Archive for the ‘Monthly Summary’ Category

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.

Tuesday, June 13th, 2017

 

 

 

BUSINESS OPERATIONS – JUNE 13, 2017

Congratulations to ARPA Award Recipients for 2016: At their meeting on May 25, the ARPA Board of Directors announced the recipients of the Gordon Robertson and Tom Pryor Awards for 2016.

Allen Hill, a former ARPA Board Member from the City of La Junta, has been named the recipient of the Gordon Robertson Award for Distinguished Service on the Board of Directors. Allen was selected 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.

Michelle Miles was named as the Tom Pryor Award recipient for 2016 for Exceptional Contribution to Public Power. Michelle is an ARPA Board Member and a member of the Trinidad City Council. Michelle was recognized for her independent and sound judgment in decision making; her creative ability to find solutions that benefit all; her strong leadership on the Trinidad City Council and ARPA Board of Directors; her vast knowledge in finances and serving as Treasurer of the ARPA Board of Directors; her public service commitment to the citizens of Trinidad and to Public Power; and for her superb negotiating skills and willingness to serve on yet another “negotiating team”.

2017 Integrated Resource Plan: The ARPA Board of Directors approved an Integrated Resource Plan and directed its submittal to Western Area Power Administration. The Resource Plan recommended 2-year and 5-year action plans.
2-Year Action Plan:
• Consider repowering the existing wind turbines;
• Monitor developments related to the Mountain West Transmission Group (MWTG) and its organized energy market;
• Continue low-cost energy efficiency measures;
• Continue trend toward replacing street lighting with LED fixtures.
5-Year Action Plan:
• Continue actions from Two-Year Action Plan;
• Begin process of securing replacement power supply resources at the end of the existing Twin Eagle Resource Management agreement.

Roman Horn Appointed by the Town of Springfield to Serve on the ARPA Board of Directors: Roman Horn was appointed by the Town of Springfield to serve on the ARPA Board for a 4-year term ending December 31, 2019. Roman has been employed by the Town of Springfield for 5 years. He initially worked as the street superintendent before transferring to the electric department where he currently serves as the acting electric superintendent. Roman is not a stranger to the ARPA Organization; he also serves on the Operating Committee. We’d like to welcome Roman to the ARPA Board of Directors and hope he finds his time of service both educational and rewarding.

Summary of April 2017 Financial and Operating Statements: During the month of April, total operating revenues were better than budget by $61,590. Total cost of goods sold were over budget 2.2%, and A & G expenses for the month were over budget by $14,343. There were net revenues of $173,378 for the month. Total Revenues YTD are better than budget by $159,554. Member sales for April were 1.4% better than April of 2016 and better than budget by 3.5%. Member Sales YTD are about 2.8% better than budget.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, July 27, 2017 by WebCast. The meeting will begin at 9:00 a.m. If any member of the public desires an agenda for the meeting or wishes to attend, please call the ARPA office at 719.336.3496 for further instruction. ARPA board meetings are open to the public.

Tuesday, May 16th, 2017

 

 

 

BUSINESS OPERATIONS – MAY 10, 2017

2016 Year in Review: 2016 was a successful year for the Arkansas River Power Authority, especially financially. ARPA, for the 5th consecutive year, had no rate increase in 2016. Our cash position showed an increase of $951,504. Net revenues for the year were $3.6 million. Sales were 1% better than 2015 and 2.5% better than 2014. S&P re-affirmed our credit rating  and we ended the year with a debt service coverage of 1.39x.

ARPA Holds its Election of Officers: The Board held officer elections at its meeting on April 27. Board Members, by resolution, voted to retain the current slate of officers for the next 12 months. Those officers include: David Willhite (Holly), President; Rick Stwalley (Las Animas), Vice President; Michelle Miles (Trinidad), Treasurer; and Arvenia Morris, (Staff), Secretary.

Meet ARPA’s Newest Board Member: Gary Cranson was appointed by the City of La Junta to serve on the ARPA Board for a 2-year term ending December 31, 2018. Gary was appointed to the position previously held by long-time member, A.W. Hill. Gary has an extensive background in electric utility operations having recently retired from a career in the electric utility industry. We’d like to welcome Gary and hope he finds his time on the ARPA Board educational and rewarding. We would also like to thank A.W. for his many years of service (2008-2016).

 ARPA Holds its Annual Pole Top and Aerial Lift (Bucket Truck) Rescue Training: The annual safety training was recently held at La Junta and Las Animas. Staff Members from the La Junta Municipal Utilities led the pole top and bucket truck rescue training which was held on April 19 at the training center north of La Junta. Twenty-one line workers attended the training from the cities and towns of Holly, La Junta, Lamar and Trinidad. On April 25 the City of Las Animas Municipal Utilities led the bucket truck rescue training. This training is held for personnel from the members’ electric and parks departments, and other personnel who operate bucket trucks. There were twenty-one people who attended the training on April 25 including those from the City of Lamar Parks Department and Lamar Light & Power, Town of Springfield, City of Las Animas and Prowers County Road & Bridge Department.

