Proposed GCEA rate increase meant to cover rising costs

GCEA board trying to dampen impact of inflation

By Mark Reaman 

The proposed Gunnison County Electric Association’s rate increase is expected to provide about $1 million more per year to the local electric co-op. The 5% increase would begin this spring so only $832,000 would be collected in 2024.

Several reasons are responsible for the proposed increase, including a rise in the cost of wholesale power from Tri-State Generation and Transmission Association along with general inflation. GCEA chief executive officer Mike McBride said the local co-op was hit with a the rate increase from Tri-State for wholesale energy this year and while it was the first increase from them in seven years, the local rate increase proposal is not even covering the entire bump. 

“This proposed rate increase is not primarily due to the Tri-State increase since Tri-State has not passed along a rate increase to GCEA in seven years, and this increase from Tri-State amounts to less than 1% per year on average over that time. Several factors contributed to this proposed rate increase, including inflation, supply chain challenges and the 6.6% rate increase from our wholesale power supplier,” he explained. “Our projections indicate we need a 6.8% rate increase to cover our increased expenses in 2024, but the board of directors elected to mitigate and absorb a significant portion of the cost increase. By limiting the rate increase to 5% and deferring it until March 1, the board helped members keep $660,000 in their pockets.”

According to McBride, the GCEA board also strategically delayed the rate increase to start on March 1, 2024, to assist members during the months of highest electricity usage. He said that in doing so, GCEA will absorb approximately $260,000 in increased costs, “helping members keep even more in their pockets.”

All GCEA rate classes will be impacted by this rate increase, which will be distributed across the monthly service availability charge, demand charge (for large power and industrial accounts), and the energy or kWh charge, as indicated by its most recent cost of service study. Residential accounts will see a $3 increase to their monthly service availability charge plus an increase to their energy (kWh) charge. Basically, the average residential consumer using roughly 704 kWh per month will see a $6.87 increase to their average monthly bill. A residential consumer-member using 1,000 kWh/month would see an average monthly increase of $8.53. 

GCEA rates have gone up 10.7% in the last five years and 17.7% over the last decade. “By comparison, the CPI (Consumer Price Index) projected increase is 21.3% over the five-year period ending in 2024 and 29% over the 10-year period ending in 2024 (using the October 2023 consensus estimate of 3.2% for 2024),” explained McBride.

There is no requirement for the state Public Utilities Commission to approve the proposal, only the GCEA board of directors is required to vote for approval of the rate increase. McBride made clear that the board has not yet voted to approve the increase. “The board authorized publication of the proposed rates and there was no dissenting vote,” he said. “There was unanimous support for the mitigation actions taken to lessen the impact on members.”

A virtual public meeting was held on Tuesday, January 9 to let GCEA members ask questions and make comments about the proposal. There were no direct protests over the proposed rate increase, but a few people asked if other cost savings measures were being considered. GCEA chief financial officer Mark VanderVeer said he has studied the budget line item by line item and not seen a lot of places for cuts.

“We recognize that costs are increasing in nearly every sector of the economy and GCEA members are being financially impacted by this proposal,” McBride concluded. “We hate to raise rates and I hope that the actions taken by the board to minimize the rate increase and its impact show GCEA’s commitment to our members.”

The board will officially discuss and vote on the rate increase proposal at its January 24 meeting.