Energy proposal could cover Interior electricity costs
Published Friday, July 25, 2008
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Stumble It!JUNEAU — A new proposal before state lawmakers would significantly reduce the cost of electricity for residents of Fairbanks, North Pole and other Interior Alaska cities.
The proposal, which was introduced this week in the House and Senate, would expand the state’s Power Cost Equalization program, which was created in 1985 to bring rural electricity prices more in line with those in urban areas.
Lawmakers say the program deserves a makeover in light of skyrocketing energy prices — many rural areas are already hitting the cap placed on the subsidy years ago, and some urban areas are starting to suffer from high prices.
“We’re trying to get back to the thrust of the bill, which is equalizing power (costs) as much as possible throughout the state,” said Sen. Lyman, Hoffman, a Democrat from Bethel and author of the new proposal.
The PCE program works by covering the difference between average electric costs in urban areas and the actual electric cost in high-price locations, up to a certain cap. The program covers certain community facilities in rural areas, but not other public buildings or businesses.
Hoffman’s proposal would raise the per kilowatt-hour cap from 52 cents to $2, increasing the benefit to many rural residents. Prices in about 40 communities already exceed the 52-cent cap, according to the Alaska Energy Authority.
The new proposal also would modify the eligibility requirements for participating utilities so that residents would benefit in any location with higher than average electricity prices.
Under current prices, that would include residential customers using Golden Valley Electric Association, where rates have risen to 20 cents per kilowatt-hour, including the fuel surcharge. GVEA has about 36,000 residential customers, according to spokeswoman Corinne Bradish.
The new proposal would reduce the per kilowatt-hour charge to about 15 cents, or 120 percent of the average urban rate, for the first 300 kilowatt-hours used in summer months and 700 kilowatt-hours used in winter months.
The expanded program would cost about $85 million a year, instead of the current $25 million to $30 million, according to Hoffman.
Local lawmakers said Thursday they liked the idea but had concerns about creating a new, long-term subsidy.
“I think we can probably develop a mechanism through PCE that will work,” said Rep. Mike Kelly, a Fairbanks Republican and member of the House Finance Committee, which considered a House version of the bill Thursday morning. “What I’m worried about is that we create something that goes on forever.”
Sen. Joe Thomas, a Fairbanks Democrat and member of the Senate Finance Committee, said he thought the proposal was a “pretty good idea.”
“I’m also concerned about fuel oil costs, but this is obviously a step forward,” he said.
Lawmakers said they saw the changes to PCE as a supplement to other proposals, including Gov. Sarah Palin’s proposal to give every Alaskan a $1,200 “resource rebate.”
Joe Balash, a special assistant to the governor, said the administration is certainly willing to discuss proposals dealing with the cost of energy. He declined to comment on the specifics of the PCE proposal, but said Palin was supportive of the effort to reach as many communities as possible.
Hoffman also is pushing a one-time boost for the federal Low Income Home Energy Assistance Program and a similar state program.
The two proposals are SB 4005 and SB 4006.
Community Discussion
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Expanding the PCE program to help as many communities as possible is a good idea. The concerns expressed by some legislators is that this program could go on forever. That is not the case if the state supports finding alternatives that will lower the cost of energy for everyone in Alaska. We should look closely at the core problem, and that is the high cost of gasoline, heating fuel, diesel, aviation fuel, and propane.
If those fuel costs are not reduced, our economy will suffer. We need to tap into the State Royalty Oil and have that Royalty oil refined at Flint Hills and distributed to all Alaskans at $2.00 a gallon for all fuels.
Andora: Right on!!! Senator Hoffman's proposal to the PCE cost adjustment to reflect the increased electrical energy differential in both rural and interior communities is an excellent idea. Perhaps a "sunset clause" to keep the focus on developing cost effective alternatives to the high priced diesel would be a good idea, too.
Sounds like this would cover only residences, needs to include small businesses, or perhaps all businesses too.
As I recall GVEA just asked for a rate increase just for residential users.
