The
INSIDE Discussion on grief
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Lopez man’s jail death under investigation
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Bach in B-Minor
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Islands’ eekly W
VOLUME 38, NUMBER 14 • APRIL 14, 2015
What lies behind OPALCO’s rate increases? (Editor’s note: The following is a guest column. To read more about recent OPALCO meetings visit islandsweekly.com.) By Chom Greacen Special to the Weekly
If you find the electricity rate increases, 12 percent this year and 41 percent by 2019, rather shocking, what’s behind the rising rate is even more alarming. Given OPALCO’s broadband busy-ness lately, how much of the rate increase is due to broadband? OPALCO’s answer is only an average of $3/member/month for 24 monthsi, roughly $1 million total. So what explained the sudden need for 41 percent increased revenues or $28 million in accumulated total by 2019? The explanation we often hear from OPALCO is 1) warming
temperatures and 2) the submarine cable between Lopez and San Juan. By OPALCO’s estimate, the warmer temperatures caused a $1.4 million revenue shortfall, a tiny sum compared to the $28 million. The $15 million price tag for the submarine cable is a big surprise, but when amortized over 30 years at 3 percent, contributes only $759,000 to OPALCO’s annual expense. In contrast, the increase in revenue requirement in 2015 is $2.7 million. So what else lies behind the rate increases? The answer is “grid control backbone,” OPALCO’s code word for fiber optics infrastructure. The obscure terminology is convenient because OPALCO tries hard to
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Contributed photo / OPALCO 2015 Budget Report, Graph by Chom Greacen
Selected capital expenditures of OPALCO. The appearance or increases of these costs coincide with OPALCO’s venture into broadband but are booked as “electrical expenditures” and paid for through the increased electricity rates. divert negative attention away from its foray into the broadband business. They work hard at messaging that the rate increases are not because of broadband but rather an unavoidable need on the electrical side. But is this so? Looking closely at OPALCO’s 2015 budget, one will find an intriguing pattern of capital expenditure. Certain “electrical business” items on OPALCO’s capital projects budget happen to skyrocket or suddenly manifest, in tandem with the startup of the broadband business (see graph). For example, “underground cable replacement” (reads: fiber optics trenching) expenditure in 2014 quadrupled that of the pre-broadband years. The appearance of such new line items as “Headquarter facilities” (office expansion) or “Computers/servers/
Ad Sales Deadline: Non-Glossy: April 22, 12 pm Publication Dates: May 20, 2015 For more information call Cali Bagby at the Islands’ Weekly 376-4500
software” coincided with OPALCO’s venture into broadband. And so did the $7.5 million expenditure on “Fiber/microwave infrastructure.” These items add up to over $25 million, dwarfing the $15 million submarine cable. Besides capital expenditures, operations budget is also skyrocketing. “Member communications” (PR machine) expenses have more than doubled and will triple, and so will
“Grid control communication design” expenses. Two Communication Technicians positions and an apprentice are on the (electric) Operations Department this year. Perhaps these rising costs and investments are partially justified and costeffective from the electrical perspective. Still, questions remain. How much of these budgeted costs are beyond electrical necessity? And will there be more to come? OPALCO’s attempt to hide its charitable but costly act of “facilitating” broadband under the “electrical” rug not only causes hardships on membership, but also violates our trust. The financial outlay of what
2nd annual
THE BITE OF LOPEZ Friday, April 24th 4 – 8 pm Lopez Center Join us under the tents for a sampling of tasty bites from several of our local chefs.
APRIL 25th Don’t miss the fun – our 12th year 4 routes, rest areas, BBQ lunch, beer garden, music by ISLE ZEN, raffle
Eat-in or Take-out Beer garden & music by LOS HERMANOS
Early check-in for Tour De Lopez riders
To register check our website www.lopezisland.com
Join the fun!
Volunteers also welcome!
Sponsored by Lopez Island Chamber of Commerce
ATTENTION CLASS OF 2015
Your Senior Memory (Full Name, Plans and Dreams for the Future, Most Memorable Moments, If you could pick a super power, what would it be and why?. 150 words max) and Senior Photo are due by May 15th. Please submit your entries to: Kathryn Sherman ksherman@sanjuanjournal.com
OPALCO is doing now may be no different than the failed broadband plan that OPALCO put forward to the membership two years ago. The key differences are: two years ago, we at least had a chance to see the business plan with known impacts on the rates ($15/ member/month across membership plus additional fees for subscribers), and we were given the opportunity to vote yay or nay with our checkbook. Now, there is very little transparency of information regarding OPALCO’s broadband costs, plans and rate impacts, but the electricity fixed charges have been approved to rise to $78/ month by 2019, an increase of $50/member/month from year 2014. Worse, the members-owners had no say this time but to pay up or get disconnected due to unaffordability. What is more alarming is the fact that the rising costs and investments, not to mention the debt OPALCO got itself into to provide a $7.5 million loan to the new internet service company (NewCo), has pushed OPALCO financially over the brink. For the first time in decades, OPALCO was unable to meet a debt service coverage ratio (called “TIER”) and thus violated its SEE INCREASES, PAGE 3