OPD Board Approves Rate Increase

The Overton Power District (OPD) Board of Trustees approved an increase in power rates at a meeting held in Mesquite on March 18. The rate increase will be effective May 1. According to the rate change, customers will likely see power bills increase by $12 to $25 per month, depending on how much power a household uses.

Only six members of the public were in attendance at the meeting. During the public comment period, some of these expressed concerns that the increase would be particularly hard on low income ratepayers and seniors with fixed income. “I’d urge you to take a breath on this. Slow down and consider carefully what the effects of this might be on some people,” said one resident.

But with growth in the area at a stand still, high energy prices and ratepayer population in decline, OPD officials said that they saw few alternatives.

“OPD is a non-profit organization,” said OPD General Manager Delmar Leatham. “Any money collected from customers is used to pay for purchasing and delivering power to customers. There isn’t a middleman. We don’t have stockholders that we have to pay out dividends to. OPD is managed for our customers.”

Leatham showed a list of the rates charged by other power providers in the region for comparison with OPD rates. “As you can see, our rates are solidly in the middle of the pack,” Leatham said.

The highest residential rates charged on the list was Nevada Power which was showing about 41% higher than OPD rates. Leatham added that Nevada Power is currently in the process of raising rates again by a proposed 18%.

The lowest residential rates on the list were charged by Boulder City which were about 38% lower than OPD rates.

The increase being proposed would raise the residential base rate from $13.20 to $20 per month. The base rate is the flat minimum monthly cost paid by all residential household regardless of how much power is used.

“This will put that base rate closer to the actual cost of providing service to the household,” Leatham said. “Currently, the base rate is well below those costs. In fact, our rate studies indicated that the (residential) base charge should be more along hte lines of $28 or $30.”

Leatham explained that since the lower end users are currently paying far less than the cost of service, that cost is being subsidized by higher end residential users and, to an even greater extent, commercial customers.

Leatham said that, in the past, subsidization was used to help low and fixed income ratepayers in the district. “Past increases have kept the base rate low to adjust to the low end user,” Leatham said. “But we have done that so long that it is too far out of alignment. An adjustment is needed.”

Raising the base rate would also address the difficult issue of absentee homeowners, Leatham said. This issue, mainly of concern in Mesquite, deals with snowbirds and owners of vacation homes. These ratepayers do not occupy the residence all week long. Thus, they end up as low end users, receiving the full benefits of that subsidy. “We have to pay for the infrastructure to service those homes all 30 days of the month, even though they are just staying there one day,” Leatham explained. “That cost is being subsidized by folks that live here full-time.”

In addition to the base rate, the residential rate per kilowatt hour (kWh) use will also go up. This rate is divided into three bands of users. For the first 500 kWh used, the rate will increase by 15%. For the next 1500 kWh used the rate will increase by 9%. For anything over 2000 kWh used, the rate increases 3.5%.

The average OPD household uses about 1200 kWh per month.

Leatham told the Board that action of some kind was becoming urgent. The OPD is required to maintain a certain debt service ratio, a measurement showing adequate income available to cover expenses. If the district falls below that threshold, it is required by law to raise rates. If it fails to do so, regulators can step in and mandate a rate increase.

“We are approaching that position now,” Leatham said. “Left as we are now, we would fall below (our requirement) this year if we don’t raise rates.”

The last OPD rate increase took place in 2005.