In response to increasing costs for natural gas and the need for system maintenance, Homer Electric Association will be increasing rates in 2006. 

As of January 1, the wholesale power cost rate adjustment (WPCRA) increased from 0.28 cents per kilowatt hour to 1.94 cents.  The increase is due mostly to the rising cost of natural gas which is Chugach Electric’s fuel source for the majority of power purchased by Homer Electric.  The WPCRA, calculated on a quarterly basis, forecasts the purchased power cost and energy sales to members for this coming quarter. This pass-through charge represents costs that are mostly paid to Chugach Electric, HEA’s wholesale power supplier. 

In addition, Homer Electric has filed a request with the Regulatory Commission of Alaska (RCA) seeking an 8 percent increase in the base rate, from 11.16 cents per kilowatt hour to 12.05 cents. If approved by the RCA, the base rate increase will go into effect on February 1, 2006.  The increase, which would be just the second in the last ten years, is needed to cover increasing operating costs (fuel, insurance, interest, materials etc.) that all businesses are facing. 

The proposed base rate increase, combined with the change to the WPCRA, would result in an overall blended rate of 13.99 cents per kilowatt hour.  By February, this will represent a 22.3 percent increase from December 2005.

For the average residential member using 650 kilowatt hours, the average monthly electric bill will increase by about $16.58.

Despite the proposed increase for 2006, Homer Electric rates have remained relatively stable over the last several years.

In October 1995, the blended rate for Homer Electric members was 10 cents per kilowatt hour.  If the proposed rate hike is approved, HEA’s blended rate will have increased 40 percent in the last ten years.  In comparison, residential bills for natural gas have increased by 158 percent in the last three years.  

Homer Electric General Manager Brad Janorschke says the utility works to keep rates as low as possible and still maintain and improve the electric service provided to HEA members.

 “While it’s never easy to request a rate increase, this action is necessary to ensure we can continue to move forward and take care of the needs of our cooperative.  As a cooperative, we will continue to explore ways to expand our power generation options, lessen our dependence on natural gas, and stabilize the cost of electricity to our members”, said Janorschke.