Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

 
 

Power rate increase of 18 percent sought

 


Local utility provider Alaska Power Company is proposing an across-the-board rate increase of more than 18 percent.

The company is asking for the Regulatory Commission of Alaska (RCA) to allow a 6 percent interim increase to ease customers into the higher prices and minimize “rate shock” for its customers.

According to utility officials, the 6 percent increase would add $8.55 to the monthly energy bill of a four-person family in Haines consuming roughly 1,000 kilowatt hours.

Alaska Power Company (APC) is the energy subsidiary of Alaska Power and Telephone (APT), which also provides Internet and phone service to Haines residents.

APC is also proposing to raise rates, by the same percentage, for all of its other customers, which include residents in Prince of Wales Island, Tok, Tetlin and several villages in the Interior.

In a nutshell, APC is bringing in less money than it is spending to provide its service, said APT president Bob Grimm. This resulted in a nearly $2 million revenue shortfall in 2012.

Because costs are largely fixed (putting poles in the ground, erecting and maintaining equipment like transformers) and demand is either remaining stagnant or projected to decrease due to decreases in population, APC needs to raise its rates to remain in the black, Grimm said.

“A large portion of our costs are fixed, so when you divide them by a lower number of units being sold, that equates to an increase in the rate just to keep even,” Grimm said.

Factors leading demand to decrease or remain flat include a lack of economic development, lack of jobs and promotion of more energy-efficient products like LED lights, Grimm said.

“I can sympathize with the customers, but when we have a shrinking economy, this is going to affect more than just the electrical rates. It’s kind of the same economic equation for everyone that is doing business in rural Alaska,” Grimm said.

“We want the situation to turn around, but it hasn’t yet,” Grimm added. “And this has been the trend since 2010, since the last increase. The economy is shrinking and that puts upward pressure on rates.”

APC last instituted a 5 percent rate increase in 2009, from 12.43 cents to 13.06 cents per kilowatt hour.

If the interim rate proposal is accepted by RCA, residential and small commercial rates will rise from 13.06 cents per kilowatt hour to 13.84 cents per kilowatt hour in Haines. It would also raise the monthly base fee, which all customers pay on top of their usage fee, from $12.46 to $13.21.

APC serves 1,076 residential and 374 commercial customers in Haines.

According to Rod Crum, the RCA’s chief of consumer protection and information section, the short-term 6 percent increase – if approved – would come into effect Jan. 14.

Crum said the permanent increase of 18 percent could be approved within 15 months of APC’s file date, which was Dec. 4.

“The interim rate increase would remain in effect until final rates are adjudicated and whatever those rates are would take effect when finalized,” Crum said.

Robert Lindquist, chief of RCA’s tariff section, said public utilities like APC are required to submit a considerable amount of documentation to support their request for an increase. The commission can then take one of three actions: approve the increase, deny it, or suspend the decision for further investigation.

Lindquist said it is rare to have the increase approved outright: he’s only seen it two or three times in his 20-year career.

The investigation involves a hearing process, an invitation for the Alaska attorney general to join, public involvement and expert testimony to determine what a fair rate increase might be.

“Sometimes they have to lower what they are asking for because it doesn’t prove up,” Lindquist said.

The 6 percent interim rate is refundable, Lindquist said, which means if the commission determines, for example, that APC can only implement a 4 percent increase, it would have to refund the revenue collected from the 2 percent difference.

Haines residents are encouraged to comment on the proposed increase by the 5 p.m. Dec. 27 deadline. Lindquist said all comments are taken into account regardless of content, even if it’s just, “I don’t want my rates to go up.”

“If I was sitting commissioner, I would consider that comment,” Lindquist said. “Especially if they come in volume.”

Residents might also enlighten decision-makers unfamiliar with Haines. “There are a lot of community conditions that the commission in Anchorage might not be aware of,” Lindquist said.

Residents can send comments to 701 West Eighth Avenue, Suite 300, Anchorage, Alaska 99501 or via the RCA’s website at https://rca.alaska.gov.