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Answers to common questions about Juneau's energy crisis

Posted: Tuesday, April 29, 2008

Q. What exactly started all this power rate consternation?

A. Juneau was cut off from its biggest source of inexpensive hydroelectric power when a series of four or more avalanches on April 16 damaged seven transmission towers - destroying three - that connect Juneau to the Snettisham hydroelectric project, leaving it to rely on backup diesel generators.

Q. So how much will that make my rates go up?

A. Under an order issued April 25 by the Regulatory Commission of Alaska, they'll go up 447 percent starting May 1. The current residential rate of $0.125 per kilowatt-hour will go up to $0.561 per kWh, including taxes.

Q. Will Juneau's sales tax apply to the increased power bills?

A. At the moment it will, but a proposal to exempt the increase from sales tax is pending before the Assembly.

Q. When will the increases take effect?

A. Bills going out May 1 will include the increase, covering the previous 30 days.

Q. Isn't a retroactive rate increase unfair?

A. The rate increase has been approved by the Regulatory Commission of Alaska, a state agency tasked with ensuring that public utilities charge "just and reasonable rates." AEL&P officials have said the first consumers to pay the higher rates will be the first to see a decrease when they go back down.

Q. How long will the high prices last?

A. The emergency $0.561 per kWh rate will last until May 30, with a new rate adopted by the RCA beginning May 31. The new rate will likely be somewhat less, but high rates will continue until the transmission line is repaired. Normal rates will not resume until hydro power is restored, estimated to take three months.

Q. Who exactly is AEL&P?

A. Juneau's city utility was incorporated in 1905 by local businessmen. Juneau's Bill Corbus, a descendant of one of the founders, remains the largest stockholder.

Q. Is AEL&P public, private or nonprofit?

A. AEL&P is a private, for-profit utility. That makes it an unusual animal in Alaska, where most residents get their power from a utility owned by its customers, generally through government entities or cooperatives.

Q What other types of ownership are there in Alaska?

A. In Sitka, the City and Borough of Sitka provides power. In Kake, Inside Passage Electric Cooperative provides power. Interior residents of Fairbanks, North Pole and other communities get power from Golden Valley Electric Association, a not-for-profit rural electric cooperative.

Q Why does the loss of the transmission line mean rates go up?

A. Snettisham provided most of AEL&P's hydroelectric power, without access to that power, the utility now relies mostly on backup diesel generators - at a time when diesel prices are at record highs.

Q. What does diesel fuel cost now?

A. Fuel oil is costing AEL&P $3.81 a gallon. It was under $1 a gallon not too long ago.

Q. Does AEL&P have other hydroelectric plants?

A. Yes, three small plants in town. Gold Creek, Annex Creek and Salmon Creek continue to provide about 21 percent of Juneau's power.

Q. What exactly is Snettisham?

A. The Snettisham hydroelectric project is 40 miles southeast of Juneau. It is a lake, small dam and powerhouse built by the federal Alaska Power Administration in 1973 to provide inexpensive power to Juneau.

Q. Who owns Snettisham now?

A. The Alaska Industrial Development and Export Authority, a part of state government, owns title to the project. It purchased it from the federal government in 1998. AEL&P is required to pay off the purchase bonds as well as operate and maintain the facility. AEL&P also has an option to buy Snettisham itself, but has so far not chosen to do so.

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



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