VEA Board Approves 9.9% Reduction in Electric Rates
New, lower rates to take effect Jan. 1, 2017
PAHRUMP, Nev (Nov. 22, 2016) – Electric rates for Valley Electric Association member-owners will be cut by 9.9 percent beginning Jan. 1, 2017.
A resolution to reduce rates was approved today by VEA’s Board of Directors at its regular meeting.
“How appropriate that this occur during Thanksgiving Week,” said Board President John Maurer of Fish Lake Valley. “This is a watermark day. We should all be thankful for the blessings that have come our way.”
The rate reduction is a result of the anticipated sale of the Cooperative’s 230-kilovolt transmission line to GridLiance Holdco, L.P., which required a two-thirds approval by VEA’s membership. Approximately 68 percent of the membership voted in favor of the sale. The Board accepted the affirmative vote of the membership, which cleared the way to cut rates. The sale of the system will not become final until regulatory approvals are secured. The approvals are expected to take place during the first quarter of 2017. CEO Thomas H. Husted characterized the transaction as a partnership with GridLiance. It creates enormous benefits for the Cooperative and the membership, he said. VEA will be able to assure reliable power at affordable rates while paying down a significant portion of its debt. Meanwhile, members will enjoy reduced rates, a prolonged period of rate stability, a cash premium of $579 and the largest capital credit retirement in the Cooperative’s history.
Valley Electric Association, Inc., Board of Directors, front row from left: David Dawson, Secretary; John Maurer, President and Rick Johnson, Vice President. Back row from left: Ken Derschan, Treasurer; David Hall and Peter Gazsy, Assistant SecretaryThe lengthy process of closing the sale includes approval from the Federal Energy Regulatory Commission (FERC), and the California Independent System Operator (CAISO). To get to this point in the sale of the transmission system has been “truly a monumental, once-in-a-lifetime event,” said Maurer while signing the asset-purchase agreement Tuesday.The size and scope of GridLiance will allow it to expand the high-voltage system the way it should be but which would have been impossible for VEA on its own, said Husted.Under the agreement, GridLiance will contract with VEA long-term to operate, maintain and manage the system – preserving local jobs and ensuring that the relationships and experience VEA staff have developed will continue to benefit the high-voltage transmission system. The acquisition will not affect the remaining transmission and distribution facilities owned by VEA.Valley Electric’s 230 kilovolt transmission system through Clark and Nye counties was built between 1995 and 2013. The 164 miles of transmission lines run north and south out of Pahrump, connecting the VEA system to the regional transmission grid. The system was an entirely self-funded project that established critical redundancy, or backup service, to electric users so they would not have to face brownouts or blackouts that plague other areas of the nation.The system, which cost approximately $90 million to construct and took 20 years to complete, dramatically increased in value after VEA joined the California Independent System Operator Corporation (CAISO) in 2013. Membership in the CAISO placed the system in the California market and under CAISO’s regional tariff. In addition to optimizing the 230 kV transmission system economically, joining CAISO created enhanced opportunities for renewable generation in VEA’s service territory.While building the system created much-needed reliability for VEA, the cost of ownership (debt service, operation, maintenance and depreciation) is high. As the demand for renewable energy resources in California continue to increase so has the value of VEA’s high-voltage system, which is now part of the California service area.In May of 2016, VEA issued a request for proposals to sell the HVTS, comprising approximately 164 miles of 230 kV transmission lines and related substation equipment. Multiple companies submitted formal bids, and two finalists were further evaluated by the VEA Board before they selected GridLiance as the successful bidder. GridLiance will pay 2.4 times net book value for the assets, assume outstanding debt, and provide additional value that brings the total consideration to $200.6 million.