Standard & Poor’s Ratings Services (“S&P”) Affirms ARPA’s Credit Rating:  S&P’s Ratings Services affirmed its ‘BBB-‘long-term rating and underlying rating on the Arkansas River Power Authority’s power revenue bonds. The outlook is stable. S&P’s view is that during the next two years, member rates and energy demand will remain relatively stable given ARPA’s long-term power supply contracts in place. The rating further reflected ARPA’s strengths and weaknesses. Weaknesses included the continued inability to operate the LRP; member rates that are above state averages (although management projects that rate increases over the next few years will be minimal); the loss of load represented by the City of Raton; high debt ratios, and participating member municipalities’ limited service area economies. Strengths identified included a debt service coverage (DSC) that has been restored to covenanted levels in fiscal years 2011 to 2015, improved liquidity and unrestricted cash that is bolstered by a $1.5 million line of credit, currently untapped; a recently signed purchased power agreement that will provide power at a competitive rate through at least 2024; and cost certainty given that most expenses are known and fixed for the next several years. To view the full Standard & Poor’s Rating Report go to: http://www.arpapower.org/docs/Standard_&_Poors_ARPA_28-March_2017.pdf.

Western Area Power Administration – Loveland Area Projects (WAPA-LAP) to Reduce Rates in 2018: ARPA recently learned that WAPA anticipates reducing rates for its LAP customers by 14% effective January 2018. WAPA implemented a drought-adder component to its rate several years ago to repay costs incurred due to drought conditions at its hydro facilities. It was able to reduce that drought-adder rate in 2017 and now anticipates reducing it further beginning 2018. The hydro allocation from WAPA provides approximately 25% of ARPA’s power supply.

Summary of March 2017 Financial and Operating Statements: During the month of March, total operating revenues were better than budget by $42,362. Total cost of goods sold were just over budget 0.2%, and A & G expenses for the month were under budget by $405,617. There were net revenues of $203,163 for the month. Total Revenues YTD are better than budget by $97,964. Member sales for March were 2.4% better than March of 2016 and better than budget by 4.1%. Member Sales YTD are about 2.5% better than budget.

Next ARPA Meeting: The next regularly scheduled ARPA board meeting is Thursday, May 25, 2017 in Holly, CO. beginning at 10:00 a.m. ARPA board meetings are open to the public.

Wednesday, April 12th, 2017

 

 

 

BUSINESS OPERATIONS – APRIL 12, 2017

 Integrated Resource Plan (IRP). The Arkansas River Power Authority is in the process of preparing an Integrated Resource Plan (IRP), as required by the Western Area Power Administration (WAPA) under its Energy Planning and Management Program. ARPA will be accepting written and verbal comments from affected retail customers of the six ARPA communities at the April 27, 2017 meeting and for a ten working day period following the April meeting. At the end of the comment period, all comments received from the public will be reviewed and, if necessary, changes will be incorporated into the IRP. The final IRP will be approved at a public meeting of the ARPA Board of Directors on May 25, 2017. Interested parties may provide written comments directly to ARPA outside of the April 27 public meeting by sending them electronically or via US Mail to the following address: Rick Rigel, General Manager, Arkansas River Power Authority, P O Box 70, Lamar, CO 81052, rrigel@arpapower.org

ARPA Board Discusses Distributed Generation (DG) Policy. With utilities facing an increased interest from its customers and developers to install distributed generation such as wind and solar, it’s only natural that ARPA and its members would experience continued marketing efforts by solar companies. There are many facets to solar developments that must be considered, especially when considering large solar gardens. For instance, what impact would a mid to large solar installation have on power supply contracts, rate structures, and reliability?

The ARPA Board directed staff to continue its efforts on developing a policy for the development of renewable power generating installations including solar developments, and to ensure the policy addresses the following issues:

  • Review of rate modifications that will not increase rates, but would alter how fixed costs are recovered. ARPA’s fixed costs include debt service, administration expenses, and capacity related costs. These fixed costs differ from variable costs such as purchased power and transmission costs associated with energy sales and usage.
  • Evaluate the potential for ARPA to enter into power purchase agreements (PPA) with solar developers above a certain sized installation. For example, ARPA could consider the possibility of contracting with its member community directly for the generated output of solar installation, or contract with the solar developer directly.
  • The Board also discussed whether to place a cap or upper limit on the amount of solar installations it could support in each member community, and as a whole. There are contractual implications related to the sizing of renewable resource developments that will need to be addressed in a policy.
  • Ensure member utility operations are aware of the metering requirements for renewable installations. It is imperative that the utilities be able to capture all renewable generated energy for cost recovery and transmission capacity and scheduling purposes.

Southeastern Colorado Water Conservancy District’s (SECWCD) Pueblo Hydro Project. After an extensive review of the pricing, contract terms and compatibility with existing power purchase agreements, the ARPA Board decided to not pursue a long-term contract for hydro power with the SECWCD. The Board liked many of the attributes the project provided, but ultimately determined that the time and circumstances were not right for the long-term commitment.

Contract Power Rate. ARPA has been working with certain of its members on an economic development effort. After evaluating the potential for an economic development opportunity, and ARPA’s existing tariff structure, the Board directed staff to continue its efforts to evaluate the development of an economic development rate.

Summary of February 2017 Financial and Operating Statements. During the month of February, total operating revenues were less than budget by $44,520. Total cost of goods sold were just over budget 0.9%, and A & G expenses for the month were over budget by $51,585. There were net losses of $220,690 for the month. Total Revenues YTD are better than budget by $55,602. Member sales for February were 3.2% lower than February of 2016 and lower than budget by 2.2%. Member Sales YTD are about 1.8% better than budget.

 Next ARPA Meeting. The next regularly scheduled ARPA board meeting is Thursday, April 27, 2017 by WebCast beginning at 9:00 a.m. ARPA board meetings are open to the public. If anyone wishes to attend, please contact the ARPA office (719) 336-3496 for additional details.