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Show Moon Lake Electric rate increase explained The rate increase that Moon Lake Electric members have been notified about will become effective April 26; however, members will not see the increase in-crease until around June 5, according to officials. The increase on the entire Moon Lake system is 22.7 percent of total revenue. Because of properly allocating the expenses ex-penses in both the states of Utah and Colorado, it results in an average revenue increase of 21.3 percent in Utah and 24.1 percent in Colorado. The basic reason for the increase is a wholesale power charge increase from Deseret Generation and Transmission Cooperative (DG&T). DG&T has experienced ex-perienced increased coal costs at the Hunter II Plant because of a poor grade of coal which necessitates more mining and washing so that it is fit to burn at the generating station. The second reason for the DG&T increase in-crease is through their share of the increased in-creased operating cost of the Hunter II Plant. The third reason is because of the increased cost of getting the power from the plant to their members (transmission expenses). DG&T has to maintain a reasonable financial position posi-tion for their banker so the increase is necessary. Officials would like to remind re-mind members that DG&T is also a cooperative, whose desire is to serve their members in the best wav nnssihle j It is not a profit organization. The smaller portion of the increase to be received by members is because Moon Lake lost money in 1981 on the sale of kilowatt-hours. Some of the reasons for the loss from the sale of kilowatt-hours are due to inflationary factors, higher interest payments, and other things recognized in daily budgets. However, the largest reason for this loss is through regulatory lag in putting the proper rates into place when they should be charged. Officials recognize this lag to be as long as seven months in the State of Colorado. Each month of delay adds to the loss, since rates are not recovering the expenses that they should. In determining rates. Moon Lake goes through a very detailed cost of service ser-vice study, as do most utilities. The criteria and guidelines for the cost of service study are set forth by the various State Utilities Commissions. After recognizing that an increase in the total revenue at Moon Lake is necessary. The company must determine deter-mine the appropriate method of collec- ting those revenues. This is where rate design enters the picture. Rate design is the result of the cost of service study and the criteria set down by the Commissions. Com-missions. It is the Commissions' desire to have fairness and equity among the different rate classes so that they will pay their proper share of the expenses of the cooperative. It is for this reason that some rate classes will have an average of only 18 percent increase while other classes will have an average increase of 30 percent. As part of this increase members will see on their bill what is called a Purchased Pur-chased Power Adjustment (PPA). The i example that follows may best explain the reason for the PPA. Moon Lake purchases power from two sources. One source is at a very inexpensive inex-pensive cost, but the company can only purchase a specified amount from that source. The other source of power is much more expensive. As Moon Lake's members require more power, it must purchase it from the higher cost source, which drives up the blended cost to Moon Lake. By Commission orders the company cannot put a cure for this type of problem into the rates that it files, so it proposes to collect that additional expense ex-pense through the PPA which will be listed as a separate item on the bill. |