COMMERCIAL OPERATIONS – September 2022: The Prowers Journal


ARPA Board of Directors reviews draft 2023 budget: A preliminary budget was presented to the ARPA Board of Directors at its August 25 meeting. Budget includes total revenue of $30.6 million, power costs of $14.9 million, transmission costs of $3.5 million, A&G costs of $1.2 million and debt service costs of $8.3 million. The budget also includes achieving 1.29x debt service coverage and fully funding bond reserve accounts as required by ARPA bond covenants. There is no rate increase included in the 2023 budget. ARPA passed a rate cut in 2021 that is being carried forward into its 2023 budget, and the lower rate is expected to remain in effect through 2024. he budget hearing and final approval of the 2023 budget is scheduled for December 1 at the board meeting. to be held at La Junta.

FitchRatings Reaffirms ARPA Investment Grade Credit Rating of BBB- with Stable Outlook: Fitch Ratings recently affirmed its BBB- long-term investment grade rating on Arkansas River Power Authority Electricity Revenue Bonds. The outlook is stable. The rating reflects ARPA’s strong revenue defense capability and strong operational risk profile. ARPA’s strong revenue defense capability stems from its long-term wholesale electricity supply contracts and the independent legal ability of ARPA and its members to increase electricity rates if necessary. Operating risk is characterized by a low operating cost burden, reflecting ARPA’s low power purchase costs. ARPA’s electricity supply is provided primarily through a power purchase agreement until January 31, 2025. Identified rating weaknesses included ARPA’s increased debt service due to the issuance of debt related to revenue bonds associated with the Lamar repowering project. The full Fitch Rating Report can be viewed here.

Summary of financial and operating statements for July 2022: During the month of July, electricity sales revenue was 0.5% below budget and total cost of goods sold was 5.9% below budget. Net income for the month was $803,576. Year-to-date, revenue from electricity sales is 0.5% below budget and cost of goods sold is 4.4% below budget. Net revenue year-to-date is $4.53 million. Member energy sales were 1.1% below budget in July and 1.4% lower than July 2021. Year-to-date member sales are 0.7% below budget. budget and 0.9% higher than in 2021.

Update on the impact of the drought from the Western Area Power Administration on hydroelectric facilities: The current drought has severely affected the hydroelectric generation allocations that ARPA has with the Western Area Power Administration (WAPA). ARPA has a Loveland Area Projects Generated Hydropower Allocation (WAPA-LAP) and the Lamar Utilities Board has a Colorado River Storage Projects Allocation (WAPA-CRSP). These two allocations collectively provide approximately 28% of ARPA’s power supply.
WAPA-LAP (the larger of the two allocations) has notified the implementation of a “drought addition” to its tariff effective January 1, 2023. The tariff adjustment will increase the WAPA-LAP rate to ARPA by approximately 16%. ARPA absorbs the increase and does not anticipate any rate increase resulting from WAPA’s rate adjustment.
WAPA-CRSP had to increase its throughput and reduce deliveries to its customers due to lower water levels that support hydroelectric generation from its Glen Canyon Dam facility. WAPA-CRSP implemented a “Deliverable Sales Amount” (DSA) program effective December 1, 2021, which reduced electricity deliveries to its customers by approximately 30% and increased tariffs by 11%. ARPA provides the delivery shortfall to Lamar while WAPA assesses the impact of the two-year program and its long-term options for meeting its hydroelectric delivery obligations.

Next ARPA meeting: The next regular meeting of the ARPA Board of Directors will be held on Thursday, October 27, 2022. The meeting will be held at the Otero Junior College Student Center, 2001 San Juan in La Junta, CO. Notice of meeting and agenda will be posted on the ARPA website ( below Public notices and will also be posted in a designated place in each of the member cities at least 24 hours before the meeting. ARPA Board meetings are open to the public.

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