HEA rates set to increase

Higher natural gas, administrative costs fall to consumers

Posted: Monday, January 16, 2006

In response to an increase in natural gas prices and increased business costs, Homer Electric Association customers will see higher bills starting Feb. 1. The rate increase will be roughly an additional 2.5 cents per kilowatt hour, or $16.58 more per month for a household using 650 kilowatt hours.

The majority of the price hike is the result of an increase in the price of natural gas. Chugach Electric, from which HEA purchases about 90 percent of its electricity, generates the majority of its power from natural gas-fired generators. According to HEA spokesperson Joe Gallagher, the jump was expected.

“We anticipated an increase, but we didn’t know what the the final increase would be until the end of December,” Gallagher said.

The increase in natural gas prices isn’t the only factor contributing to the higher rates, though. HEA also plans to increase its base rate — money used for HEA’s operational costs — from 11.16 to 12.05 cents per kilowatt hour. The increase is pending approval from the Regulatory Commission of Alaska, which HEA hopes for before Feb. 1. The base rate increase, the second in 10 years, is the result of increased operating costs, such as fuel, insurance, interest and materials.

“Things are just more expensive. Everything that we do is more expensive and we’ve reached a point where we just need to have this base rate increase to meet increasing costs in all sorts of different areas,” Gallagher said.

The price of natural gas is not expected to fall any time soon. HEA operates the Bradley Lake Hydroelectric Plant and owns about 12 percent of its output, and also benefits from the Nikiski Cogeneration Plant, but there are further efforts underway to attempt to stabilize prices. HEA is partnering with other utilities to investigate wind generation on Fire Island, and Gallagher pointed specifically to the cooperative’s study of the Healy Clean Coal Plant.

“We’re looking at the possibility of putting that coal plant into operation,” he said. “It would diversify our power options.”

A rate increase of this size is likely to put the squeeze on families throughout the area, and Gallagher pointed to the budget billing option HEA offers as a possible solution. The budget billing option allows consumers to pay a flat rate each month based on the household’s average annual usage instead of paying higher bills in the winter and lower bills in summer.

Gallagher also urged the use of energy-efficient appliances, turning off lights and properly insulating homes as a way to ward off high bills.

There is another option available for low-income households: the state of Alaska’s Heating Assistance Program.

The program, which provides assistance between November and April, is open to both homeowners and renters throughout Alaska. The amount of assistance paid to participants is based on five factors: type of housing, type of heating, number of people in the house, the region of the state and gross monthly income.

According to Acting Program Coordinator Kathleen Dore, the HAP office sends out application forms to anyone involved in the program the previous winter in September, but applications are available online and can be requested over the phone. Dore said the nearly 16 percent increase in applications this winter is not a surprise.

“There’s an increase in the need for assistance because of the increase in all types of heating costs,” Dore said. “I don’t see any reason why it would decrease.”

For more information on the HAP, call (800) 470-3058 or visit www.hss.state.ak.us/dpa/programs/hap/.

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