2014 Summary of Activities
December 19, 2014
ANNUAL SUMMARY OF ACTIVITIES
This report is provided as a summary of the activities and accomplishments of the Lincoln County Power District No. 1. For additional details on activities listed in this report, please contact David Luttrell at the Lincoln County Power District No. 1 by telephone at 775-962-5122 or by email at firstname.lastname@example.org.
The Power District did not implement any rate changes in 2014. The Power District continues to offer some of the lowest rates in the State of Nevada, including the lowest rates for commercial service in Nevada, the second lowest rates for irrigation service in Nevada behind only Raft River Rural Electric Cooperative and the second lowest rates for residential service in Nevada behind only Mt. Wheeler Power.
- From December 2013 to November 2014 the Power District sold 10,417,376 kWh to its residential customers for a total cost of $920,739.06. This results in an average composite rate to the Power District’s residential customers of 8.84 cents/kWh. This is well below the Nevada statewide average of 12.89 cents/kWh and the national average of 12.94 cents/kWh for residential service.
- In 2014 the Power District provided power to the City of Caliente, Pioche Public Utilities, and Alamo Power District No. 3. The composite rates for the power sold to these organizations from December 2013 to November 2014 as follows:
- Alamo Power District, total cost $893,439.36, total energy sold 15,001,200 kWh, for a composite rate of 5.96 cents/kWh.
- City of Caliente, total cost $710,604.11, total energy sold 11,976,960 kWh, for a composite rate of 5.93 cents/kWh.
- Pioche Public Utilities, total cost $507,224.99, total energy sold 8,194,200 kWh, for a composite rate of 6.19 cents/kWh.
The Power District continued to aggressively implement its plan to rehabilitate the aging electric infrastructure in Lincoln County.
- Projects completed in 2014 included:
- The main distribution line that runs through the southern portion of Meadow Valley was rebuilt. This project represents the start of a larger, multi-year effort to rebuild the entire line. When completed, the project will give additional capacity in Meadow Valley and will provide significantly improved reliability for much of the Power District’s northern system.
- The electric distribution system in the Geyser area was repaired and upgraded, including adding anti-perch devices to eliminate electrocution of eagles commonly found in the area.
- The 75 year old overhead electric system in Caselton was replaced in its entirety with new underground distribution lines. The new system will improve reliability, lessen the fire hazard from overhead line contacts with trees, and improve aesthetics.
- A portion of the overhead electric system in Panaca on Hansen Street was placed underground to eliminate continual tree trimming maintenance costs and tree contacts with overhead lines.
- An extensive maintenance effort in the Eagle and Rose Valley areas, including tree trimming, replacement of deteriorated poles and crossarms, and replacement of aged cutouts and lighting arrestors was completed.
- During the year the Power District completed design and procurement of materials for the rebuild of another section of the main 69-kV transmission line from Bennett Pass to the Power District’s substation near Caselton. The Power District will complete this work with its in-house crew at an estimated cost of $836,000. Completion of the project with in-house staff is estimated to save $102,000 as compared to using an outside contractor. The Power District will break ground on the project in the spring of next year.
During 2014 the Power District continued to purchase all of the power used in Lincoln County from two sources, Hoover Dam through a contract with the Colorado River Commission of Nevada; and supplemental purchases from the wholesale market through the Silver State Energy Association.
- Purchased power expense is the largest single cost incurred by the Power District. For the Fiscal Year Ending May 2014, purchased power expense accounted for 50.8% of the Power District’s annual revenue requirements, excluding depreciation.
- Given the drought in the Colorado River drainage basin, and reduced generation from Hoover Dam, the Power District will purchase 12,931,000 kWh of supplemental power in 2014, which represents about 14.3% of the Power District’s need.
- The composite rate for supplemental power purchases made by the Power District in 2014 is expected to be 3.68 cents/kWh. This wholesale rate is lower than that available from other sources including local biomass projects. This low market price for supplemental power is due to the current low price for natural gas which has existed for the past several years. Prices for wholesale supplemental power are forecast to increase in the future and may reach 4.89 cents/kWh by 2018.
- Because the need for supplemental power is expected to increase and because the rates for supplemental power are forecast to increase in the future, the Power District continued to actively looking for ways to stabilize the cost of its supplemental purchases.
- In 2014 the Power District conducted and an extensive feasibility study on constructing a small scale solar project on its property near Panaca. A summary of the Power District’s finding in that report are:
- The 17 acres of land owned by the Power District is ideally suited for a small scale solar photovoltaic project. Although this site was purchased for a future relocation of Lincoln’s headquarters, there is sufficient room at the site to accommodate both purposes. It is believed the site could accommodate up to 900 kW of fixed axis, solar photovoltaic development in addition to its planned use for the Power District’s headquarters.
- Given budgetary limitations and to provide the Power District with an opportunity to develop expertise in solar installations, the Power District plans solar development at the site to occur in a series of phases over a ten year period, with the first phase being constructed at 90 kW.
- Given a) the price for solar panels has dropped significantly, b) the Power District will construct the plant with its in-house crew, and c) the Power District has already received partial grant funding for the project; the resulting equivalent rate for power generated from the proposed 90 kW solar photovoltaic project is expected to range between $0.043314/kWh to $0.049829/kWh in 2014 dollars.
- Accordingly, the project is expected to generate at a cost point lower than the cost of wholesale market power available to the Power District within a period of one to five years after its completion, and to provide other benefits as indicated in the feasibility report.
- The Power District’s Board approved proceeding with the 90 kW solar installation on its property near Panaca at its December 8, 2014 meeting. Construction is expected to begin in the summer of 2015.
