Power rates outside Juneau expected to rise

Posted: Wednesday, May 14, 2008

Juneau won't be the only place where power rates will be going up.

Almost every place in the state outside Southcentral will see rising electric power rates in the next few years, despite the state's Power Cost Equalization program.

Under PCE, rates in the state are tied to an average of rates in Juneau, Fairbanks and Southcentral utilities such as Chugach Electric.

In Southeast, communities from Haines to Hydaburg get state subsidies to keep power prices down. Juneau, Sitka and other communities with hydroelectric are not eligible.

That average rate is now at 12.87 cents per kilowatt-hour, and PCE tries to reduce diesel community rates toward that number.

With rates going up in both Juneau and Fairbanks, the floor rate is likely to go up as well.

The "floor" is the amount residents are expected to pay before equalization begins to help. Fairbanks and Juneau each contribute about 13.5 percent of the calculation, and, if rates double in those cities, it could raise the statewide average, officials say.

The Alaska Energy Authority and Alaska Industrial Development and Export Authority, which together manage the programs, haven't done any calculations yet, but increases are almost certain, said Sara Fisher-Goad, deputy director of operations for AIDEA.

"I fully expect with the increased cost of fuel, we will see that floor go up," she said.

The state's PCE effort last year provided subsidies for residents in 183 rural communities. It lowers rates for residential customers and community facilities but not businesses.

Last year, those communities were paying an average of $2.78 per gallon for diesel, a seemingly big 15 percent increase from the $2.41 they paid in 2006. This year, Juneau is paying $3.80 a gallon, and fuel deliveries are much more difficult in some of the villages in the program.

Increases this year won't be factored into the calculations until next year and won't hit consumers until 2010, Fisher-Goad said. Only a portion of consumers' bills are covered by PCE, so other rates are expected to rise immediately.

The PCE program also has a maximum amount above which it doesn't reduce rates. That amount is 52.5 cents, and doesn't change, she said.

"With higher fuel prices, more communities are going to be reaching that level," Fisher-Goad said.

State Rep. Mary Nelson, D-Bethel, said the Legislature last session thought it "fully funded" PCE, but that amount might not be enough now.

The legislative appropriation for the PCE in 2007 was $25 million.

PCE may need a supplemental appropriation, she said. That may be one of the matters under discussion at a special session on energy costs Gov. Sarah Palin is expected to call for this summer.

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

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