The Valley Electric Association board of directors will consider an average 7.47 percent increase in retail rates at their monthly meeting at 9 a.m., Nov. 24, at the VEA meeting room, 800 E. Highway 372 in Pahrump.

If approved, the rate adjustments will become effective Jan. 1. VEA members should be notified of the proposed increase by mail early next week.

A Pahrump meeting on the rate increase has been scheduled for 6 p.m., Nov. 14, at Pahrump Valley High School, Nov. 18 at the Amargosa Valley Community Center, Nov. 19 at the Beatty Community Center and at 5 p.m., Nov. 20, at the Dyer Community Center.

Increased wholesale power costs and pending infrastructure projects were blamed.

Valley Electric Association Chief Executive Officer Tom Husted said, "In 2009 the wholesale power costs are projected to increase 8.5 percent over 2008, and since the last rate adjustment in 2006, wholesale costs have risen by 18.11 percent."

The decision was made after the VEA board and management examined the 10-year, long-range financial forecast, a cost of service study and revenue requirements study to determine the rate of return needed on revenues to meet expenses.

They determined a rate adjustment is necessary to maintain the cooperative's financial obligations and objectives, VEA officials said in a prepared statement.

While VEA officials estimate 7.47 percent is projected to generate necessary revenues, specific impacts on each rate class may vary.

Residental rates will rise 8.5 percent, from 10.27 cents per kilowatt hour to 11.25 cents under the proposal.

The general service rate class will be divided into three categories: less than a 50 kilowatt demand load, with rates increasing 4.63 percent from 10.07 cents per kilowatt hour to 10.79 cents; commercial service from 50 to 249 a kilowatt load, rising 7.39 percent from 8.61 cents per kilowatt hour to 8.46 cents; and commercial usage 250 kilowatt and over, which will rise 4.08 percent to 8.41 cents.

The good news is VEA doesn't anticipate having to renew the power cost adjustment put into effect several years ago of 1.9 cents per kilowatt hour, in 2009. But the minimum charge for residential rates will increase from $20 to $35, which will take effect if a homeowner uses less than $35 electricity per month. Last year on average 770 accounts sat idle, about 4 percent of the total.

The cooperative uses hydropower for 18 percent of its energy resources, the cheapest source of energy in the range of 1.8 cents to 3 cents per kilowatt hour, but supplies have been diminishing.

Contract purchases account for 64 percent of VEA power needs, which meets most of the base load. A contract with Powerex expires Dec. 31. A new contract was signed with Sempra Energy Trading and Constellation Energy Commodities Group, which runs from Jan. 1, 2009 through the end of 2012.

"While gasoline has come down, the cost of other energy sources has not come down," Husted said.

The primary source for the generation of energy in the Southwest is natural gas, he said.

Wholesale power costs for the cooperative are rising from an average of 6.1 cents to 6.619 cents per kilowatt hour. In 2006 the rate before the last increase was 5.6 cents/kwh.

Spot purchases on the energy market account for another 14 percent of VEA needs, to cover peak loads, the most costly purchases.

VEA policy allows the cooperative to purchase power on a futures market, to hedge against price spikes.

Electricity loads are monitored on an hourly basis to ensure consumers have power at the lowest market cost, VEA stated.

The second major reason for the increase is capital infrastructure.

Over the next two years VEA will undertake the largest capital expansion in its history, the cooperative said in the press release.

The construction of a 58-mile, 230-kilovolt transmission line from Pahrump connecting up with the NV Energy line from northwest Las Vegas to the Nevada Test Site, estimated to cost $27.7 million, is scheduled to start soon.

The project has been in the planning and permitting stage for 10 years. The U.S. Bureau of Land Management issued the right-of-way permit for the project within the past month.

A 138-kilovolt transmission ring around Pahrump will intersect with the 238-kilovolt line at the Pahrump and Vista substations.

Interconnection options will be possible for renewable energy projects in the Amargosa Valley and Beatty areas.

VEA said it may need to re-evaluate and possibly adjust rates again in 2010 and 2011. They are expected to be smaller percentage hikes, to make up for increased wholesale power costs.