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ARPA settlement may happen in 2016

by Bill Knowles

TRINIDAD — In a telephone interview with the World Journal, Trinidad City Council member, business owner, and member of the ARPA board of trustees, Michelle Miles talked about the future of the city, as it is poised on the threshold of growth.

One component of growth is plenty of electricity to support businesses and manufacturing, with rates that allow for sustained growth along with increasing residential demand.

Unfortunately, Trinidad has seen electricity rates for consumers rising over the past 12 years, and is now experiencing some of the higher electric rates in the state.

Much of the power problems started in 1979, when several southern Colorado cities and Raton, New Mexico joined together to form an electric power authority named the Arkansas River Power Authority. It was hoped that the cities and towns forming the association would have a bright future and livable electric rates.

However, between 2004, when plans were put together that would change the Lamar, Colo., power generation plant from a gas fired steam generator to a coal fired generator, and 2016, a series of events and miscalculations drove the overall debt load for ARPA to a staggering $173 million. The bond debt alone is estimated by Standard and Poor’s to be $153 million.

One of those events happened in December 2011 at the newly constructed coal fired ARPA power generation plant in Lamar. During a test firing, the generator exploded, leaving ARPA with one option, to sue Babcock & Wilcox, the Ohio boilermakers who built the generator. The case will be heard this November in Denver.

“The bond debt is currently at about $142 million from the high of around $153 million because ARPA has been making a pay down on it,” noted Miles during the interview. “The bond debt can be refined with different amortization, which will bring down the debt.” But finding a buyer for the bond debt can’t happen until several lawsuits have been settled.

Lamar, which won a first lawsuit against ARPA, will see the dismantlement of the Lamar power generation plant. When dismantled, it will be sold for scrap. “We are in active discussion with other firms for sale of the plant as well,” noted Miles.

But until a second lawsuit against ARPA by Lamar– which will be heard in September– is settled, the bond debt can’t be sold. In that suit, Lamar is pleading to rescind their relationship with ARPA, much like Raton did in 2008.

ARPA has contracted with an electric power wholesaler for energy. “Right now ARPA is purchasing power from Twin Eagle Resources for sale to its customers. We have a contract that has locked in those rates until 2024, so the rates shouldn’t budge at all,” said Miles.

However, the use of transmission lines to move the energy from its origin point to southern Colorado is a separate issue. “There are 30 miles of transmission lines that we use which belong to San Isabel Electric Association. They have raised their rates for the use of the lines by five times more than what we have been paying.” Miles said. What those costs are she didn’t say.

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