Utility considers payment plans for electric bills

Posted: Sunday, April 20, 2008

Those in town bracing for an enormous electric bill and hoping that the electric company, Alaska Electric Power & Light Co., may allow its customers to amortize, or gradually pay off the initial cost, may be in luck.

AEL&P's general manager, Tim McLeod, and it's director of consumer affairs, Gayle Wood, said all options related to customer payments are being considered as the company tries to deal with the avalanche that recently destroyed electric transmission equipment and may increase Juneau's electric rates by five times or more.

But, both McLeod and Wood cautioned, there are good reasons why AEL&P wouldn't want to spread the costs of generating electricity for the next three months over a longer period. Mainly, they said, the company needs cash, lots and lots of cash.

AEL&P is burning through $1 million every three days in diesel fuel costs to keep Juneau's juice flowing, Wood said. The whole point of the dramatic rate increase is to pay for the fuel to keep the generators working, she said.

"We're holding the bag big time," Wood said. "And we need our customers to come through for us."

But allowing customers to spread out a huge bill could soften the economic blow to the city, said Brittney Cioni, a professor of economics at the University of Alaska Southeast.

Cioni said spikes in energy prices are especially difficult economic situations because they tend to lower economic growth and raise prices at the same time.

And spreading out the cost of electric bills would allow people to adjust their behavior gradually, like weatherizing their homes or buying more efficient electrical appliances, so they could reduce their electricity consumption, Cioni said. She added that in the short term there's only so much a person can do to keep their electric usage down.

"Our lifestyle basically demands that we have electricity in our homes," Cioni said. "I think it's particularly unfair if you ask consumers to pay this super high rate hike in a very short amount of time."

Whether the Regulatory Commission of Alaska, the public body that overseas AEL&P, can force the company to allow its customers to spread out the next three months' bills over a longer period is unknown.

"I've never seen it done before," said Grace Salazar, head of the RCA's consumer protection office. "Only because I don't think there's been an incident like this before."

Salazar added that there are already provisions in place to allow cash-strapped residential customers behind on their bill to enter into a deferred payment with AEL&P.

Under the agreement between the electric utility and the RCA, residential customers who demonstrate an "economic hardship (that) prevents payment in full" of a late bill, may enter into a three- to six-month-long deferred payment plan. Deferred payments may include additional finance charges.

There's no mention of deferred payment plans for commercial entities in the AEL&P's contract with the RCA.

RCA Commissioner Mark Johnson said it was too early to comment on what, if anything, the RCA may require AEL&P to do because the company had not yet filed any paperwork indicating that its rates were going to rise.

"We regulate the utility but we don't just do that on a whim," Johnson said. "We respond to ... specific filings."

• Contact reporter Alan Sudermanat 523-2268 or e-mail alan.suderman@juneauempire.com.

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