Submitted by Lincoln County Power District No. 1
The National Oceanic and Atmospheric Administration, or NOAA, has been reporting for years that the west has been in a period of sustained drought. According to NOAA this drought began in 2000, and with the exceptions of a few years, precipitation and snowpack in the areas feeding into the Colorado River have been below normal. Right now, the U.S. Drought Monitor places 60 percent of the western states under severe, extreme or exceptional drought. This situation and its impacts on electric rates was discussed at the meeting of the Board of Trustees of Lincoln County Power District No. 1 on April 13.
Lincoln County Power is the provider of all electric energy used in Lincoln County. The power district provides retail electric service to most areas of the county, and is the wholesale energy provider to Alamo Power District No. 3 who provides service in the Pahranagat Valley area, and to the City of Caliente who provides service in Caliente. During the board meeting, general manager Dave Luttrell reported on the worsening situation. Using information obtained from the U.S. Bureau of Reclamation, Luttrell indicated that as of mid-March, Lake Mead was only at 40 percent of its capacity and Lake Powell was only at 37 percent. The lake elevations will continue to decline through the year as the upstream snowpack has been 82 percent of normal this year.
The worsening drought situation does have a direct impact on rates for electric service in Lincoln County. Lincoln County Power obtains the majority of electric energy needed from Hoover Dam. Hoover Dam hydropower has been one of the main reasons why Lincoln County Power has some of the lowest rates for electric service in the nation. Luttrell reported that the cost of Hoover Dam hydropower is typically one-half the cost of power available from the wholesale electric power markets. Prior to 2005, hydropower from Hoover Dam supplied all the energy needed in Lincoln County. Since then, as generation has been reduced because of the drought, Lincoln County Power has had to purchase more and more power from the wholesale energy market at higher costs.Because the western drought has been reducing the water supply into the Colorado River, Luttrell reported that the Department of the Interior, Bureau of Reclamation and the states of Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming developed and signed drought contingency plans for the upper and lower Colorado River basins in May of 2019. The press release issued by the Bureau of Reclamation following the signing of the plans indicates that these completed plans are designed to reduce risks from ongoing drought and to protect the single most important water resource in the western United States that supplies water to around 40 million people and 5 million acres of farmland.
Luttrell indicated that the drought contingency plans could be helpful in the long run, but that they may have significant short-term impacts on electric rates in Lincoln County. Under the drought contingency plans, mandatory water delivery cuts will be implemented when Lake Mead and Lake Powell water elevations drop to predetermined levels. The first mandatory cut in water deliveries is expected to occur at the end of this year. Luttrell reported to the board that when water flow through the dams is reduced because of mandated cuts to water deliveries, those dams won’t produce as much electric power.
The federal agencies responsible for operating the dams and marketing the power from the dams are working on updated energy generation forecasts for the next year and the following years. Luttrell indicated this information will become available in early summer and at that time he will be able to determine how significant the changes will be. However, he stated that any energy that is not available to Lincoln County from Hoover Dam will have to be replaced with energy that is purchased at a considerably higher cost.
Luttrell reported that Lincoln County Power is doing what it can to reduce its operating costs, but that it will not be able to absorb a significant increase in power supply costs and will have to raise electric rates for the first time in eight years.
The board asked Dave to begin the outreach process to educate customers on the situation and to begin to take steps to put in place a rate increase.