City tries 3-pronged push for lower electricity prices
Plaquemine city officials have launched a search for short- and long-term lower electricity prices for City Light & Water customers.
CLECO, which is building a new power plant, and NRG of New Roads, which operates the two “Big Cajun” coal-fired plants are expected to make proposals to sell electricity to the city.
Mayor Mark A. “Tony” Gulotta said officials are looking to those proposals to provide relief from high summer electricity prices. High natural gas prices and heavy usage last summer sent utility bills soaring.
“We have solicited from them, and they have told us verbally their would submit something,” Gulotta said. The last three times the city has asked for proposals, no company has made an offer, he said.
For the moment, natural gas prices are low, around $4.66 per thousand cubic feet (mcf), the mayor said, nothing that is down from $10 in December and $13.70 last summer. The cost of natural gas used to produce electricity is added as a fuel adjustment on utility bills. The city makes 3.5 cents a kilowatt hour on electricity; the fuel adjustment cost is paid straight to the gas company, Gulotta said.
“We have some of the cheapest power that we’ve been seeing since 2002,” he said. “Let’s hope they continue through the summer.”
At its meeting Tuesday night, the Board of Selectmen was expected to authorize a contract with a Baton Rouge consulting firm, Brooks-Harbour and Associates to perform a rate structuring study.
It will be the first comprehensive look at the city’s rates since 1989 when the city paid off the bonds on its steam generating plant, the mayor said.
The study resulted in lower electricity rates. Since then, the city has eliminated the $5-per-utility fee on city services, Gulotta said.
Last week, the city council heard an initial proposal from the Louisiana Power and Energy Authority (LEPA), which is checking its member cities for interest in participating in the construction of two new highly efficient natural gas-fired power plants at Houma and Morgan City.
“It gives you the opportunity to stabilize your cost and take control again,” Grand said.
Plaquemine buys its electricity through LEPA, a consortium of Louisiana cities that searches for the lowest rates. CLECO has made an offer to LEPA, Mayor Gulotta said, noting he asked for a separate proposal for Plaquemine.
“We’re looking for something short-term, something for this summer,” Gulotta said. “The LEPA pr0posal is four years down the road...The more proposals, the better.”
In the early 1980s, Plaquemine officials turned down a chance to participate in a coal-powered plant that currently produces some of the most economical electricity around, Gulotta said.
For most of this decade, when LEPA has found lower electricity to buy, it has not been able to get the transmission rights to transport it to its member cities, said LEPA General Manager Cordell A. Grand.
Replacing generating facilities at Houma and Morgan City with state-of-the-art power plants would make it easier to arrange transmission, he said.
“When we found cheaper power, we found we had to construct more transmission lines,” he said. “The prices have come back as high as $132 million. It killed any economy we might have.
“Like the interstate, they say the lanes are full,” Grand said. “You can get on if you build another lane...What’s happening is the grid is not being upgraded.”
Grand said LEPA is trying to assess the interest of member cities in participating in building the plants before beginning the design process.
“Both areas have a high vulnerability to hurricanes,” said Selectman Ralph J. Stassi Jr. “What happens if both are affected?”
“You look to the grid,” Grand said.
The construction of the new plants would mean that LEPA would no longer maintain and operate the city’s outdated power generating facilities.
LEPA uses city plants to generate power as needed for times of peak usage. The city uses the steam plant as a back-up to provide power when transmission from Entergy lines is cut, as was the case after Hurricane Gustav.
“It would be up to the city,” Grand said. “If other cities buy in, Plaquemine would have to take it over and operate it.”
City officials are looking at the options.
“We’re gong to look at the big picture,” said Selectman Timothy L. Martinez. “...We’re interested.”
“We want the best bang for our buck for our customers,” Stassi said.
“Are we gong to be able to charge our customers less? That’s what the public needs to hear,” Selectman Oscar S. Mellion said.
Additionally, city officials are continuing with plans to organize a community action panel to look at its utility operations.
Gulotta said he had talked with Tim Johnson about having his company help the city organize its panel. Johnson has recommended a group of 15 citizens.
The mayor asked the city councilmen for suggestions of residents who are interested and capable of looking at the complicated subject.