2024 Rate Change
New HEA rates go into effect on January 1, 2024
To address the rising costs of materials and services and to ensure the cooperative continues to provide safe and reliable energy to its members, HEA’s Board of Directors approved the base rate change at a special Board of Directors Meeting on October 31, 2023, after careful deliberation and thorough consideration of the cooperative’s long-term financial health. This strategic decision was driven by our dedication to the long-term energy needs and our commitment to delivering reliable, affordable electricity to our community.
The cost of electricity is rising across the country. The issue is not unique to any one location or sector. According to the U.S. Energy Information Administration, the average rate for residential electricity has increased by 10.6% over the last 12 months, the largest year-over-year increase in the past decade.
The last two years have seen rapid price increases due to several factors: inflation, pandemic-induced labor and supply shortages. The largest impact on energy prices is the cost escalation of natural gas, which is one of the primary fuel resources used to generate electricity.
FAQ
The 3.5% base rate change increases the current residential rate from the current base rate of $0.16077 to $0.16640. This increase does not impact the Customer Charge or include any adjustments to the COPA. The new base rate will go into effect on January 1, 2024.
Yes, HEA adjusts COPA on a quarterly basis. Accordingly, the COPA will continue a quarterly adjustment schedule for 2024 (January 1, 2024, April 1, 2024, July 1, 2024, and October 2024). The base rate change is not correlated to HEA’s quarterly COPA. COPA reflects the cost of the fuel (mostly natural gas) HEA purchases to generate electricity. In the first quarter of 2024, the COPA will increase from $0.08191/kWh to $0.08868/kWh pending approval from the Regulatory Commission of Alaska (RCA).
It’s no secret that energy costs are increasing. he issue is not unique to any one location or sector. According to the U.S. Energy Information Administration, the average rate for residential electricity has increased by 10.6% over the last 12 months, the largest year-over-year increase in the past decade.
Prices for materials and services necessary to produce power have increased due to inflation and supply chain impacts. (e.g., equipment costs such as transformers, poles, and wires, labor, and cost of fuel for vehicles – see above graphic).
In February 2020, HEA submitted an SRF increase, approved by the RCA, and thereafter implemented a 3% base rate increase effective April 1, 2020.
HEA’s rates are not the highest rates on the Railbelt. HEA’s rates are comparable with other Alaskan electric utilities. Many of Alaska utilities are experiencing the same financial pressures. Increasing operating costs, supply chain disruptions, higher material costs and declining sales like HEA. HEA’s service territory has a lower population density and given the high fixed cost nature of providing electric service, HEA cannot expect to realize the same economies of scale as utilities serving suburban and urban regions.
Yes, HEA Departments were challenged to reduce costs. We strive to operate efficiently while doing our best to provide safe reliable service. HEA is pursuing opportunities for lower cost power by expanding the capacity of Bradley Lake, which produces the lowest cost generation for HEA. In 2020, the Battle Creek Diversion project was completed increasing Bradley Lake’s output by about 10 percent. HEA and other stakeholders are studying the Dixon Diversion project which could increase the power output at Bradley Lake[1] by almost 50 percent, of which HEA has a 12% share.
We are always looking for ways to manage costs. HEA continues to seek external funding opportunities to assist with system investments and offset upward pressure on rates. For example:
- Federal Funding Opportunities
- $206.5M GRIP funds received to build a second transmission line from the Kenai Peninsula to Healy opening options for HEA to participate in large generation projects with other utilities and obtain economies of scale.
- Pursuing PACE and NEW ERA grants for additional battery storage systems.
- Obtained appropriation of $875,000 for HEA’s gas to energy Landfill Gas project.
- State Funding Opportunities
- $166M invested in transmission upgrades from the excess bond payments for Bradley Lake.
- Renewable Energy Project Grants
- Hydro
- Large Scale Wind and Solar
- Landfill Gas
- Geothermal
[1] Bradley Lake currently electrifies the equivalent of 54,000 homes. The Dixon Diversion Project has the potential to power an additional equivalent of up to 30,000 homes.
HEA offers several options to help members manage their power consumption and energy bills.
- Our website offers tips for efficient energy use.
- Additional information regarding the availability of AHFC grants to fund retrofit projects can be found on the Alaska Housing Finance Corporation website.
- HEA staff are available to discuss usage patterns and strategies to lower future consumption. Simple steps, such a sealing draft, properly insulating homes, and using energy-efficient appliances are important measures in reducing energy usage and lowering costs.