With increased energy costs, Aspen mulls ways to plug deficit | AspenTimes.com

With increased energy costs, Aspen mulls ways to plug deficit

Aaron Hedge
The Aspen Times
Aspen, CO Colorado

ASPEN – Revenue projections for next year’s Aspen energy budget indicate the city will need to plug a nearly $320,000 hole if it wishes to allow residents and companies to continue using current amounts of electricity.

John Gallagher, an analyst with Redoak Consulting, an energy consulting group with which the city has contracted, spoke to the City Council Monday night. He said the city should try to implement a “cost-of-usage” model of collection that would, in some cases, require those who use more energy to pay more.

Aspen should initiate such a model over a number of years so the shift is gradual, Gallagher said.

Next year’s projected costs, Gallagher said, are roughly $7.3 million – $319,818 more than the $7 million the city is expected to bring in.

Other options noted in Gallagher’s presentation included keeping things the same or increasing rates on every customer by 4.6 percent. But he warned that the former might worsen the state of the city’s budget in the economic downturn, while the latter could result in an unequitable cost-sharing arrangement between classes of users.

Currently, the 44 largest energy users, which are categorized as “large commercial” entities in a report generated by Redoak, consume about 10 percent of the energy consumed by Aspen’s 2,881 users.

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Councilman Steve Skadron said the city should be careful not to shift too much of the burden onto such a small percentage of energy users, but city public works officials said large industry has enough resources to support that move.

Phil Overeynder, the city’s director of public works, said the need stems from an increase in prices in the fossil fuel industry, particularly higher rates at a coal-fired power plant that Aspen buys energy from in Nebraska.

He said the city’s proposed hydropower expansion project would help to quell some of those costs.

“The more we produce locally, the less we have to buy,” Overeynder said.

The city is in the second part of a two-phase project that began last year, when the city changed its model of collection to reduce energy consumption and recover energy costs in Aspen.

Overeynder said the effect so far of the project has exceeded expectations: Small companies are using, on average, 10 percent less energy than they were before the change.

ahedge@aspentimes.com