HEA Anticipates Base Rate Change Effective April 1, 2019
An Important Message From Your Cooperative
Consideration of changing rates is not easy for the board of directors and management at HEA. We understand our members do not want to pay more each month on their electric bill, but we also have a responsibility to our members of keeping the cooperative in a solid financial position to meet financial and loan obligations, to keep up with rising costs and to ensure safe, reliable service now and into the future.
We invest in technology to improve reliability, operations and efficiency. As a cooperative, we are not driven by profits. Rather, we are service-driven and operate as close to cost as possible. Our focus is on keeping the cooperative financially strong on behalf of all members, in order to continue to provide safe, reliable service at the lowest practical cost.
We are your employees, neighbors and friends and we proudly belong to the communities we serve. Living in our service area, we are committed to finding ways to reduce the impact of rising costs. If you have additional concerns or questions about the base rate change please give us a call or stop by one of our offices.
We Are In This TOGETHER.
Base Rate Change Frequently Asked Question’s
How much will my bill increase? The proposed 5% base rate change will result in an increase of $4.09 for the average HEA residential member using 550-kilowatt hours a month.
What is the base rate? The base energy rate is set to recover operational costs and return on investment in plant. The base rate is multiplied by the number of kilowatt-hours used at the location during the billing period.
Is the base rate the same as Cost of Power Adjustment (COPA)? No, the base rate has no correlation to HEA’s quarterly COPA. COPA reflects the cost of fuel HEA purchases to generate electricity and continues to fluctuate on a quarterly basis.
When will the base rate change go into effect? HEA submitted a simplified rate filing to the Regulatory Commission of Alaska (RCA) on February 13, 2019. We anticipate the new rates will go into effect on April 1, 2019. After 2019, the base rates are projected to remain stable into the near future, however, base rate changes are influenced by many different factors.
Who will approve this change and when?
A. The HEA Board of Directors approved the base rate increase at the regular Board of Directors meeting on February 12, 2019.
B. HEA submitted a simplified rate filing to the RCA on February 13, 2019.
C. The RCA will review the request from HEA to increase the base rate by 5%. HEA anticipates the increase will go into effect on April 1, 2019.
Why are the rates going up? There are several reasons for the need to increase the base rate.
A. Lower than expected kilowatt-hour sales. This decreases operating margins due to lower revenues.
B. General inflation
C. Membership has remained level/static
D. HEA’s last rate case was based on costs experienced during 2014
When was the last base rate change? HEA‘s last rate case was completed in January 2017, which resulted in decreasing base rates while increasing the customer charge for residential members.
Why are your rates so much higher than other Alaskan electric utilities? HEA’s base rates are comparable with other Alaskan electric utilities. Many of the other Alaska utilities are experiencing the same financial constraints and decline in revenue that HEA is facing today. HEA’s service territory has a low population density. Given the nature of providing electric service, HEA cannot expect to realize the same economies of scale as utilities serving suburban and urban regions.
Is HEA doing anything to hold down rates? HEA strives to operate efficiently while delivering electric service that is safe and reliable. We are committed to finding ways to reduce the impact of rising costs. Here are a few items that HEA is currently working on to help reduce future energy costs:
A. Battle Creek diversion into Bradley Lake
B. Soldotna Landfill Gas Project
C. Grant Lake Hydro Project
D. TRANSCO initiative to save costs of transferring power up and down the Railbelt
What if I need help with my bill? HEA offers several options to help members manage their power consumption and energy bills. Some services we offer include automatic payment options, budget billing, energy tellers, energy efficiency recommendations and an analysis of your historical usage of your home.