A tale of two cities ARPA, Raton, and Trinidad

by Bill Knowles
TRINIDAD/RATON — With an increase in the bond debt carried by Raton, New Mexico, and Trinidad, Colorado, the two cities took different paths to solve the rising utility rates demanded by the Arkansas River Power Authority (ARPA).  
The tale of the two cities began to diverge in 2008 when Raton filed suit against ARPA while Trinidad continued to work with the company.
In 2004, the City of Raton learned of new Environmental Protection Agency (EPA) regulations governing pollution caused by the use of coal in the generation of electrical power.  In Raton, ARPA operated a coal fired power plant that was 78 years old and scheduled to be shut down around the same time a newly converted ARPA plant in Lamar, Colorado, was to be fired up.  The City of Raton was skeptical that the conversion of the Lamar plant from gas to coal was a good idea.
In 2008 Raton city officials filed a federal lawsuit against ARPA, seeking to limit the city’s financial liability regarding ARPA’s Lamar Repowering Project which the city  opposed after initially – and reluctantly – approving it with a smaller budget than the $110 million cost it had reached. 
Raton successfully withdrew from ARPA following a dispute around the city’s contention that it did not authorize additional cost increases above the original bond issuance of $86 million in 2006.  The city contended since it did not approve the issuance of additional bonds for the project, the city should not be responsible for cost overruns, according to a report in the Lamar Ledger in 2012.
A test of the new boiler in Lamar in 2011 caused it to explode.  As of press time, ARPA has yet to generate one kilowatt of power from the Lamar Power Plant.
The City of Trinidad filed a breach of contract rescission, and impracticability of performance in 2010.  In the suit, Trinidad claimed ARPA did not file a written notice to Trinidad or other member municipalities of their intent to commit funds for the Lamar Repowering Project (LRP) for the Series 2010 Bonds for $17,260,000.
ARPA argued that under the contract, APRA was authorized to fully provide funds for the project through the issuance of bonds without seeking additional member municipality approval.  APRA also claimed Trinidad did approve the 2010 Series Bonds and Trinidad should equally be stopped from arguing that ARPA failed to obtain additional approvals. 
Third Judicial District Judge Leslie Gerbracht ruled in October 2013 that ARPA was in breach of its obligations to Trinidad, thus granting the partial summary judgment for Trinidad’s first claim for relief. 
Raton signed an agreement with Enserco Energy which began in January, 2013.  Then in September 2013, Raton changed utility providers, switching to Twin Eagle Resource Management headquartered in Houston, Texas.  
Currently, Trinidad and five other municipalities, Holly, La Junta, Lamar, Las Animas, and Springfield,  are bearing the burden of about $145 million in debt, according to Trinidad City Council member Michelle Miles.  That means rate payers in Trinidad are seeing 3.8 cents per kilowatt hour used by the customer out of their electric bills being applied to the bond debt.  In other words, 3.8 percent of the total bill paid by each customer goes to pay bond debt for the defunct power plant in Lamar.   
Raton however, is purchasing power with a secured rate contract resulting in rates below those charged in the cities that are part of ARPA.