friday, November 16th, 2018

 

 

 

BUSINESS OPERATIONS – OCTOBER-NOVEMBER 2018

ARPA Board Reviews 2019 Budget and Financial Planning: The ARPA Board of Directors reviewed its proposed 2019 budget at both its September and October meetings that includes a 2% rate decrease in ARPA’s wholesale energy rate. This reduction was made possible due to ARPA’s reducing its debt service costs through the refunding of a significant portion of its debt this past summer. In addition to the savings in debt service, ARPA has also significantly reduced other expenses in its Admin and General fund. The total savings of approximately $1.1 million more than offsets anticipated increases in power supply and transmission expense. The proposed 2019 budget includes:
• Power Sales Revenues of $27.8 million
• Power Supply costs of $14.3 million
• Transmission costs of $ 3.1 million
• A&G costs of $ 1.7 million
• Debt Service costs of $ 9.5 million

The Board also discussed its strategy for retiring its 2010 bonds. The 2019 budget, (as will the 2020 budget), is designed to accrue additional cash sufficient to retire the 2010 bonds of approximately $14.8 million when they become “callable” in 2020. Retiring the bonds will reduce ARPA’s annual debt service by $1.2 million. This reduction in costs is anticipated to result in an additional rate decrease in the 2021-2022 time frame. ARPA’s 2019 Budget Hearing is scheduled for December 6, in La Junta.

ARPA Board Discusses Distributed Generation (DG) Policy: Recent trends have promoted expanded deployment of a wide variety of renewable and distributed generation (DG) technologies. This has come at a time when tax incentives and improved technologies have reduced the cost of renewable energy including solar and wind generation. In recognition of this, the ARPA Board has been working to develop a policy to address the many facets of DG.

Key points of the policy include net metering, a process to account for installations less than 25 kW (10 kW residential) that is owned by a retail customer and is “behind the retail meter”. Net metering allows a retail customer to offset their consumption by power generated by the renewable facility. For installations larger than 25 kW, it is anticipated that either ARPA, or its member utility, will purchase all the output from the installation at a predetermined price. The policy discussions also include the type of reporting and metering that will be necessary, how the invoicing, payments and credits for the generation output will be handled, and the total amount of renewables ARPA and its members can install without violating existing power supply agreements.

Summary of Year to Date Financial and Operating Statements: Revenues from Power Sales are better than budget by almost 8%, and better than 2017 sales by 4.2%. Total Cost of Operations, including Admin and General are about 1% over budget. Net Revenue from Operations are $4.2 million YTD.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, December 6, 2018. The meeting will be held in La Junta at the Otero Junior College Student Center, 2001 San Juan, and will begin at 10:00 AM. ARPA board meetings are open to the public.

Monday, September 10th, 2018

 

 

BUSINESS OPERATIONS – SEPTEMBER 10, 2018

ARPA Board Reviews 2019 Budget: The ARPA Board of Directors reviewed different scenarios for its 2019 budget, as it began its 2019 budget process. None of the scenarios discussed included a rate increase which will signal an 8th straight year without a rate increase by the Authority. The Board directed staff to focus on two priorities, accumulation of funds to retire the Authority’s 2010 bond series when they become callable (fall of 2020), and evaluate opportunities to reduce rates both near term and long term. To that end, ARPA placed $4.2 million into its rate stabilization account that is earmarked for retiring the 2010 bonds.

The budget scenarios included recognition of the savings from ARPA’s recent debt refinancing. ARPA’s debt service was reduced by approximately $700,000 annually via the refinancing. If ARPA is successful with retiring the 2010 bonds, it will realize another $1.2 million in annual savings beginning in 2021. The Preliminary Budget presented to the Board included total revenues of $33.7 million, operating costs of $19.1 million and debt service costs of $9.5 million.

Budget Hearing: The proposed 2019 budget for the Arkansas River Power Authority will be available for inspection beginning November 5th at the City Clerk’s office in each member city. Any interested elector in an ARPA member community or electricity consumer of an ARPA member (Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado) may register objections to the proposed Budget prior to its final adoption. The ARPA Board of Directors will hold a public hearing on the proposed Budget at the Otero Junior College Student Center, 2001 San Juan, in La Junta on Thursday, December 6, 2018.

