Understanding how AEL&P charges for electricity

Posted: Monday, May 05, 2008

Street lights provided Juneau's electric utility the most money for each unit of energy in 2007, and cruise ships paid the least, according to public documents filed by Alaska Electric Light & Power Co.

Courtesy Of Aelp
Courtesy Of Aelp

The company took in $30 million last year from 15,865 customers, averaging 8.7 cents revenue per kilowatt-hour.

That's according to a form AEL&P files annually with the U.S. Federal Energy Regulatory Commission that breaks down how much revenue the utility gets per kilowatt for each type of customer.

Varying costs of service determine the rates for each type of customer, according to Gayle Wood, AEL&P director of consumer affairs. Business rates are in general lower than residential ones because businesses use more kilowatt-hours per customer; the cost of service is spread out over those kilowatt-hours.

A few customers have lower rates as a reward for installing efficient heating systems.

Also, the cost is lower for service that might be interrupted, such as to cruise ships.

Residential: Last year, AEL&P received an average 10 cents per kilowatt-hour from the 13,644 residential bill-payers.

Small commercial: Small businesses, cruise ships and two manufacturers were among 1,456 customers. They bring in an average of 8 cents per kilowatt-hour. Princess Cruise Lines has a contract and rate approved by the Regulatory Commission of Alaska. Princess pays less per kilowatt-hour partly because its service is interruptible.

Large commercial: Greens Creek, another interruptible (and currently interrupted) customer, paid $650,248 for its 9.9 million kilowatt-hours at a rate of 7 cents a kilowatt-hour.

Street lights: They brought in an average of 19 cents per kilowatt-hour. AEL&P charges more because it maintains the lights.

Government: Average revenue was 8 cents per kilowatt-hour for 439 customers.

Decoding business electric bill increases

It's easy to calculate how residential rates will increase with the new cost of power adjustment. The COPA is 43 cents per kilowatt-hour, so the total rate will be 56 cents - five times the base rate.

But the proportion businesses' bills will increase is trickier to figure out, because many businesses pay one rate for the actual kilowatt-hours and another for the biggest load they put on the system.

In the end, the Empire's bill will quintuple. Here's how we figured it out:

April bill:

kWh charge: $2,632.13

Rate 24: 53,390 at $0.04930

Demand charge: $1,593.45

Rate 24: 138.20 at $11.530

Power cost adjustment at $0.014024/kWh: $748.74

Regulatory cost charge at $0.000274/kWh: $14.63

Customer charge: $99.24

Sales tax: $253.68

Current charges: $5,341.87

kWh charge: The total amount of energy used during the month, measured in kilowatt-hours. The Empire's bill says Rate 24 - aka large commercial - so we pay 4.9 cents per kilowatt-hour.

Demand charge: AEL&P measures, in kilowatts, the biggest load a business uses for longer than 15 minutes. If two businesses use the same amount of power in a month, the business that uses it in shorter, intense bursts will pay more than the business that spreads out that usage over the month. Higher-watt usage is more expensive to the utility, which has to provide more capacity and infrastructure as a result.

Power cost adjustment: Here's where the big hit will appear. The power cost adjustment - also known as the COPA - is an equal amount per kilowatt-hour tacked onto all bills, no matter what rate schedule. Juneau customers were already paying an extra 1.4-cents per kilowatt-hour because we ran on some diesel this winter. The new COPA is about 43 cents. Multiply 0.43 by your total kilowatt-hours (from the first line) to estimate how much you'll contribute to AEL&P's diesel costs this month. The Empire's COPA will rise from $749 to $22,958.

Regulatory cost charge: A charge per kilowatt-hour that AEL&P collects and gives to the state to cover the cost of regulating the utility. Currently at .02 cents per kWh.

Customer charge: A base rate each customer pays no matter how much power is used. It varies based on the type of customer.

Sales tax: AEL&P collects tax for the city and borough of Juneau. But the Assembly voted after the Snettisham crisis not to charge sales tax on the recently raised COPA.

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