Rates

HEA Rate Schedule (effective October 1, 2020)

HEA offers four different rates to its members, depending on the classification of the service provided. Our rates are regulated by the Regulatory Commission of Alaska.

Service Type	Monthly Customer Charge (A)	Energy Charge per kWh (H)	System Delivery Charge (B)	Demand Charge per kW (I)	Minimum Demand Charge (C)	Cost of Power Adjustment per kWh (D)	Regulatory Cost Charge (G)
Residential	$20.00	$0.16077	$24.12	N/A	N/A	$0.08067	$0.000654
General Service (E)	$20.00	$0.16734	$25.10	N/A	N/A	$0.08067	$0.000654
Large General Service (F)	$50.00	$0.10515	$0	$21.63	$432.60	$0.08067	$0.000654
Industrial Service	For more	information	contact	Member	Services.
Outdoor Lighting	175 watt lamp: $29.60; 250 watt lamp: $34.95; 360 watt lamp: $42.47; 400 watt lamp: $46.96; 55 watt LED: $28.97; 93 watt LED: $32.31; 160 watt LED: $41.31 per lamp per month

Explanation of Service Type and Billing Terms

To understand each part of the rate schedule, check the table above for the following lettings in parenthesis:

Customer Charge: A flat monthly charge that recovers a portion of costs attributable to billing, collections, data processing and meter expenses regardless of the amount of energy used during the billing period.
System Delivery Charge: This charge recovers expenses associated with building, operating and maintaining transmission and distribution facilities whether or not electric service is used. If energy consumption meets or exceeds 150 kWh within the billing period, no charge applies.
Minimum Demand Charge: The cost for 20 KW of demand/month. This is the amount needed to recover the costs of standby power required to serve a commercial location whether or not electric service is used. If the minimum demand of 20kW/month is met during the billing period, no minimum demand charge applies.
Cost of Power Adjustment (COPA): The COPA rate was established to recover the cost of fuel, purchased power and other fuel-related costs. This line reflects the most current COPA rate and is multiplied by the number of kilowatt hours (kWh) used at the location during the billing period. Rate fluctuations may occur on a quarterly basis predominately due to changing costs of fuel.
General Service (Rate 3). Any class of service which does not qualify for Residential Schedule and where the demand does not exceed 20kW for three consecutive months.
Large General Service (Rate 4). All general services using more than 20 kW of monthly demand during three consecutive months, but less than 1,000kW of monthly demand.
A rate that is established by the Regulatory Commission of Alaska (RCA) The money collected for this charge is passed on to the RCA to defray their operational costs.
A charge based on the electric energy (kWh) consumed.
A charge based on the rate at which electric energy is delivered to or by a system at a given instant, or averaged over a designed period, during the billing cycle.

What is a kilowatt-hour?

We usually use the term kilowatts (one kilowatt is 1,000 watts) when speaking of power production or power needs. A power plant makes kilowatts; we sell power in units called kilowatt-hours (kWh). For example, a 100-watt light bulb left on for ten hours uses one kWh of electricity. A typical HEA residential consumer uses 550 kWh per month.

You can find additional information on HEA’s Governance page.

What is the Cost of Power Adjustment (COPA)?

HEA receives many inquiries and comments regarding the COPA rate and its misconceptions. The following should help explain the purpose of this rate and provide you with factual information.

The COPA element of your bill is a direct pass through of HEA’s costs associated with fuel (predominantly natural gas with some hydroelectric power) and electric power purchased from other utilities. It also includes minor costs associated with HEA’s usage of the CINGSA natural gas storage facility and fuel to support emergency generators located on the south side of Kachemak Bay.

COPA is calculated based on two parts. The first is a forward projection of kilowatt hour (kWh) of sales and the expected fuel costs noted previously to support the level of generation. The other component reflects the status of balancing account. Because HEA makes forecasts of sales and associated costs, often the actual amount collected over a quarter will not equal the amount projected. This can be due to weather, level of economic activity, the mix of hydroelectric versus natural gas supplied generation and generation and transmission facility outages to name the most common factors. This under/over collection based on actual costs is incorporated into HEA’s forecast to determine the amount to be collected through COPA. COPA is submitted on a quarterly basis and is reviewed and approved by the Regulatory Commission of Alaska.