Financial Projection for YE 2018: Projections for YE 2018 include power sales approximately $1.5 million better than budget (projected at $29.1 million) while cost of operations are projected to be approximately $1.0 million less than budget (projected at $18.1 million). The reduction in bond interest payments from the recent bond refinancing are projected to lower costs by $308,000 for 2018 and A&G costs are projected to be $1.3 million less than budget. Projections for net cash for operations at the end of 2018 is approximately $3 million.

Summary of July 2018 Operational Financial and Operating Statements: During the month of July, total cost of goods sold were over budget 9.4% which was offset by revenues that were 13.5% better than budget. There were Net Revenues from operations of $1,021,599 for the month. Member sales for July were 1.2% better than July of 2017. Total Operational Revenues YTD are better than budget by 8.7% as Member Sales YTD are 9.2% better than budget and 4.6% better than 2017 sales.

Extraordinary Income and Expenses: ARPA refinanced the 2003, 2006, 2007 and 2008 bonds in July which resulted in approximately $933,000 in bond issue expenses. The Authority also realized revenues of approximately $5.0 million for amortization of bond premiums and $4.9 million from litigation and insurance settlements.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, September 27, 2018. The meeting will be held in Lamar at the Cultural Events Center, 102 East Parmenter, and will begin at 10:00 AM. ARPA board meetings are open to the public.

Thursday, August 16th, 2018

 

 

BUSINESS OPERATIONS – August 6, 2018

Bond Refinancing: On July 3, ARPA closed its bond refinancing transaction of approximately $121 million. The refunding of the bonds resulted in an annual savings of approximately $848,000 over the term of the bonds (2019-2043). ARPA will also save approximately $196,000 in 2018. ARPA realized a Net Present Value savings of approximately $13 million from the transaction.

The ARPA Board views this as the next step in maintaining stable rates moving forward. ARPA has not had a rate increase since 2011 and this bond refunding will allow that course of action to continue well into the future. At this point in time, the ARPA Board does not foresee the need for a rate increase for the next few years. In fact, the current financial model for the Authority demonstrates the potential for a rate decrease beginning in 2021.

Update on Tri-State Power Purchase Agreement:  During the past several months, ARPA has been engaged in negotiations regarding the possibility of assigning its Power Supply obligations to Tri-State Generation and Transmission Association (Tri-State) and Southeast Colorado Power Association (SECPA), a cooperative member of Tri-State. The proposal would reduce the power supply costs for the six ARPA members and use Tri-State funds to retire ARPA’s debt of approximately $143 million.

The transaction would require the ARPA members to enter into new long-term Power Purchase Agreements with Tri-State/SECPA and terminate the existing Power Supply Agreements with ARPA. Current negotiations have targeted the August-September time frame for implementing the new power supply arrangements. The ARPA members have begun the approval process but will not have a final approval until all the terms of the individual member PPAs are finalized.

Summary of June 2018 Financial and Operating Statements: During the month of June, total operating revenues were better than budget by $376,818. Total cost of goods sold were over budget 1.4%, and A & G expenses for the month were just under budget by $2,040. There were net revenues of $795,894 for the month.

Sales at Ten-Year High, YTD: Member sales for the first six-months of the year are 5% better than in 2017 and 4.5% better than the ten-year average for sales through June. Revenues from sales are also well above average, 5% better than 2017 and almost 8% better than budget.

ARPA Scholarship Program: In 2000 the Arkansas River Power Authority Board of Directors established a College Scholarship Program. The Program is administered through the member municipalities of Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado. The scholarship is awarded to one high school senior in each member municipality. The total scholarship award is $1,000 funded equally between ARPA and the member municipality. Congratulations to the following individuals on receiving the scholarship for the 2018-2019 school year: Holly: Victoria Avalos; Lamar: Alexa Comstock; McClave (Lamar): Allie Nidey; La Junta: Cassidy Jones; Springfield: Jayci Westphal; Trinidad: Jaylynn Tortorelli; Las Animas: Richard Gallegos; Wiley (Lamar): Jonathan Hickman. Good luck in your future endeavors!

Next ARPA Meeting: The next regularly scheduled ARPA board meeting will be held at the Holly Senior and Community Center, 129 South Main Street in Holly on Thursday, August 30, 2018 beginning at 10:00 AM. ARPA board meetings are open to the public.

