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HEA expected to raise prices, manager says

Posted: Wednesday, June 23, 2004

The general manager of the Homer Electric Association told Soldotna business leaders Tuesday the utility has the lowest rates among Alaska providers, but he warned that an increase is on the way.

"On average, members will see about a $15-a-month increase," said Brad Janor-schke, who has been the utility's manager since February.

He attributed the increase to the cost HEA must pay for fuel specifically natural gas saying people need only look at gasoline pump prices to realize the current trend in fuel costs.

As of July 1, HEA customers will see the portion of their electric bill called the wholesale power cost adjustment go from .562 cent per kilowatt hour to 2.517 cents.

"This is the cost to us that we pass through to members," Janorschke said.

For the average consumer using 800 kilowatt hours per month, the increase will be between $15 and $16.

When asked how the increase affects HEA's bottom line, the general manager said it has no effect.

He said the increase goes directly to the natural gas supplier.

Currently HEA members pay about $83 per 800 kilowatt hours, he said.

Giving a quick look at HEA's operations and prospects to members of the Soldotna Chamber of Commerce attending the business luncheon at the Riverside House, Janorschke listed projects in which the utility is involved, economic opportunities HEA is watching and strategic initiatives the cooperative is developing.

"We're watching the Pebble Gold operation across (Cook) Inlet," he said.

The Kenai Peninsula utility would be in a position to provide some of the mining operation's electricity in cooperation with other utilities and possibly with Native corporations, he told the 30 people in attendance.

He said one of HEA's engineers is exploring the possibility of supplying electricity across the inlet by way of an underwater cable.

"That's one possibility. It all comes down to economic feasibility," he said.

"We're certainly going to watch (Pebble Gold). Whatever we do, though, it's got to bring back a benefit to our members on the Kenai Peninsula," he said.

Janorschke also said HEA is exploring power supply alternatives including wind and tidal energy, which, he said would add an element of stability to the price of energy supply.

"They would not be as volatile as gas and oil prices," he said.

The utility also expects to seek an increase in its debt cap in the near future, Janorschke said.

At present, HEA indebtedness may not exceed $150 million, an amount the utility expects to reach within 18 months, he said.

He added that HEA currently owns about 35 percent of its plant and equipment.

Janorschke said HEA's mission continues to be to provide reliable, competitive utility service to its consumer members and has developed a simplified vision for its employees: "Members first."



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