Last year at about this time I shared news of a rate increase coming from our wholesale power provider, Tri-State Generation and Transmission Association. Tri-State filed a rate with the Federal Energy Regulatory Commission that represented a rate increase and a cost realignment. The realignment reallocated Tri-State’s cost recovery which, unfortunately, recovers more revenue from low load factor systems such as Highline Electric Association. Review my explanation of load factor in my August 2023 article on our website at hea.coop by navigating to Colorado Country Life under the Community tab.
As a result of the cost realignment from Tri-State, Highline completed a cost of service study to aid in implementing the rate change fairly across rate classes. The COS study indicated that we need to implement rates that increased fixed cost recovery and decreased our variable cost recovery. In general, this means increases in access charges and the implementation of, or increase in, demand charges. The increase in fixed charges is countered by little or no change in energy rates, with energy charges decreasing in some instances. It was also evident from the COS study that there was a variance in cost recovery across rate classes. To alleviate this variance, the majority of the 2024 rate increase was borne by increases to two rate classes: Farm and Residential increased 7.1% and Irrigation increased 4.3%.
These changes resulted in an overall rate increase of 3.5% which was half of the rate increase necessary to account for the wholesale rate increase from Tri-State. Highline utilized deferred revenue that was set aside in prior years to cover the shortfall in our 2024 margin. I shared with you at the time that a similar rate adjustment was likely in 2025 to fully implement that wholesale rate increase from Tri-State.
At its December meeting, the Highline Board of Directors approved a rate increase for 2025 that results in approximately the same increases to the same classes as the rate increase implemented in 2024. The percentage increase will vary from account to account based on the individual usage characteristics of each account. This rate increase will go into effect with the bill due on March 17.
For irrigators who participate in our voluntary load control program, there is a bit of a silver lining to the rate change. The discount that irrigators receive for participation in the load control program increased across all five program options last year.
Tri-State has not raised their wholesale rate since 2016. Power suppliers across the Rocky Mountain West have increased their rates over the past few years, so it’s not surprising that Tri-State needs a rate adjustment. Tri-State and Highline have both been subject to the same inflationary pressures that have been felt by all consumers over the last few years.
Highline staff works diligently to provide you, our members, with safe, affordable, and reliable energy. As a nonprofit electric cooperative, we don’t have the same profit motives that drive investor-owned utilities; rather, you, our members are our shareholders and drive everything we do. We will continue to work with Tri-State to provide you with the best value possible in your electric service.
. Author: Dennis Herman, General Manager