Friday, April 6th, 2018

 

 

 

BUSINESS OPERATIONS – MARCH 23, 2018

ARPA Bond Refunding Effort Continues to Move Forward. The ARPA Board of Directors received an update regarding its Series 2018 Bond Refunding effort at its February meeting. Between 2003 and 2010 ARPA issued a series of bonds to fund the construction of the Lamar Repowering Project. Approximately $143 million of the bonds are outstanding with the vast majority currently eligible to be refunded. ARPA engaged Public Financial Management (PFM) as its financial adviser, Goldman Sachs as its underwriter, and has evaluated a handful of options for the refunding. The analysis performed by the companies indicate the potential for significant savings in annual debt service payments based on current market conditions.

Refunding Strategy. The Power Revenue Refunding Bonds, Series 2018A, will include the Series 2003, 2006, and 2007 Bonds. The expected transaction closing date is early May. The refunding of the Series 2008 Bonds will close in early July as they have a bit later call date. The Series 2010 Bonds are not callable until October 1, 2020 which will give the Board the opportunity to retire the debt rather than refund it. The Board is not considering issuing any additional bonds nor extending the retirement date of the debt.

2017 a Successful Year Financially for ARPA. 2017 proved to be another successful year for the Authority as its Revenues from Sales finished the year approximately 3% better than budget and resulted in revenues of $28.6 million. Purchased Power costs were under budget by about 2% due partly to ARPA successfully purchasing excess hydro power in late spring of 2017. ARPA’s A&G costs were down considerably from 2016 and well below budget for the year. A major factor for the reduced cost was the settlement of all its outstanding litigation. ARPA finished 2017 with $3.3 million in net revenue and an increase in cash of a little over $1.0 million.

During the past five years, ARPA has improved its financial position significantly. Unrestricted cash increased from $1.2 million in 2011 to $6.3 million by the end of 2017. This improvement has been done without a rate increase, as ARPA’s rates have not increased since 2011, nor is there an increase budgeted for 2018. ARPA has modeled rates through 2024 and believes not only can it avoid any rate increases through this planning period, but believe we can implement a rate decrease by 2021.

ARPA Scholarship Program. In 2000 the Arkansas River Power Authority Board of Directors established a College Scholarship Program. The Program is administered through our member municipalities of Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado. The scholarship is awarded to one high school senior in each member municipality. The total scholarship award is $1,000 funded equally between ARPA and the member municipality. Application forms, scholarship requirements, and eligibility criteria are available either through the counseling offices of the member high schools or at the local office of the electric utility. To be eligible, a student must reside with a family that receives electric service from one of the ARPA member municipalities.

Summary of January 2018 Financial and Operating Statements: During the month of January, total operating revenues were better than budget by $67,390. Total cost of goods sold were over budget 3.4%, and A & G expenses for the month were under budget by $21,282. There were net revenues of $248,283 for the month. Member sales for January were 4.5% better than budget.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting will be held at the Lion’s Den, 200 Main Street in Springfield on Thursday, March 29, 2018 beginning at 10:00 AM. ARPA board meetings are open to the public.

Friday, April 6th, 2018

 

 

BUSINESS OPERATIONS – FEBRUARY 16, 2018

ARPA Moving Forward with its Bond Refunding Effort: The ARPA Board of Directors received an update regarding its Bond Refunding effort. The Board appointed a Banking Team shortly before the end of the year and directed the Team to evaluate opportunities to refinance its existing debt. Between 2003 and 2010 ARPA issued a series of revenue bonds to fund the construction of the Lamar Repowering Project. ARPA now has the opportunity to refund those bonds at lower interest rates, which would result in a significant reduction in the repayment of the debt. There are four bond series that ARPA is considering refunding that amount to approximately $127 million.

The refunding will include only ARPA’s existing bonds, as the Board is not considering issuing any additional bonds. The retirement schedule for the bonds will also remain the same, circa 2043. The repayment schedule will be based on a “level repayment plan” in which the payments remain the same throughout the term of the debt.

ARPA believes it has an opportunity to improve its credit rating through the refunding process as well. There are several factors that credit rating agencies consider when determining credit quality and ARPA believes it has positioned itself well to meet or exceed the factors, including compliance with bond covenants such as funding of bond reserve accounts and generating revenues sufficient for debt payments.

Additionally, ARPA’s financial position has improved significantly over the past few years. ARPA’s rates to its members has remained stable with no rate increases since 2011 and its members retail rates, on average, are at or below those of the neighboring utilities.

