Chugach Files to Lower Retail Rates

Chugach Electric Association wants to lower rates for its retail customers. The cooperative utility has asked the Regulatory Commission of Alaska to approve a series of changes that include lower retail rates. The Commission must accept the proposed changes before they can be implemented. Overall, if the new rates are approved by the RCA, retail customers will be paying about $4 million a year less than they are under current rates.

In general, the new rates will result in lower bills for Chugach retail customers. The amount of the reduction will vary by customer class and usage, and could range from about 2 to 3.5 percent for a given customer. The monthly bill for the average Chugach residential customer using 700 kilowatt-hours of service would go down by about 3 percent, or about $3 at current rates.

The details are contained in tariff sheets that were submitted to the Commission October 9 that would, if approved, make specific changes to the rates currently in effect. Chugach proposed that the new rates go into effect November 1. Here is a short summary of some of the proposed rate changes:

• Reduced Energy Charges: The charge for a kilowatt-hour would go down for all retail customer classes, ranging from 2 to 5 percent.
  
  
• Simplified Customer Charges: Monthly customer charges would be rounded down to even amounts.
  
  
• Fuel Costs in a Single Charge: The new rate removes the small contribution to fuel currently in the energy charge and adds it to the fuel charge to give a more accurate picture of the total cost of fuel on electric bills.
  
  
• Reduced Demand Charge: The charge assessed to large retail general service customers for the maximum amount of power they draw or "demand" from the system will go down for all large retail general service customers from 4 to 5 percent.
  
  
• Street and Yard Lights: Charges will more accurately reflect fuel cost changes. Switching from a flat fee that has not been adjusted since November 2003, to rates that include a per-kilowatt-hour fuel charge based on the hours of darkness each month, will provide a more equitable cost recovery for this service. Depending on the type of lighting service provided, the increases range from 0.1 to 12.7 percent.

The action comes as a result of a rate case Chugach initiated in September 2006 when it filed paperwork with the Regulatory Commission of Alaska seeking to adjust rates. The goal was to set rates that fairly recover the costs of key business activities. Chugach performs two key functions: it generates and transmits (G&T) power for utilities (including for its own retail customer base) and it distributes (Distribution) power to approximately 80,000 metered retail locations. In its filing in 2006, Chugach contended that the G&T rates did not properly recover the costs associated with that part of the business, while distribution customers were paying more than was fair.

"It's important to have rates that are fair," said Elizabeth Vazquez, chair of the Chugach board of directors. "We believe these new rates more equitably cover the costs of providing generation, transmission and distribution services. I am also pleased that many customers will see their bills go down as a result."

Chugach successfully negotiated a settlement agreement with three of the four intervenors (Homer Electric Association, Seward Electric System and the public advocacy section of the office of the Alaska Attorney General) in the rate case before the Regulatory Commission of Alaska. The RCA accepted the settlement agreement in August, which has allowed Chugach to file for these rate changes

Efforts were unsuccessful to come to terms on a settlement agreement with Matanuska Electric Association -the final intervenor - and so Chugach and MEA will proceed with a process before the RCA

Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.