The Power District provides direct retail service throughout Lincoln County and Coyote Springs, excluding those areas served by the Alamo Power District No. 3, City of Caliente, Penoyer Valley Electric, and Pioche Public Utilities.
- In 2014, working with the board and customers of Penoyer Valley Electric, PVEC transferred its utility responsibility and utility assets for the town of Rachel and the surrounding area to the Power District. The Public Utility Commission of Nevada approved the transfer in June of 2014 and the Power District assumed full utility responsibility.
- During 2014 the Power District and the Alamo Power District jointly explored the possible merger of the two power districts. Although studies revealed the merger could provide a reduction in electric rates to the consumers in the Pahranagat Valley area, the respective boards elected to not proceed at this time but may consider this topic again at a later date.
- The Power District has been working with the Union Pacific Railroad in regard to a new underground power line that will serve UPRR facilities between Caliente and the Utah State line. Construction of the line will begin in January 2015. Although a final contract has not yet been signed by the Power District or the UPRR, the Power District is working towards a goal of being able to offer electric service to the residents of Acoma and Barclay in 2015. Preliminary meetings with residents in those areas have already occurred.
Long Range Planning
The Power District continues to plan for the long-range electric power needs for all of Lincoln County.
- The Power District and other members of the Silver State Power Association have applied for a right-of-way grant from the Bureau of Land Management that will allow transmission facilities to be constructed to serve the SSEA member utilities and allow for efficient interchange of resources. One section of the alignment was proposed through an area near Las Vegas encumbered by the Sunrise Instant Study Area, thereby delaying federal action. Through lobbying efforts by the Power District, other SSEA members, and other interested parties, Senator Reid included language in legislation in 2014 that removed the ISA designation thereby allowing the BLM to proceed to process the SSEA’s application. A right-of-way grant offer is expected within the next two years.
The Power District continued its tradition of community involvement in areas relating to its core business during 2014.
- The Power District provided $12,712.98 in grants for weatherization of low income homes in Lincoln County, regardless of their utility, through a partnership with the Rural Nevada Development Corporation.
- The Power District provided $1,377.50 in rebates to citizens from all over Lincoln County, regardless of their utility, for purchase of energy efficient cooling and heating systems.
- The Power District provided 600 CFL lights to citizens from all over Lincoln County, regardless of their utility, without cost.
- The Power District applied for and received a grant from the Nevada Governor’s Office of Energy to replace street lights in Alamo and Panaca. In conjunction with Alamo Power District, this work was completed during the fall and will reduce each of these town’s monthly street lighting costs by 52%.
- In conjunction with the National Rural Electric Cooperatives Association, the Power District is making available an opportunity for four students from Lincoln County to travel to Washington, D.C. and participate in the NRECA national rural youth tour.
- In 2014 the Power District continued its summer student employment program, providing work experience to local youth.
- The Power District provided two $1,500 scholarships to graduating seniors, one from Lincoln County High School and one from Pahranagat Valley High School.
- The Power District conducted a survey of its customers to assess interest in a community solar project. Six customers indicated a desire to provide funds and participate in a project. As a result, the concept of a community solar project will be included with the solar project discussed under the Renewable section above.
- The Power District continued to provide monthly safety training to employees of all utilities serving the Lincoln County area at no cost to these other utilities.
Cost Reduction and Other Efforts
The Power District continued efforts to reduce costs in order to achieve its stated goal of holding electric rates at current levels through October 2017. To achieve that objective:
·In 2014, the Power District completed restructuring of its outstanding long-term debt. This debt, which was incurred in 1994 to support transmission improvements, still had ten years left on its term. Working with Nevada Bank & Trust, the Power District was able to take advantage of the lower interest rates and retired the long-term debt and replaced it with a short term loan from NB&T. This restructuring of debt will save Power District customers $136,700 dollars over the next ten years.
·Over the past several years the Power District has worked to improve safety through revised practices, training and appropriate personal protective equipment. Because of the Power District’s employee’s outstanding safety record the past several years, Federated Insurance, the company that insures the Power District will be reducing the Power District’s workers compensation premium. The premium will be $4,977 lower per year in 2015 than it was in 2011.
·In the summer of 2014, the Power District completed a redesign of its web site. The web site had been in use for six years and was in need of a facelift. This original website was developed, managed and hosted by an outside contractor. The Power District realized that if it took over development and management of the site it could not only quickly update the site when necessary, but could also reduce the cost. Managing the web site in-house is expected to save between $1,000 and $2,000 annually.
- During the year the Power District formed a committee comprised of employees and Board members to review the Power District’s health insurance plan in an effort to see if changes could be made that provided employees with appropriate protection while simultaneously reducing costs to the Power District. The committee undertook the task and over a seven month period developed a proposal to change the Power District’s health insurance to a high deductible plan in conjunction with health reimbursement accounts for employees. The plan was adopted by the employees and the Board and will take effect January 1st. The plan is expected to reduce costs by $42,000 next year.
 Includes all charges (energy, customer, PPAC, MLRA) except loan charges or late payment charges.
 U.S. Energy Information Administration, Table 5.6.A, Average Retail Price of Electricity to Ultimate Consumers by End-Use Sector, by State, September 2014 and 2013 (Cents per Kilowatthour).
3 Includes all charges (energy, demand, customer, PPAC, MLRA) for the Sales for Resale delivery, except loan charges or late payment charges
 December 2014 is estimated.
 December 2014 is estimated.
 The market price report “Electricity West” prepared by Tradition/TFS Energy, LLC for the Mead 230 kV delivery location.