Power Merger

In August of last year, I was approached by David Luttrell , general manager of Lincoln County Power District (LCPD), about the possibility of merging Alamo Power District (APD) and Lincoln County Power District. We met several times to discuss the advantages that merging the two districts would bring to both districts. 

LCPD was interested because they provide electrical power service to the Coyote Springs area and also because LCPD may soon serve the Rachel areal. LCPD staff thought it would be advantageous to have people on this end of the county to provide service to these areas more efficiently. The other advantage to LCPD would be in the event of a power outage resulting from problems on the main line south of Alamo. Currently they have to respond to the main office in Caselton, then approximately an hour and a half drive to address the problem on the line. If there were trained people and repair materials here in the Alamo area, the response time would be greatly reduced.

Alamo Power District was interested because of the possibility of reducing rates to its customers and also to provide better employment opportunities for the current and future employees of the District. Additionally, there would be access to equipment, larger inventory of materials, on-staff engineering expertise, etc. In the event of a major project or serious outage, the crews in Pioche would be available to assist with manpower, equipment, and materials. Also there would be savings in areas that currently both districts pay for: accounting, legal, etc. 

As we began discussions on the staff level, several considerations came up at the very first. APD required that none of the current employees would lose their jobs until they were ready to retire. LCPD’s requirement was that none of the things involved in merging the two districts would result in increased cost to the existing customers of LCPD. Another APD requirement was that all classes of customers would be able to receive benefit from the merger. 

As we began the financial analysis of the merged District, it became apparent that at current LCPD rates, the sales volume in Pahranagat Valley would not support the current employees and expenses incurred in operating the system here. The proposed solution was to create an “area adder,” which would cover the additional costs of operation. This adder would remain in force until the current, long term, employees began to retire. At that time the adder would also be retired, allowing further reduction in rates to the people in Pahranagat Valley. In approximately 5 to 7 years, the entire adder would be eliminated. With the proposed costs, including the area adder, the customers in Alamo would be able to realize approximately an 8 percent reduction in overall rates compared to the current APD rates. This reduction would increase as long term employees retire. 

There has been much discussion on the topic of the structure of the Board of Directors of the merged districts. There have been considerations of the relative sizes etc of both districts. The proposal was that there would be three directors from northern Lincoln County, one director from Alamo and one elected at large. Legal counsel for both districts felt that this did not meet the requirements of the Nevada Revised Statutes, which allows for proportional voting districts or all members elected at large. A legislative option has been considered to change the law to allow the Board of Directors to be established as proposed. This would require some changes in how APD customers would be represented and how they would be eligible to vote and run for office in the new District. 

Currently, APD purchases all power from LCPD at wholesale rates and has no representation on the LCPD board of directors. This is a concern of APD given that LCPD sets the rates for both its retail and wholesale customers such as APD. The merger would provide an opportunity for APD customers to have direct representation on LCPD board in such matters as rates. Due to increasing costs and other legal requirements APD may be forced to increase rates again. 

In order to provide information and answer questions, the Board of Directors of the Alamo Power District will have a public informational meeting to be held Tuesday, July 15, at 6 p.m. at the Pahranagat Valley Elementary School multipurpose room. 

We invite all customers of the Alamo Power District to come and express their opinion and have their questions answered at that time.

Douglas Miller

Alamo Power District #3 GM