HEA rates intended to make it fair, promote conservation

Posted: Wednesday, July 21, 2010

One of the most important decisions that can be made by a Cooperative is the design of the electric rates. That's why Homer Electric Association (HEA) is making every effort to get it right the first time during our current rate design review process.

Over the past couple of months, HEA has been working to identify the best design option for ensuring that rates are fair and equitable for all members (residential, commercial and industrial). A small portion of rates represent amounts members invest in the Cooperative so that HEA can provide dependable electricity. Rates are how HEA remains a financially solvent organization with a goal of providing electricity at the lowest reasonable cost possible.

Let's look at the first part of this equation -- dependable electricity. HEA has undertaken a number of projects to improve our dependability such as implementation of the Automated Meter Reading (AMR) program for residential members, a new substation at Diamond Ridge in Homer, expanded right-of-way clearing that resulted in significant reductions in tree-related power outages and a cable injection project that prolongs the life of underground cable wire. We also continue to install new electric facilities throughout the service territory.

Equitable rates are achieved by structuring rates so that each member class pays a fair and equal share for services provided to them. This is where the tough decisions come in. For example, the design of rates should not discourage the sale of electricity through new and expanded services, but it should promote the wise use and conservation of electricity.

The HEA Board of Directors and Management team will continue to review rate design options over the next couple of months in an effort to find the best plan for our members. I encourage you to attend one of the upcoming Board of Director meetings or one of the area meetings in September where these options will be discussed.

With reprint permission from National Rural Electric Cooperative Association's (NRECA) Management Quarterly, an interesting article on rate design has been posted on the HEA web site at www.homerelectric.com. The editorial was written by well respected utility consultant Marty Blake and outlines some of the challenges facing utilities as they conduct rate design efforts.

As always, please feel free to contact me with any comments or suggestions that you might have regarding Homer Electric Association, Inc. and its rate design process.

Brad Janorschke is Homer Electric Association's general manager.



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