On Tuesday, Nov. 27, the board of directors of the Delta-Montrose Electric Association (DMEA) unanimously approved the cooperative's 2013 budget. The staff and board of DMEA have recommended that the approved budget does not pass along any of the most recent rate increase from Tri-State Generation and Transmission Association, Inc. (Tri-State), DMEA's wholesale power provider.
The budget also has a provision allowing the board to re-evaluate the effect of the Tri-State rate increase and make any adjustments that may be deemed necessary after the first quarter of next year.
In October, Tri-State announced that it would impose a 4.9 percent (over $2.4 million) rate increase to its member distribution cooperatives, including DMEA, for 2013. This increase follows a 5 percent (over $2 million) increase in 2012 which was added to the 4.1 percent ($1.8 million) increase which first appeared in 2008 and has continued since then. According to Tri-State spokesman Jim VanSomeren, the Tri-State board of directors elected to impose these increases to meet, among other needs, rising fuel costs, regulatory costs, and its own set of financial goals.
Like most budgets, DMEA's 2013 budget represents the best estimates for the upcoming year's projected revenues and expenses. When formulating the budget, DMEA considered the impact of the Tri-State increases, current economic conditions and the cost of maintaining the high level of services and reliability to which DMEA's members are accustomed. "Although DMEA's controllable costs have remained relatively flat, DMEA continues to try and minimize the effect of increasing costs from our wholesale power supplier Tri-State," said DMEA chief financial officer Bill Mertz. "We've achieved this by finding other measures to help contain or manage those costs upon which DMEA does have direct influence."
Over the years, DMEA has been able to achieve substantial savings through the advancement of technology, saving members money through energy efficiency programs and diversifying DMEA's sources of energy with renewable projects such as the South Canal hydroelectric project and the community solar array. "We're pinning a good deal on the South Canal," noted board director Tony Prendergast. Initial analysis indicates that as much as $1,188,000 of cost savings may be achieved by the power production from the South Canal hydroelectric plant.
In addition to the benefits projected from the South Canal Hydro Plant, DMEA took other assertive cost-containment measures to help absorb an additional $580,000 of the Tri-State rate hike. Expenses including travel, training, outside services, materials and supplies were carefully evaluated and budgeted to levels that helped to maintain mission-critical operations. Also, DMEA expects to achieve savings by not filling a number of positions that have recently been vacated. In addition, management employees will experience a salary freeze and caps on their medical and retirement plans.
These cost-cutting measures have caused concern for some including the DMEA Member Advisory Council (MAC), a volunteer group that serves as a liason between the DMEA board, and staff and the broader communities of the service territory. In a letter to the board, the MAC expressed concerns, "...that reliance on probable future offsets and continued belt-tightening... may negatively affect services and programs, as well as the maintenance of necessary, qualified, and experienced staff." The letter went on to say, "Such methods, we feel, used in order to prevent or postpone passing along ... these externally-imposed rate hikes may be approaching a 'too-close-to-the-bone' situation."
For now, however, members can count on their rates to remain the same.blog comments powered by Disqus