ARPA’s goal is to go to market with most of the refunding transaction completed by early May and the final refunding completed by early July. ARPA has engaged Goldman Sachs as its Underwriter for its refunding effort and the law firm of Chapman and Cutler for bond and disclosure counsel. In addition, Public Financial Management Inc. (PFM) is ARPA’s independent registered municipal advisor and UMB Bank will be the Bond Trustee.

Financial Planning: The ARPA Board directed staff to continue with its long term financial planning at its January meeting. The Board’s plans include continued stable rates through 2024 with the potential to retire debt and implement a rate stabilization fund during the planning horizon.

Summary of Unaudited December 2017 Financial and Operating Statements: During the month of December total operating revenues were better than budget by $14,265. Total cost of goods sold were over budget 2.2%, and A & G expenses for the month were over budget by $27,327. There were net revenues of $244,151 for the month; year to date (YTD) net income is $3,354,814. Member sales for December were 1.8% better than budget, and YTD sales are better than budget by approximately 3.2%.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting will be held at 27850 Harris Road in La Junta on Thursday, February 22, 2018 beginning at 10:00 AM. ARPA board meetings are open to the public.

Friday, April 6th, 2018

 

BUSINESS OPERATIONS – DECEMBER 22, 2017

Allen Hill, Recipient of ARPA’s 2016 Gordon Robertson Award: Allen Hill, former ARPA Board member from the City of La Junta, was officially presented the 2016 Gordon Robertson award at the ARPA board meeting on December 8, 2017 in La Junta. The Gordon Robertson award, is presented to a current or former member of the Board of Directors of the Arkansas River Power Authority who displays exceptional leadership on the ARPA Board and in the local ARPA member community.

Allen was recognized for his loyal support to defend the goals and mission of the Arkansas River Power Authority; For his outstanding leadership in the La Junta community; For his immersion into Public Power through his service on the La Junta Utilities Board; For his common sense and vision to think outside the box; For his ability to remain focused on the fiscal sustainability of ARPA and the betterment of all the member communities; and his “it’s a privilege to serve” attitude. Allen served on the ARPA Board of Directors from 2008-2016. Congratulations Allen!

Financial Bond Covenants: The ARPA Board heard a presentation on the status of its bond compliance requirements at its December meeting. Aarin Ritter, Finance/Accounting Manager for ARPA reported that ARPA is in full compliance with all its bond covenants including meeting the debt service coverage ratio, timely payment of the interest and principal payments for 2017, continuing disclosures, maintaining full funding of all bond reserve accounts and ensuring those accounts are held in permitted investments. ARPA is in the process of analyzing its ability to refund the vast majority of its debt, and remaining in compliance with its bond covenants will improve its position when going to the bond market.

2018 Budget – Power Costs Remain Stable for the Seventh Consecutive Year: At its December meeting, the ARPA Board approved a budget for 2018 that results in no power supply cost increase for the seventh consecutive year.

The budget includes total Revenues of approximately $32.6 million with sales budgeted at 258.4 million kWh. The power supply budget is approximately $13.3 million and projects that approximately 63% of the 2018 ARPA power supply will be provided by Twin Eagle Resource Management. Twenty-nine percent of the ARPA member’s power supply requirement is anticipated to be provided by federal hydro-power contracts with the Western Area Power Administration and approximately 8% will be provided by the 5 wind turbine generators owned by Lamar (3) and ARPA (2). Total Transmission cost is budgeted at $2.9 million and includes the cost for Network Transmission Service from both Tri-State and Black Hills, and point-to-point agreements with a variety of third-party transmission providers. Debt Service payments are budgeted at $9.9 million, with $7.5 million in bond interest and $2.4 million in bond principal.

Summary of October 2017 Financial and Operating Statements: During the month of October, total operating revenues were better than budget by 8.3%. Total cost of goods sold were just under budget and A & G expenses for the month were right on budget. There were net revenues of $263,508 for the month. Total Revenues YTD are better than budget by 4.1%. Member sales for October were a bit less than October of 2016, but better than budget by 2%. Member Sales YTD are about 3.4% better than budget and total net revenues of $2.96 million YTD, are well above budget.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, January 25, 2018 beginning at 10:00 AM. The meeting will be held at the Otero Junior College Student Center, 2001 San Juan in La Junta. ARPA board meetings are open to the public.

