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Cheap power backfires on city

Posted: Sunday, April 20, 2008

With one avalanche, Juneau's residents went from the state's most secure to most vulnerable power customers.

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Chris Miller / The Associated Press
Chris Miller / The Associated Press

While many Alaska communities have had to cope with high power prices for years, the city's Snettisham Power Project has provided inexpensive - for Alaska - electric power for the capital since the early 1970s.

That's meant that Juneau has among the highest, if not the highest, proportion of residents who heat their homes with electricity in the state.

At the same time, that history of low-cost power means Juneau is not eligible for Power Cost Equalization, the state-funded program that subsidizes electric rates in 183 other Alaska communities.

Now, Juneau is facing power prices likely to top 50 cents per kilowatt-hour, according to Alaska Electric Light & Power.

"It's going to hurt," said Mike Wittig, a Juneau resident with electric heat in his Mendenhall Valley home.

The hurt is going to be widespread. Juneau has 2,576 homes using electricity as their primary fuel source, according to the 2000 U.S. Census. Wittig's is one of those.

A 1980s electric boom

Juneau's older homes - those from the 1940s, '50s and '60s - typically use fuel oil, as do some newer homes.

Juneau underwent a building boom in the 1980s, between bouts of capital-move anxiety, and many of those homes had electric heat.

"The most inexpensive heating to install in a house was electric baseboard heating, and they went wild with it," said Gayle Wood, consumer affairs director of Alaska Electric Light & Power.

AEL&P no longer encourages electric heat, she said.

Those people are now facing soaring power costs, leaving many wondering how even middle income residents will pay their bills.

"Everybody in this town will be hurt," said Tamara Rowcroft, general manager of Alaska Housing Development Corp., which has three apartment complexes in Juneau. She said it was too soon to tell how much people will be hurt.

People are already paying between $3 and $4 a gallon for fuel and are now facing an additional cost of electric prices going up as well.

State administrator Kevin Brooks is among those bracing for their next bill.

"My electric bill was over $200, and I heated with oil," he said.

Brooks said his forced air heating system uses power for fans, but he's already talked with his kids about turning off unneeded lights to conserve electricity.

AEL&P has not yet asked the Regulatory Commission of Alaska for an emergency rate increase, but expects to soon, company officials said. The new rate hasn't been specified but is likely to be above $0.50 per kwh, Wood said.

Power bills expected to soar

That's likely to leave Juneau residents paying some of the highest electric bills in the state - higher even than diesel generator dependent communities such as Hoonah and Gustavus.

That's because the state's Power Cost Equalization program, which last year spent $25 million subsidizing power costs in rural Alaska, doesn't apply to Juneau.

Last year, the program reduced Hoonah's electric rates from $0.4904 per kwh to an effective rate of $0.2186 per kwh. Gustavus' rate was $0.523 per kwh, but was dropped to $0.2566 with the equalization program.

Several Alaska cities with access to cheaper power from hydro and elsewhere are excluded from the program, however. In fact, the base rate established by law from which equalization rates are calculated is an average of the previous year's cost in Anchorage, Fairbanks and Juneau, all of which were assumed to have access to cheap power.

Juneau officials estimate the loss of Snettisham will cost the city at least $25 million, equal to what the state paid for the equalization program for all of Alaska last year.

Wittig said he doesn't regret his decision to go with electric heat. He's got an older home that he's worked hard to make more energy efficient, and he can burn wood as well. This week's announcement from AEL&P means Wittig will have to take additional steps, he said.

"Here in the next week we're going to be installing quilts on all our windows to close those off at night," he said.

Savvy consumers like Wittig may be prepared to cope with soaring bills, but some in Juneau are worried that many aren't so fortunate.

Utility, officials, look for help

"It's the elderly people on fixed incomes, and the single-parent families that I'm worried about," said Rep. Beth Kerttula, D-Juneau.

Wood said Juneau is fortunate to have a delinquency rate that is already below average to start with.

"We certainly have our customers we are talking to on a monthly basis, if not more often, and a small group on a weekly basis," she said.

The utility is willing to work with customers in trouble, she said.

"We're open to payment agreements," Wood said. "We don't want to turn people off. We want to keep the meters spinning, but we want to be paid."

Kerttula encouraged customers unable to cope with their power bills to contact her office at the Capitol, or those of Rep. Andrea Doll or Sen. Kim Elton.

"The (Juneau) delegation is already working on emergency money, and Sen. Ted Stevens' office is well aware of it, too," she said.

Wittig took a step of his own with a second home he rents to a couple in Juneau, after hearing about the effect of the Snettisham avalanche.

"I called them up and told them I was going to lower their rent," he said.

• Contact Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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