El Paso Electric has some explaining to do
Our local electric utility, El Paso Electric, just submitted its 20-year operating plan for approval by the Public Regulation Commission. It’s a real wallet buster for consumers, and a head scratcher for anyone who follows the utility industry. If you like history, it makes for a revealing excursion into 1960s energy industry thinking. If you enjoy true crime stories, there might even be some larceny in it!
Here are just a few of the many plan features that can use some explaining.
Plant Investment
Four newly built gas-fired power plants dubbed Montana 1-4 are projected to run an average of just 150 hours per year through 2034. When obtaining final regulatory approval to construct the facilities in September 2013, EPE said each plant would operate 3,500 hours per year. The four new plants will cost $370 million to put in service.
Consumers now stand to be charged billions of dollars to keep mostly idle facilities open for 40 years. Is this a case of inept planning, or a deliberate deception by EPE? Either way, should customers be asked to pay for it?
EPE, please explain. (And I hope our attorney general is listening!)
The plan also shows five existing power plants operating between zero and 40 hours per year until they go out of service between 2020 and 2024. That means ratepayers will be stuck with maintenance and financing costs for nine power plants that are idle 99 percent of the time. And be required to pay EPE an annual 10 percent return on all that wasted investment to boot!
EPE, please explain some more.
Reducing peak demand
The only excuse EPE has for operating nine plants less than 1 percent of the time is that they are needed to meet peak electricity demand spikes on hot summer afternoons. If you’re thinking there must be far less costly ways to meet peak power demand, you are right. Adopt proven strategies to reduce peak power use.
A simple pricing strategy has been shown to reduce peak demand in homes by 20 to 40 percent at electric utilities around the world. Charge a steep premium for power used during a few peak-demand summer afternoon hours, and offset it with an even steeper discount for power used during non-peak hours. Called “Time of Use” rate plans, consumers who have voluntarily adopted them report significant cost savings with no loss of comfort.
