RCA approves AEL&P's levelized payment plans

Posted: Thursday, May 22, 2008

The Regulatory Commission of Alaska, the state agency that oversees utilities, approved an optional levelized payment plan Wednesday, allowing Juneau customers faced with enormous electric payments to spread them out over a year.

The RCA also approved a request from Alaska Electric Light & Power Co., the city's privately owned electric utility, to extend the maximum amount of time customers that demonstrate an economic hardship can enter into a deferred payment program from six months to one year.

Under a levelized payment plan, AEL&P would estimate a customer's bill for the next 12 months and allow customers to pay a monthly average. The estimated bills would include the sharp increase in electric rates due to AEL&P generating most of the city's power through pricey diesel fuel, which is estimated to last for three months.

"In a way it's like giving somebody a 12-month loan so that they don't have to pay that very large bill right up front," said Scott Willis, AEL&P's vice president of generation.

Last month, avalanches wiped out part of the transmission line between Juneau and its main source of hydroelectric power.

The levelized payment plan approved by the RCA differs from a similar, so-called "amortization" plan, which was suggested soon after the avalanches but was quickly derailed after a public outcry over fairness issues. That proposal would have spread out the electric rate increase over 12 months - meaning that winter electric usage, which is typically higher than summer usage, would have been charged at a higher than normal rate. It also would not have been optional.

Before the RCA's ruling, only customers who used electric heat were eligible for levelized payment plans. It was designed to help customers with large winter bills pay off part of those bills in the summer when the bills were lower. There were 148 customers who used the program.

Now all AEL&P's 13,520 residential and 1,454 small commercial customers can take part in the levelized payment plan.

At the end of the levelized payment period, if the monthly estimates turn out to be too high, the customers will be credited for what they overpaid. If too little was paid, customers will have to pay AEL&P the difference.

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