Welsh officials consider rate stabilization program for electricity use

Published 12:48 pm Sunday, July 7, 2024

Officials here are considering a proposed rate stabilization program that could save the town money on buying electricity during high peak usage.

The goal of the program is to limit the high electricity costs to participating municipalities by relieving spikes on the wholesale side during peak consumptions like extreme cold or heat, according to Louisiana Energy and Power Authority (LEPA) General Manager Kevin Bihm.

Bihm and Assistant General Manager David Bergeron recently presented the program to Welsh officials as a way to help balance the cost of buying electricity through LEPA. The non-profit agency supplies wholesale power to 19 LEPA member municipalities operating their own independent power systems throughout the state.

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Mayor Karl Arceneaux said the program is worth considering, but said more discussions are needed before taking any action.

Bihm said the rate stabilization program would allow LEPA members to put funds into a “bucket” during months when wholesale areas are low and to take those funds out of the “bucket” during high volatility months.

The program is currently being piloted in Winnfield but could soon be extended to other LEPA members. Rayne, New Rhodes and St. Martinville are considering similar programs, he said.

“What was happening is when we had these winter storms, the City of Winnfield’s winter peak would be higher than their summer peak,” Bihn said. “In Louisiana, you know how hot it gets. Everyone peaks in the summer except Winnfield. When they would have these storms, the bills to their constituents would be extremely high.”

As a result of the discussions and engagement of a consultant, a rate stabilization program was created to meet the needs of Winnfield based on the previous year’s budget, Bihm said.

“With our budget that is approved, we looked at Winnfield’s rates for the following year and that is our baseline,” Bihm said. “What we do is a plus 5 percent and a negative 5 percent, so we have a 10 percent bandwidth. As long as our rate to them is in the bandwidth, nothing happens. We just bill them inside that bandwidth.”

Bihm noted the municipality will be charged the lowest rate in the bandwidth if the charge goes below the 10 percent bandwidth.

Any funds charged in addition to what the municipality has to pay is deposited into a separate “bucket” fund to help offset future spikes in rates, he said.

“If you put money in the bucket, it stays there anticipating at some point, you will get a higher rate,” Bergeron said. “It gets applied to the rate then.”

In Winnfield’s case, Bergeron said the city paid over every month and ended the year with a surplus which it was able to use to bring the wholesale retail rate down when the rates skyrocketed during severe winter weather earlier this year. The surplus helped bring the rate down from 6.8 cents per kilowatt hour to 5.4 cents, he said.

As an example, a bill for 2,000 kWh in 2000 would have been $194. 76. With stabiliz