Until last week’s fire, the Martin Drake Power Plant provided nearly one-third of the community’s power needs at some of the lowest cost per kilowatt hour. That electricity is being replaced by Colorado Springs Utilities’ own natural gas-fired plants and purchased power from other electric providers in the region. The additional cost for the replacement power is estimated at $3 million per month depending on the natural gas market and summer electric demand.
To recover the additional costs, Utilities will submit a request to increase the Electric Cost Adjustment (ECA) rate to City Council at the May 27, 2014 meeting. The ECA rate would increase to $0.0102 per kWh and would be effective June 1, 2014.
If approved, the change would increase the typical residential customer monthly bill by $5.34, or 7.4 percent. The typical residential customer uses 600 kWh per month. Commercial and industrial customer bills would increase by 10.5 percent to 11.2 percent depending on electric usage.
The proposed rate increase is not designed for and is not needed to cover the cost to repair the Drake Power Plant. Utilities has adequate insurance coverage to get the plant up and running again. Insurance does not cover replacement power costs.
The ECA rate is adjusted periodically to compensate for changing coal, natural gas and purchase power costs. When wholesale fuel costs declined in 2012 and 2013, Utilities passed along the savings to customers through a lower ECA. Higher fuel costs required an increased ECA on March 1, 2014. Colorado Springs Utilities is a not-for-profit entity and sets rates only high enough to cover the cost to provide service.