Tuesday, November 21st, 2017

 

 

 

BUSINESS OPERATIONS – NOVEMBER 20, 2017

ARPA and City of Lamar Settle Lawsuit: The Arkansas River Power Authority and the City of Lamar have resolved a lawsuit regarding the Lamar Repowering Project (LRP) and Lamar’s Unit 6 generating plant.

The Lamar City Council and the ARPA Board of Directors both approved a settlement that will dismiss the lawsuit between the two parties that has been ongoing since 2014. The Settlement will allow ARPA to pursue a refinancing of its bonds which will potentially provide significant savings in its annual debt service payments.

The terms of the settlement provide a $2.5 million payment to Lamar once the bonds are refinanced. In addition, ARPA will make a $350,000 annual payment to Lamar for 26 years (approximate term of the LRP bonds). ARPA’s bond insurer, Syncora Guarantee, Inc. has agreed to make a $2.25 million payment to ARPA once the bonds are refinanced. ARPA will also deed over property to Lamar that is adjacent to the LRP and the LRP dome storage facilities located on City of Lamar property.

Lamar will remain members of ARPA and continue to purchase its power requirements in accordance with its existing power supply contracts with ARPA which includes payment of the bonds. ARPA General Manager Rick Rigel stated that “the settlement provides ARPA the ability to access a very favorable bond market and the potential to significantly reduce our debt service costs over the life of the bonds”. Rigel went on to say that financial analysis performed by its municipal adviser Public Financial Management, Inc. (PFM) and Goldman Sachs, ARPA’s underwriter for the bond refinancing, “indicate that the annual savings from a refinancing far outweigh the annual payment agreed upon with Lamar. Our goal is to go to the bond market in the first quarter of 2018”.

Proposed 2018 Budget: A proposed 2018 budget, based on the Settlement of the Lamar lawsuit was presented to the ARPA Board of Directors at its October 26 meeting. As presented, the budget includes no base rate increase for 2018 and a reduction of over $600,000 in debt service costs. The budget projects total revenues of $32.6 million, power supply costs of $13.3 million, transmission costs of $2.9 million, and A&G costs of $2.5 million. The Board is also considering retiring its Series 2003 bonds.

2018 Budget Hearing Scheduled: The hearing for the proposed 2018 Budget for the Arkansas River Power Authority will be held at the Otero Junior College Student Center, 2001 San Juan, La Junta, CO., on Thursday, December 7, 2017. The 2018 proposed budget is currently available for public inspection at the City Clerk’s office in each member city. Any interested elector in an ARPA member community or electricity consumer of an ARPA member (Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado) may register objections to the proposed budget prior to its final adoption.

Summary of September 2017 Financial and Operating Statements:  During the month of September, total operating revenues were better than budget by 6.5%. Total cost of goods sold were right on budget and A & G expenses for the month were over budget 3.3%. There were net revenues of $369,781 for the month. Total Revenues YTD are better than budget by 3.7%. Member sales for September were a bit less than September of 2016, but better than budget by 5.7%. Member Sales YTD are about 3.7% better than budget and total net revenues of $2.89 million YTD, are well above budget.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, December 7, 2017 beginning at 10:00 AM. The meeting will be held at the Otero Junior College Student Center, 2001 San Juan in La Junta. ARPA board meetings are open to the public.

Sunday, October 15th, 2017

 

 

 

BUSINESS OPERATIONS – OCTOBER 15, 2017

Michelle Miles, Recipient of ARPA’s 2016 Tom Pryor Award: Michelle Miles, ARPA Board member representing the City of Trinidad, and Trinidad City Council member, was officially presented the 2016 Tom Pryor award at the ARPA board meeting on September 28 in Trinidad. The Tom Pryor award, named in memory of the late Tom Pryor who served on the La Junta Utilities Board and ARPA Board of Directors for many years, is presented to an official, employee, citizen, or customer of an ARPA member electric utility system who displays commendable efforts in promoting the mission of public power in an ARPA member community.