HEA’s COPA costs generally reflect the price HEA pays to transport and burn natural gas for its generation plants at Nikiski, Soldotna and Bernice Lake. Natural gas is not the same as automotive gas in terms of pricing. Automotive gasoline is derived from oil and fluctuates in price as determined in the global market. Natural gas for HEA and other utilities in the region is sourced locally. Unlike the Lower 48, Alaska does not possess a robust transport and storage system to move natural gas from producing regions to areas of consumption. All of HEA’s natural gas, along with that other utilities in the region, such as Enstar, is sourced solely from Cook Inlet. Cook Inlet prices are higher than in the Lower 48 for multiple reasons and are the primary driver determining the COPA charge. HEA has a multi-year fuel contract with Hilcorp that meets HEA’s needs for natural gas. Fuel contracts are reviewed and approved by the RCA.

The graph shows the fluctuations in COPA beginning in 2018. The range has varied from a low of just over six cents to a peak marginally over eight cents. Low prices experienced at the end of 2019 and the beginning of 2020 reflect the availability of excess hydropower to HEA due to the operational loss of the transmission line north to Anchorage and Fairbanks because of the Swan Lake fire. HEA does not anticipate such a recurrence in the future. One can also see in general that 2018 prices are lower than 2019 and 2020. This is due to natural gas contracts incorporating annual escalators in price.

Rate Change Information

2020 Rate Changes

Anticipated Rate Decrease Effective October 1, 2020

Homer Electric Association (HEA) members will likely see a rate decrease effective October 1, 2020.

HEA has submitted a filing with the Regulatory Commission of Alaska (RCA) that requests a decrease in the Cost of Power Adjustment (COPA) from $0.08113 per kilowatt-hour to $0.08067 kilowatt-hour.

COPA reflects the cost of the fuel purchased by HEA to generate electricity and purchased power. It is adjusted on a quarterly basis.

If approved, the new rate will mean an approximate decrease of $0.25 per month for the average HEA residential member using 550-kilowatt hours a month.

Pending approval from the RCA, the rate change will be effective October 1, 2020.

HEA Anticipates Base Rate Increase Effective April 1, 2020

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 obligations, to keep up with rising costs and to ensure safe, reliable service now and into the future.

Commonly Asked Questions

How much will my bill increase? The proposed increase of the base rate of 3% will result in an increase of $2.57 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 (SRF) to the RCA on February 12, 2020. We anticipate the new rates will go into effect on April 1, 2020.

Who will approve this change and when?

The HEA Board of Directors approved the base rate increase at the regular Board of Directors meeting on February 11, 2020.
HEA submitted a simplified rate filing to the RCA on February 12, 2020.
The Regulatory Commission of Alaska (RCA) will review the request from HEA to increase the base rate by 3%. HEA anticipates the increase will go into effect on April 1, 2020.

Why are the rates going up? There are several reasons for the need to increase the base rate.

The rate increase will help keep pace with the rate of inflation.
Higher expenses to meet more stringent reliability standards, particularly in the area of cyber security. The other Railbelt utilities are under the same pressure as in the industry as a whole in the rest of the United States.
Membership and economic growth has remained static.
Higher expenses for right-of-way (ROW) clearing due to the faster growth rate of vegetation coupled with the trends of a warmer climate. HEA must maintain clear ROWs and will require more frequent action than in the past.
Lower than expected kilowatt-hour sales. This decreases operating margins due to lower revenues.

When was the last base rate change? In April 2019, HEA submitted a simplified rate filing to the RCA which resulted in a 5% increase in base rates.

Why are your rates so much higher than other Alaskan electric utilities? HEA’s 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. They too are required to meet the more stringent reliability standards like HEA. 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 doing our best to provide safe reliable service. We are always looking for ways to manage costs. HEA staff constantly searches out grant programs like CAPSIS and working with FEMA to help defray costs to our members for projects like Battle Creek, Grant Lake Hydro, the BESS system and costs related to large storms that hit us in 2019.

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.

If you have additional concerns or questions about the base rate increase please give us a call or submit an online form for HEA.