New Electric Rates Effective June 1, 2016

Average Res Bill Graphic (SRF & FPP June 2016).jpgThe Regulatory Commission of Alaska (RCA) has signed off on the increase of two line items across all rate categories on monthly electric bills. The net result of these two increases is an increase of approx. $19 (or 15%) to an average residential electric bill of 600 kWh.

  • Utility Charge:  This increased from $0.11508 to $0.11631 due to increased operational costs without a corresponding increase in revenues.

The Utility Charge covers operational costs (i.e. power plants, substations, power lines, power poles, transformers, depreciation loan interest, etc.), is calculated semi-annually via a Simplified Rate Filing (SFR) process, and is billed based on kWh consumed.

  • Fuel & Purchase Power Charge: This increased from $0.06099 to $0.09207 due to unforeseen major events at two of our power plants during the last quarter:
    • Healy Unit 2 Power Plant remains offline due to a March 3 explosion
    • North Pole Expansion Plant required significant unscheduled maintenanceF&PP Jan12-Jun16 chart

Because of these two events, GVEA needed to burn more expensive fuels and/or purchase additional power from other utilities. As a result, the projected F&PP rate for the last quarter was under calculated, since projections were calculated based on Healy Unit 2 running at full production. Therefore, a true-up is needed, which is effective June 1.

The F&PP charge reflects the cost of fuel to generate power and/or the cost to purchase power from other utilities. The F&PP is adjusted quarterly and is billed based on kWh consumed. The current F&PP charge will be in place through August 31, 2016, and was based on actual data from February, March and April, as well as an estimate for May.

Healy Unit 2 – Healy Unit 2 emphasizes the importance of coal in our generation mix. It has been GVEA’s expectation that the F&PP rate would decrease or remain fairly steady with Healy Unit 2 online, thus keeping rates stable.

A scheduled outage of Healy Unit 2 was scheduled for later this summer to tie-in new environmental controls; however, that work is being performed now while the plant is offline for repairs.

Note:  GVEA is preparing to submit a General Rate Case to the RCA in late 2016. The last rate case was submitted in 2008.

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