Decision could help HEA users save cash

Posted: Wednesday, October 22, 2003

Homer Electric Association's average customers could soon be enjoying a savings of about $74 a year for the energy they buy, thanks to a recent decision by the Regula-tory Commission of Alaska.

The RCA has ruled that Chugach Electric had been overcharging HEA, which buys Chugach power for resale to its own customers.

In July 2001, Chugach filed a rate-increase request with the RCA seeking to up what it charged wholesale customers, including HEA, by 6 percent. Homer Electric and other wholesale customers filed a formal objection in September of that year. Chugach was granted a temporary increase of 4 percent to its Homer Electric fee.

In a ruling issued Aug. 26, 2003, however, the RCA not only denied Chugach's request for a rate hike, but also found its current rates too high, HEA said. The commission ordered Chugach to make a refund to its wholesale customers for the amounts they had been overpaying under its temporary increase since 2001, and also to lower its rate to Homer Electric 6.9 percent below the September 2001 rate.

For members of Homer Electric, the rate reduction will mean a savings of about $74 a year for the average member using 750 kilowatt-hours each month, according to HEA. However, the company also said the expected rate decrease might be lessened by an offsetting cost increase for natural gas to Chugach Electric, which uses that fuel to generate electricity that Homer Electric buys.

"This decision by the RCA was very consistent with Homer Electric's rate design that we put forth in the rate case," said HEA Interim General Manager Rick Eckert. "We are very pleased with the commission's decision and feel our members deserve the rate relief."

Chugach, meanwhile, has filed an appeal in Alaska Superior Court and is expected to argue its case Nov. 7. Chugach had sought a stay on the rate decreases but has since withdrawn that request. A Chugach spokesperson said the court has not yet ruled on dissolving the stay request.

In a recent Anchorage Daily News letter to the editor, Evan J. Griffith, chief executive officer of Chugach, said he believed the RCA's ruling to be unfair to Chugach's retail customers. The company has some 60,000 retail and three wholesale members that would be affected by the rate changes.

"The RCA has placed an unfair burden on Chugach retail ratepayers," he wrote. "Chugach is a cooperative; one customer group should not be forced to bear an unequal share of costs."

Griffith said the RCA's decision would increase overall residential rates 1.4 percent, overall large commercial rates would go up .6 percent, while the small commercial customer would see an overall 8.9-percent decrease in rates.

For its part, HEA officials are looking forward to the rate reduction.

"We are hoping for a quick legal resolution so that the savings can be passed on to the members of Homer Electric as soon as possible," Eckert said.

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