HEA rates to jump in April

Posted: Wednesday, March 09, 2011

Homer Electric Association customers around the Kenai Peninsula will most likely see an increase on their April bills.

The overall energy rate is going from about 15.5 cents a kilowatt hour to 18.8 cents. For the average residential customer, that means their bill will be about $20 more than the previous month, said HEA's Joe Gallagher.

"It's huge," Gallagher said, adding that it's a larger increase than usual, but not the biggest increase Kenai Peninsula residents have ever seen. In April of 2009, the overall energy cost was more than 20 cents an hour.

The increase will show up on the wholesale power cost adjustment line of a customer's bill. That line multiplies the amount of energy used by a cost set by Chugach Electric Association. The cost is going from 0.863 cents a kilowatt hour to 4.171 cents. In 2009, that cost reached 7.9 cents a kilowatt hour.

Homer Electric filed the rate change last month with the Regulatory Commission of Alaska, as they do four times a year.

Gallagher said it was a pretty standard change in that HEA is just passing along an increase from Chugach Electric Association, the entity that provides HEA with much of the power for the Peninsula.

Chugach sets the Wholesale Power Cost Rate Adjustment -- the cost that is increasing -- based on an average of natural gas, heating oil and crude oil prices. It changes every quarter.

Chugach purchases natural gas from multiple suppliers, and passes that cost along to HEA.

Gallagher said that essentially, when gas prices rise, electric costs follow.

"A good indicator is your gas pump," he said.

Gallagher said that Southcentral Alaska's increased demand for natural gas in the winter doesn't affect the price electric customers pay.

The change will show up on April bills, which means that customers are paying for their energy use from March.

RCA representative Grace Salazar said the commission will make a decision by April 14. They can either approve the change, reject it, or suspend it into a docket for further research. A decision could be made earlier.

"If we don't have an RCA decision by March 31, we will still implement the new rate for billings beginning April 1," Gallagher said.

If the RCA doesn't approve the decision, the association will adjust accordingly, he said.

But not everyone will see the spike in April.

About 5 percent of HEA's customers participate in a budget billing plan, where they pay a set rate each month based on their average use and the average cost. Gallagher said the plan evens out monthly bills, so customers don't see as much seasonal fluctuation. Each spring, the company either bills or credits customers for the difference in what they actually use and what is predicted.

Those bills won't change immediately.

In the short term, HEA is encouraging people to conserve electricity to minimize the impact of the increase. Customers can also apply for the Alaska heating assistance program if they can't afford the increased energy costs and meet certain state income guidelines.

In the long term, the company's Independent Light project could help mitigate increases because it will enable the Nikiski power plant to produce more electricity with the same amount of natural gas.

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

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