Alaska Electric Light and Power residential customers could pay $4 more each month this winter and $5 more on average in the long term as a state commission reviews the company's request for the hike.
The company announced last month it wanted to increase rates by 5.26 percent. It filed the request Thursday.
The Regulatory Commission of Alaska's decision could take 15 months. In the meantime the commission could approve an interim increase of 4 percent that would appear on October bills, said Gayle Wood, the company's Juneau office manager.
Wood said that while sales have been flat, costs have gone up. AEL&P has been paying more for property insurance, spare transformers and other backup equipment, and fuel to transport freight.
Average power bills for Juneau homes each month
Before rate hike: $93
After rate hike: $98
Inflation figures based on an Anchorage consumer price index show costs of goods rising 12 percent in the last five years.
"It's time to let the rates reflect what the costs really are," Wood said.
The last increase was five years ago, when the commission approved a 3.65 hike - less than the requested 4.14 percent. Wood said there is a chance the panel will grant a lower rate than the one requested this time as well.
Wade Bryson, owner of two Subway sandwich shops and Freakin' Pizza in the Nugget Mall, said the increase could cost him thousands of dollars.
But he understands the reasons for the rising rates: "We want it to be a healthy electric company."
Rate increases usually are based on the previous year's revenues and expenses. But the 5.26 percent request considers the supply the company expects to have in the future.
Revenue gained from the recent decision to sell energy to the Greens Creek Mine will offset costs that make rates more expensive in Juneau, Wood said. If the Greens Creek Mine were not scheduled to be on the energy grid, the company would have to spike rates by about 8 percent, Wood said.
"We're certainly very optimistic," said Wood, about the commission approving the rate.
After this increase goes into effect, the company does not expect to raise rates again for four years, Wood said.
Andrew Petty can be reached at firstname.lastname@example.org