By Naomi Klouda
The Regulatory Commission of Alaska has approved Homer Electric Association’s rate restructuring plan. The new rates are effective as of Jan. 1.
The plan will result in a rate decrease for many HEA members, with the average HEA residential member using 630 kilowatt hours seeing a 7.2 percent decrease in the monthly bill, according to an HEA press release. HEA’s board of directors and management wanted the new rate structure to more fairly recover fixed costs, or expenses, incurred that are not related to the amount of energy consumed by members.
Mike O’Meara, spokesman for the HEA Membership Forum, said he did the calculations for his own estimated December billing to see how the new rates would play out on the electric bill.
O’Meara figured that he will realize a 6.25 percent decrease in his cost for electricity. That cost includes the total of the following charges, divided by the kilowatt usage for the billing period:
• New customer charge of $15;
• New blended energy charge — 16.917 cents per kWh (base rate plus COPA);
• Regulatory charge — .0492 cents per kWh (as of November); and
• Borough tax — 3 percent (at his location).
Users on the lower end of kilowatt usage will see only modest changes. These changes were meant to equalize a problem HEA encounters from seasonal customers who leave their homes vacant part or most of the year.
“HEA made no secret about feeling the need to collect more from seasonal customers whose meters remain hooked up but are inactive for much of the year. It costs just as much to maintain service to them as to someone regularly using several hundred kWh per month,” O’Meara said.
These costs include such items as billing, metering, customer service, poles, wires, substations, generation, transmission lines and insurance.
It also carries a reclassification of commercial classes, and the merging of the two rate classes. The impact on businesses was thought initially to be heavier. Jon Faulkner, owner of the Land’s End Resort, gave input early on when HEA was considering changes.
“We sought involvement in the process because we face sharply rising electricity costs despite falling revenue in a declining economy,” said Mike Dye, Land’s End chief operating officer. “We know our energy costs are to rise but remain uncertain as to the magnitude of the increase given the various elements of the equation.”
In the end, however, a low-end electricity user would likely see a savings, as worked out in an exercise comparing rates for November and December. An 11 percent reduction was calculated in a sample worked out by HEA spokesman Joe Gallagher.
O’Meara believes the board handled the new rates well for residential customers, and hadn’t yet analyzed the impact to businesses.
“My only complaint about the plan as approved is that the $15 customer charge is a bit low. It covers less than half the amount the RCA allows a utility to charge for its fixed costs (everything needed to provide service to a customer except cost of power),” he wrote in an email. “This leaves HEA still recovering a large part of those fixed costs through the per kWh energy charge. That’s why the monthly 150 kWh minimum energy charge was added. The minimum is really just an additional, but variable, customer charge disguised as an energy charge.”
The RCA capped the combined minimum energy charge and customer service charge at $38.38.
“HEA can’t exceed that amount no matter how much the per kWh energy rate increases without going back to the RCA. My sense is that the Board and management went this route because they feared HEA members would have rebelled over a higher customer charge,” he said. “All in all, I think the board made a good faith effort to adopt a rate plan that is more or less equitable while eliminating some of the outdated features of the old rate structure.”