2018 Budget Available for Inspection by the Public – Hearing Date Set by Board of Directors: The proposed 2018 Budget for the Arkansas River Power Authority will be available for public inspection beginning November 8th at the City Clerk’s office in each member city. Any interested elector in an ARPA member community or electricity consumer of an ARPA member (Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado) may register objections to the proposed budget prior to its final adoption. The ARPA Board of Directors will hold a public hearing on the proposed budget at the Otero Junior College Student Center, 2001 San Juan, La Junta, CO., on Thursday, December 7, 2017.

Summary of August 2017 Financial and Operating Statements:  During the month of August, total operating revenues were less than budget by 2.4%. Total cost of goods sold were under budget 5.5% and A & G expenses for the month were over budget 3.5%. There were net revenues of $505,593 for the month. Total Revenues YTD are better than budget by 3.4%. Member sales for August were 6.5% less than August of 2016, and less than budget by 2.2%. Member Sales YTD are about 3.5% better than budget and total net revenues of $2.5 million YTD, are well above budget.

NMPP Energy- Municipal Energy Agency of Nebraska: Bob Poehling, Executive Director and CEO of NMPP Energy and Tim Sutherland, Director of Wholesale Operations for MEAN (Municipal Energy Agency of Nebraska) gave a presentation on the membership they service and the services provided through their organization. NMPP Energy is a Joint Action Agency similar to ARPA. MEAN is the division within NMPP that provides wholesale power and transmission services to its member utilities. NMPP/MEAN provide services over a multi-state area and MEAN provides wholesale electric service to thirteen Colorado Municipal Utilities and to 69 communities in total.

ARPA has been a member of NMPP Energy for several years and continues to have representatives serve on the MEAN Management Committee.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, October 26, 2017 beginning at 9:00 AM. The meeting will be held by WebCast. ARPA board meetings are open to the public. If any member of the public wishes to participate, please call (719) 336-3496 for additional information.

Friday, September 15th, 2017

 

 

 

BUSINESS OPERATIONS – SEPTEMBER 15, 2017

ARPA Board Reviews Preliminary 2018 Budget- No Rate Increase for the 7th Straight Year: A preliminary budget was presented to the ARPA Board of Directors at its August 31 meeting that includes no rate increase for 2018. This will be the 7th consecutive year of no power supply cost increase for the ARPA member utilities. The budget includes total revenues of $32.5 million, power supply costs of $13.3 million, transmission costs of $2.9 million, and A&G costs of $2.9 million. Debt service, absent a refinancing, will continue at an annual cost of $10.2 million. The budget also includes achieving a 1.28x debt service coverage and full funding for bond reserve accounts as required by ARPA’s bond covenants.

Budget Hearing: The proposed 2018 budget for the Arkansas River Power Authority will be available for inspection beginning November 8th at the City Clerk’s office in each member city. Any interested elector in an ARPA member community or electricity consumer of an ARPA member (Holly, La Junta, Lamar, Las Animas, Springfield and Trinidad, Colorado) may register objections to the proposed Budget prior to its final adoption. The ARPA Board of Directors will hold a public hearing on the proposed Budget at the Otero Junior College Student Center, 2001 San Juan, La Junta, CO., on Thursday, December 7, 2017.

Financial Projection for YE 2017: During the course of the last few years ARPA has developed financial benchmarks to help measure its progress and to use in future planning. The benchmarks not only include available working capital and reserves, but also a tracking of debt service coverage. 2017 is shaping up to be another financially successful year for ARPA as we are projecting an increase in our Cash in Bank of almost 10% by year’s end and net revenues well in excess of $2 million. Our bond reserve accounts are fully funded and debt service coverage at the end of July is 1.37x.

Summary of July 2017 Financial and Operating Statements:  During the month of July, total operating revenues were better than budget by 12.2%. Total cost of goods sold were over budget 6.8% and A & G expenses for the month were right on budget. There were net revenues of $826,916 for the month. Total Revenues YTD are better than budget by 4.4%. Member sales for July were 0.1% less than July of 2016, but remain better than budget by 11.9%. Member Sales YTD are also about 4.4% better than budget and total net revenues of $2.01 million YTD, are well above budget.

