People opening their Homer Electric Association bills last week felt some sticker shock, as Homer's kilowatt hours became some of the highest in the nation at 21.5 cents.
The wholesale power cost adjustment line item on most bills reflected the rate increases approved by the Regulatory Commission of Alaska for Jan. 1. The increase hefted rates from 17.5 to 21.5 cents. Currently, Fairbanks residents pay just under 17 cents per kilowatt hour, while Mat-Su Electric customers pay just over 17 cents. Bethel Utility Corp., charges 21.5 cents per kilowatt hour, though its customers qualify for Power Cost Equalization.
At the new rate, the monthly bill for the average HEA member using 630 kilowatt hours was estimated to see an increase of approximately 20 percent. That translates to a jump from $121.25 to $146.45.
But when bills arrived in the mailbox, the wholesale power cost adjustment for some reflected a larger leap -- sometimes up to 65 percent. A recent HEA bill for a 15-by-20 foot, one-room cabin in downtown Homer included a wholesale adjustment cost of $33.72 for 426 kilowatt hours. The normal bill was $57.70, in addition to the wholesale cost.
According to HEA spokesman Joe Gallagher, the hefty leap was caused by combined factors.
"The cold snap caused usage to increase, along with the rates going up," he explained.
Gallagher said HEA had heard from several customers who were concerned that an error had caused the drastic hike.
"Energy assistance will be of help to people - we're hearing from people who will need to apply," he said.
HEA is locked into contracts with Chugach Electric Association through 2013. CEA is likewise locked into contracts with four producers: ConocoPhilips, Marathon Oil, Chevron and Municipal Light and Power. Their costs are tied to crude prices, natural gas costs and heating oil, Gallagher said.
In the tariff filed with the RCA, Chugach Electric cited several reasons for its increase. The utility stated that natural gas prices for the first quarter of 2009 would increase by 13 percent. In addition, CEA stated that one of its steam turbines at the Beluga power plant had shut down due to a crack in the main steam line that resulted in higher producing costs in the fourth quarter of 2008.
The Bradley Lake Hydroelectric Project also held less water in its reservoir this year than expected, and Chugach was forced to replace the shortfall with more expensive natural gas-fired power. Bradley is a state-owned project that provides about 10 percent of HEA's power.
Between now and 2014, HEA reports it will be pursuing alternative energy sources such as the Healy Clean Coal Project and hydro projects in the "hopes of finding a solution to get better potential to control our rates," Gallagher said.
According to Gallagher, the next quarter adjustment is due April 1, when HEA may be able to lower the cost. In the meantime, look for high monthly bills for February and March, when the wholesale cost adjustment factor will be reflected on monthly bills.
HEA customers from Kenai to Seldovia to Nanwalek saw an overall 47 percent increase in rates since July 2008. That makes rates here some of the highest in the nation, and certainly the highest on the road system.
"HEA, like other electric utilities, is struggling to control rates in the face of increasing fuel costs," said HEA General Manager Brad Janorschke. "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."
HEA encourages members to practice conservation measures wherever possible to reduce energy used.

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