HEA proposes changes to rate structure

Posted: Wednesday, September 08, 2010

Homer Electric Association is proposing a number of changes in the way it bills customers that could go into effect as soon as January 2012.

The electric utility said it's considering increasing the monthly customer charge from $11 to $15 while instituting a minimum monthly energy charge of 150 kilowatt hours. This means residential ratepayers who draw less than 150 kilowatt hours a month -- about 15 percent of the membership according to the company -- would still be required to pay for that amount of usage at a cost of approximately $20 at current rates.

"So each month, whether you use electricity or not, you're going to pay a $35 bill," Brad Janorschke, HEA General manager said on Tuesday.

For all other ratepayers using more than the minimum amount, their bill would increase $4.

The proposal comes on the heels of a recent cost of service study conducted by HEA.

The company found that its current $11 monthly customer charge, a fee that covers fixed costs like metering, billing, customer service and infrastructure, was too low.

"It is an increase but it's more of a way to try and reduce subsidization between one, the different classes; and two, the residents within a class," Janorschke said.

The proposed rate restructuring would also make changes to the commercial class, which would be renamed the general service class, and the large commercial class, which would be renamed the large general service class.

The general service class would see their monthly customer charge reduced from $24 to $15 and a minimum monthly energy charge of 150 kilowatt hours.

Large general service class customers, of which HEA has 340, would see their monthly customer charge lowered from $150 to $60.

The demand charge, a fee designed to recover other fixed costs associated with serving large loads, would increase from $7.75 to $14 per kilowatt.

Janorschke was hesitant to say that the recent loss of large industrial power buyers like Agrium and BP in Nikiski contributed to the rate change proposal, but did say if the trend were to continue in the future it could have an impact.

"Our infrastructure doesn't change. When you shut down Agrium, it didn't do much to reduce our investment that's out there, we just have fewer kilowatt hours to spread it over," he said. "So I would say moving forward that we will continue to see upward pressure on all of our rates if we lose additional large commercial and industrial loads."

Additionally Janorschke said that HEA's "Independent Light" project, an endeavor to produce the majority of the company's power needs here on the Peninsula, did not contribute to the rate change proposal.

Gallagher said the company is also proposing two additional changes:

* All non-residential members south of Kachemak Bay will be combined with either the general service or large general service rate classes north of the bay.

* An increase in the monthly cost of HEA outdoor lights from $27 to $31.

HEA will hold area meetings at the end of the month to provide residents an opportunity to discuss and comment on the proposed options.

If the HEA Board chooses to approve the proposed changes they will be submitted to the Regulatory Commission of Alaska.

Janorschke said approval by the RCA could take as a long as a year, and any rate changes would not go into effect any sooner than the beginning of 2012.

Dante Petri can be reached at dante.petri@peninsulaclarion.com.

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