New HEA rate questioned: Structure called too complex to understand

Posted: Wednesday, January 26, 2011

Land's End Acquisition Corporation is questioning a rate adjustment being proposed by Homer Electric Association and wants to become an integral part of deciding whether the increase gets approved.

In a statement to the Regulatory Commission of Alaska, Homer-based Land's End said that Homer Electric's rate structure "is too complex for its members to understand and therefore does not meet any reasonable standard of disclosure." The corporation also says that the utility should provide more information to the public, and made a motion to intervene and become part of the decision process.

Homer Electric presented its rate adjustment proposal to the commission late last year. The commission has the responsibility to grant or deny any changes.

In its response to Land's End statement, Homer Electric said it doesn't think there is a reason for the company to intervene, as the attorney general represents the public's interest, and Land's End had not disclosed a substantially different interest in the matter. HEA spokesman Joe Gallagher said the utility is willing to work with Land's End as a concerned customer, but the utility does not support its request to intervene.

The utility's major proposed changes would decrease the energy base rate, create a minimum monthly energy charge and increase the customer charge from $11 to $15. Homer Electric has said that the charges would more fairly represent the costs the utility has in getting energy to customers.

In responding to the commission, the utility detailed the reasoning and process followed to decide to institute the minimum energy charge. According to the brief, the minimum energy charge actually adds a smaller cost for low-energy users than other options did.

Responding to a concern that the minimum charge would be a duplicate of the fixed customer charge, the utility's brief said that the cost would actually vary based on the amount of energy a customer uses.

Land's End operates a resort and condominiums in Homer, and hotels in Kenai and Seward. According to its statement, the company employs 50 people year-round and more seasonally.

A pre-hearing conference to discuss the Homer Electric's proposed changes is scheduled for Feb. 4, in Anchorage.

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.



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