Los Alamos County Councilor Susan O’Leary poses questions to the Department of Public Utilities during Tuesday’s regular Council meeting in Council Chambers. Photo by Carol A. Clark/ladailypost.com

STAFF REPORT

At Tuesday night’s County Council meeting, Los Alamos County Councilor Susan O’Leary raised questions about the introduction of the electric rate ordinance that she would liked answered as the process moves forward.

“Our County Manager has advised me that tonight’s meeting is the appropriate forum for me to let the Utility Department know about specific issues I’m interested in reviewing as part of the rate setting process,” O’Leary said. “I’m asking for this information now in the spirit of giving the Utility Department a heads-up so they can provide this information and we can keep this process on schedule.”

O’Leary asked the following questions:

• I’d like to understand the Utility Department’s assessment of our utility physical assets, and how the Capital Improvement Projects proposed in the LEIDOS study will ensure the longevity of our utility infrastructure and service quality.  I’d also like to understand the Utility Department’s intentions about the blend of operating revenue and bonded debt financing to pay for these projects and how this decision impacts revenue requirements.

• It would be helpful if the Utility Department would provide us with a summary of electric rate increases over time, so we can see how rates have been managed in the past and what our constituents have experienced as normal operating practice.

• Next, I’d appreciate understanding the status of the Department’s investment portfolio, including a characterization of the investment in the San Juan Generating Station. If the Utility Department and the Board are making assumptions about the future value of those past investments as part of the rate strategy, I’d like to understand those valuation assumptions and how the risk of a loss of value in those investments is factored into the rate proposal.

• In terms of the timing of the proposed rate increase, I’d be interested in seeing a proposal to get to the Department’s desired revenue goal using a series of more modest annual rate increases that are phased in over a longer period, perhaps three or five years.  It would be useful to compare this kind of approach with the current proposal for a single, large adjustment.

• Finally, it would be great if the Utility Department presentation to the Council could review how public input has been incorporated into this rate increase.  I understand that the specific rate proposal will be the result of a BPU decision to move to a cost-based rate strategy. That seems like a major policy decision embedded in the rate proposal, and I’d be interested in understanding how the public’s input was sought and used for this major policy change.

“It seems that the Council won’t formally adopt or validate that strategy by approving a rate ordinance, but by approving the proposed rate change we might be doing so implicitly. So, I’d like to pay close attention to involving the public in that aspect of the decision,” O’Leary said. “I’m asking for this information because the rate proposal coming before us doesn’t represent a single decision. It represents a decision about specific rates that is based on several underlying decisions. This decision by the Council should be about whether the approved rates and the decisions behind them put the County’s Utilities Enterprise on a sustainable path forward.

O’Leary added that it’s noteworthy that for most rate payers in New Mexico, electric rate increases are carefully evaluated by professional staff and members of the New Mexico Public Regulation Commission.

“Because our utility is County owned, we don’t get the benefit of those rigorous external reviews,” she said. “That leaves the Council with a pretty serious responsibility for rate setting, and it’s a topic that merits some serious attention.“

Councilor James Chrobocinski said he also would like O’Leary’s questions answered before he would feel ready to make a decision on the issue.

These questions are now in the hands of the Department of Public Utilities to answer.