Wind Turbine Operations and Maintenance (O&M): At the August meeting, the ARPA Board reviewed its O&M agreement with the Lamar Utilities Board (LUB) for its wind turbines. The ten-year agreement was initiated in April of 2009 and appoints LUB operating agent regarding the ARPA wind turbines. Included in the services provided by LUB are annual and semi-annual servicing of the equipment (filters, oil, lubrication, etc.). In addition, LUB entered into an agreement with NRG Energy for trouble shooting services for both the LUB turbines and the ARPA turbines. NRG provides similar services to the large Colorado Green wind farm south of Lamar. This partnership with the larger utility provides additional expertise and resources for our wind turbine operation. The five turbines (3-LUB and 2-ARPA) have been in operation for more than 13 years and are showing an uptick in maintenance costs as the equipment ages. The total 7.5 mega-watts of wind generation provides approximately 7% of ARPA’s power supply.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, September 28, 2017. The meeting will be held in Trinidad at the Mt. Carmel Health, Wellness and Community Center, 911 Robinson Avenue and will begin at 10:00 AM. ARPA board meetings are open to the public.

Tuesday, August 15th, 2017

 

 

 

BUSINESS OPERATIONS – AUGUST 15, 2017

US District Court (USDC) Files an Amended Final Judgment in ARPA’s Favor: In November 2016, a federal jury in the USDC ruled in ARPA’s favor in a lawsuit filed by ARPA against the boiler manufacturer, Babcock and Wilcox (B&W). The B&W furnished coal fired steam boiler was unable to meet performance and emissions standards according to the contract, and as a result the jury in the trial awarded ARPA $4.19 million in damages. On July 21, 2017, the presiding judge in the case granted ARPA’s motion for pre-and-post Judgment interest and entered an amended Final Judgment that increased the damage award by $3.7 million. B&W has until August 21, 2017 to appeal the verdict in the case.

Mountain West Transmission Owners- RTO Implementation: The Mountain West Transmission Group, consisting of the transmission owners across Colorado, have commenced discussions with the Southwest Power Pool (SPP) to explore the potential benefits of forming an RTO (Regional Transmission Organization) in the West. The formation of an RTO is projected to reduce both transmission and power supply costs; however, there will be cost shifts in the Mountain West service area and those cost shifts could impact ARPA’s costs. ARPA has participated in meetings hosted by the Colorado Public Utilities Commission, the Western Area Power Administration, and SPP regarding the RTO implementation. ARPA will continue to evaluate the impact the RTO may have on operations and prepare for the implementation date, projected to be in the fall of 2019.

Western Area Power Administration Update: A representative from the Western Area Power Administration (WAPA) provided its annual update at a meeting of the Colorado Association of Municipal Utilities (CAMU). As one might expect, the report on reservoir in-flows and storage levels are much improved over past years. WAPA expects the Colorado River Storage Project (CRSP-Lamar allocation) will have excess energy available in 2018. The contract extension/renewals for the CRSP contract will most likely be ready for review and execution by this fall. Renewal of this contract, which terminates in 2024, will extend the contract for another 40 years, or through 2064.

WAPA also provided some positive news as it has notified its customers that as of January 1, 2018, it will take a 14% rate reduction for its WAPA-LAP (Loveland Area Projects-ARPA allocation) service area. This will be the 2nd consecutive year that WAPA-LAP has reduced rates due to a reduction in the “drought adder” component of its power supply costs. Because of the large snowfall amounts this past winter, ARPA was also able to purchase “excess” energy from WAPA, above its monthly allocation, for the months of May and June. The Lamar Utilities Board also benefited from the high snow pack as it also received excess energy above its WAPA allocation for the month of May. The cost of the excess energy was well below market prices.

Trial Judge Orders Settlement Mediation in City of Lamar Case: In late July, the trial judge for the ARPA-City of Lamar lawsuit ordered the parties to engage in a mediation to be completed no later than August 31. This represents a second opportunity for the two sides to reach a settlement that would eliminate a costly trial. If the mediation is not successful, a 4-week jury trial will take place in Pueblo beginning March 5, 2018.

Summary of June 2017 Financial and Operating Statements:  During the month of June, total operating revenues were better than budget by 8.2%. Total cost of goods sold were right on budget and A & G expenses for the month were under budget by 1.7%. There were net revenues of $681,891 for the month. Total Revenues YTD are better than budget by 2.7% as Member sales for June were 0.5% better than June of 2016 and better than budget by 6.7%. Member Sales YTD are about 2.9% better than budget and total net revenues YTD are well above budget at $1.18 million.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, August 31, 2017. The meeting will be held in Lamar at the Cultural Events Center and will begin at 10:00 a.m. ARPA board meetings are open to the public.