February 19, 2019 – Press Release
At its February 14 board meeting, the Mountain Parks Electric (MPE) Board of Directors voted to forego a 1.1-percent electric rate increase originally scheduled to take effect on January 1, 2019. MPE’s energy sales during the final two months of 2018 yielded 14 percent above-budgeted revenue and thus negated the need for a rate increase.
“As a not-for-profit electric provider, Mountain Parks Electric increases its electric rates reluctantly,” said MPE General Manager Tom Sifers. “We do our best to control operating costs. Even so, last fall, it really looked like a rate adjustment would be necessary. But when 2018 year-end revenues significantly exceeded projections, the increase was no longer needed. That’s good news for Mountain Parks Electric and our members.”
MPE’s higher-than-expected energy sales were primarily due to cold weather in November and December. On average, November was approximately 12 degrees colder per day in 2018 than 2017, and December was approximately 8 degrees colder per day. There is a direct correlation between cold weather and high electric consumption for heat-related loads like furnace fans, in-floor heat pumps, electric heaters, hot tubs and heat tape. The resulting energy sales negated the need for MPE to increase electric rates and apply deferred revenue to cover its operating costs. That deferred revenue will now be applied to the 2019 budget.
Another contributing factor to MPE’s better-than-expected, year-end financials was new accounting revenue recognition requirements. Under the new requirements, MPE recorded unbilled revenue for electric power delivered but not yet billed as of the end of the 2018 fiscal year. This resulted in an additional $186,000 in revenue that was received in January 2019, but recorded in December 2018.
At a member-initiated public hearing in January, a Mountain Parks Electric member challenged the proposed rate increase, urging the MPE Board to increase the residential kilowatt-hour charge instead of the monthly service charge. At the hearing, the member also questioned the length of MPE’s rate increase notice period, the impact of rate structure on low-usage members, and the effect of wholesale power costs on retail electric rates. MPE is currently investigating extending the notice period for rate increases, aid for low-income/low-usage members and strategies to mitigate wholesale power costs.