What about my food bills,, and dental bills, and car payments, boat payments, snow machine payments, rv payments, vacation bills,, come on you have lots of money.. send it to me..
Here's a sunset clause: "PCE is won't make you thrive, it only allows you to survive"
No one in their right mind - had they other options would consider eking out a living on PCE. This is a survival choice, not a choice anyone enjoys, just a mechanism to survive.
Finish off funding the DC Lite test.It only needs about a million to finish the testing. If it works, we'll have a viable energy transmission system for rural Alaska. If it fails, we'll know to seek other solutions.
Bugger, you may think that we would all waste our money on wants instead of needs but this is not the case.
The poll at www.fairbanksgas.com/#Poll shows that 65% would fill up their heating oil, 14% would use a rebate to increase their energy efficiency and 12% would pay bills (probably credit cards bills for last winters fuel and electric).
Bugger, do not worry, the $1200 rebate is making it way through the house finance committee. Only change, it will be attached to the permanent fund check. Per ADN it faces little opposition in the House, but some in the Senate. Most likely to pass.
Fairbanks, if this passes, Anchorage has finally determined that we will become part of the rural communities in Alaska and receive special village status. What will you who have consistently written put downs about village life do, when you join their ranks. What goes around comes around.
True enough woodman and let's hope that SC doesn't have a nutjob equivalent of Whitaker who would sue the state because of public assistance to Fkbs and not SC.
The proposed change to the PCE program would help Fairbanks - a little.
For the "typical" 750 kW/hr per month home (see GVEA rates), the savings, $0.05/kWh, would amount to about $15 per month in the summer, $35 in the winter. Not much. Adding businesses to the plan costs little and provides little. Imagine Fort Knox mine saving $35/mo on their bill - big deal.
I would much rather see us pay market rates for energy and receive a substantial energy rebate. Subsidizing the energy rates does not promote the development of alternative sources, and it does not encourage conservation. The two most important means to solve the energy "crisis".
Give each Alaskan a fair share of the oil wealth to get through the winter and invest in the future.
The State has already spent $300 million on the Healy Clean Coal Project and another $150 million on the Susitna Hydroelectric Dam, Let's get them on line now.
With Sustina we can heat our homes for pennies per kWh, without carbon or air pollution, forever.
Steve, moving to more sustainable and efficient energy in the long term is important, but something like this is also good to buffer the effect of the steep spike in energy costs this year.
A small subsidy won't keep people from conserving or moving to cheaper fuels in the long term, but it will help lessen the short-term emergency, especially for people and small businesses with tight budgets.
Alaska should sell OUR royalty oil and refined products to residents at below-market rates. The prices are no longer tied to production costs and only represent huge profits justified simply by comparison to the world market. There is no moral justification for charging residents so much to utilize OUR oil.
Anyone know what the break even price is for a barrel of oil these days? How much is the profit margin?
The PCE would help you on your GVEA bill. What is does not do is get GVEA away from oil fired power generation. GVEA needs a five year plan to get completely off oil fired power generation except for emergency standby generation. The GVEA board needs to get rid of oil.
I don't know what the break even point is for Big Oil, but the State needs at least $87 a barrel to ballance the current budget. This is up from $25 a few years ago. When oil was $25 the oil companies were still posting profit, just not world record profits.
Instead of subsidizing GVEA's dependency on oil why doesn't the State drop the lawsuit against us and fix the Healy Clean Coal plant. This would have the same impact on prices that a subsidy on oil would.
Besides short term relief for high engery costs, we must find alernatives that can lower costs and reduced our dependence on oil to generate electrical power.
PCI must cover everyone not just residents. Our businesses are paying 55 cents a kilowatt and going up with every shipment of fuel. I live in Yakutat on the Gulf of Alaska. Halibut and Black Cod boats refuse to deliver their catch because thay can run to Sitka and get a better price. The reason, our processor is paying 55 cents a kilowatt to freeze black cod where Sitka's processor is paying 8 cent a kilowatt.
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