Opalco Rates to Increase

Submarine Cables & Revenue Shortfall Drive Rates Up

OPALCO leadership has approved a new rate structure and 2015 budget that include rate increases for all members. There is no getting around it: we are facing expensive submarine cable replacements beginning in 2015 and continuing for the foreseeable future. In addition, we have to make up for a $1.4M revenue shortfall in 2014 due to warmer temperatures and we expect the warming trend to continue. Read the full story at opalco.com/news. The detailed budget report is available at opalco.com/about/finances.

The typical member will see an average 9% increase in their bill beginning with the February billing cycle. The 2015 budget targets an increase in revenue of 12% overall, but actual impacts to average residential member bills are less due to the redistribution of costs in the new rate structure, designed for greater member parity. Seasonal members and those who put the highest demand on the system will see greater increases as the new structure ensures each rate class pays its fair share of their actual cost of service. The budget also forecasts a 6% revenue increase for 2016-19.

14,000’ of submarine cable weighs about 380 metric tons on its spool. A 9000 square-foot barge will transport and install the cable in the Lopez-San Juan crossing with the assistance of a ROV at depths of up to 290’ – Contributed photo

The cost of replacing our submarine cables has gone up tremendously, mostly due to increased environmental mitigation. The last time we replaced a cable in this crossing (1994), it cost about $5M; the current project is estimated to cost at least $15M. We must build equity and revenue through rates to manage this significant debt service.

A small piece of the rate increase will fund the start-up of our new Internet services entity. The start-up cost is $7.5M over the next three years. The impact of this debt service on our membership will average $3 per member per month for 24 months, included in the facilities charge (approximately 19% of the total revenue increases for 2015 and 2016).

To ensure reliable electric service into the future, we will continue to make the necessary investments in our system, including replacement of aging infrastructure, the grid control backbone and the submarine cables that connect us to the mainland and to each other. We have a unique utility to sustain us in a beautiful and sensitive environment. We all value our natural resources and quality of life in the islands, and it comes at a cost.

For the latest information, go to OPALCO’s website: www.opalco.com.

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