Another rate hike on tap for HEA members

Posted: Sunday, December 14, 2008

Make it three in a row.

That's the new number of consecutive quarters Homer Electric Association has announced rate increases for its electricity customers.

The rate went up 19.5 percent Oct. 1, and due to a requested increase in the rate the Chugach Electric Association charges HEA for purchased power, HEA members likely will see a 20 percent increase Jan. 1.

With the new anticipated hike, HEA rates will have increased by about 47 percent since July.

In a printed information release, HEA said members will see an increase of approximately 3.5 cents to 4 cents per kilowatt hour beginning Jan. 1. A 4-cent increase will change the overall energy rate for most HEA members from 17.5 to 21.5 cents per kilowatt hour.

At that rate, the monthly bill for the average HEA customer using 630 kilowatt hours will go from $121.25 to $146.45.

In October, HEA General Manager Brad Janorschke said the rate hike was primarily due to the increase in natural gas prices.

The part of members' bills that went up then was the wholesale power cost rate adjustment, which reflects changes in the cost of power HEA purchases from Chugach Electric.

"We're going down that same path," said HEA spokesman Joe Gallagher on Tuesday. "It's exactly the same as what happened to us in October. It's due to the Chugach increase."

In the tariff recently filed by Chugach Electric with the Regulatory Commission of Alaska, Chugach said natural gas prices will increase by 13 percent for the first quarter of 2009.

Chugach also attributed the rate hike request to an unexpected shutdown of one of its steam turbines at a power plant in Beluga that resulted in higher than expected production costs in the fourth quarter of 2008, according to HEA's information release. The turbine was shut down because of a crack in a main steam line.

"HEA, like other electric utilities, is struggling to control rates in the face of increasing fuel costs," Janorschke said in the release. "The fact that 90 percent of the power in Southcentral Alaska is generated using natural gas has left us very vulnerable to volatile price fluctuations."

When asked about falling crude oil and gasoline prices, Gallagher said natural gas prices "usually lag six months behind (gasoline) pump prices."

It is HEA's hope that energy prices will stabilize, he said.

Janorschke said HEA is seeking to diversify its power generation sources to reduce its dependence on natural gas. The utility has received preliminary permits from the Federal Energy Regulatory Commission to begin studying low-impact hydro generation sites on the Kenai Peninsula, and continues to pursue the start up of the Healy coal project.

Homer Electric members who may need assistance with their energy bills may contact the state of Alaska's energy assistance program. Applications are available at any Department of Public Assistance office, or can be downloaded at

People can also call 1-800-470-3058 to request an application by mail. It can take up to 45 days to process the application.

The program runs from Nov. 1 through April 30. Households may apply from now through April 30.

Phil Hermanek can be reached at

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