Update to Electric Rate Study

New Rates go into Effect with Healy Unit 2 Back in the Generation Mix

In December 2016, GVEA submitted to the Regulatory Commission of Alaska (RCA) a filing requesting approval to reduce GVEA’s revenue requirement by 1.3 percent, or approximately $3 million annually. The new rates would more accurately reflect cost-of-service levels between the different customer classes.

In December 2017, the RCA accepted an agreement entered into by GVEA and the Office of the Attorney General, Regulatory Affairs and Public Advocacy (RAPA), which resolved all disputed issues in GVEA’s rate filing. A key piece to the agreement was the safe and successful restart of Healy Unit 2, as it is an integral part of GVEA’s generation fleet that is tied to the rate filing.

Over the past year, GVEA has worked with industry experts to redesign, retrofit, and restart Healy Unit 2. Recently, Healy Unit 2 successfully met the performance standard agreed to by GVEA and RAPA; therefore, GVEA submitted a notice of compliance and requested that the new rates agreed to in the agreement become effective November 1, 2018.

GVEA understands that this rate change may have an impact on some of its members. Residential members can expect a change to the Customer Charge and Utility Charge. For a more detailed explanation of the changes, please see the accompanying bar graphs on pages 5 and 6. Be assured that GVEA continues to work hard to control costs and safely provide quality electric service. Read more about the Healy Power Station on page 32.

Quarterly Fuel & Purchase Power Charge Declines

The Fuel and Purchased Power (F&PP) component of your bill will not be affected by the rate filing. The F&PP rate is updated on a quarterly basis, utilizing the Commission’s regulations. GVEA members are already seeing a savings in fuel costs with Healy Unit 2 back online. The current F&PP rate, effective September 1 through November 30, decreased 5 percent from the previous quarter. We’re optimistic that it will continue to decrease and stabilize with Healy Unit 2 back in the generation mix.

Note:  The article above appeared in the October 2018 Ruralite Magazine. To view that 3-page article in its entirety, click here.

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GVEA's 2016 Electric Rate Study

GVEA’s Board engaged a consultant to prepare a study of the cooperative’s costs of providing electric service and the rates charged for this service. The purpose of this study was to determine the revenue needed to cover the cooperative’s operating expenses and debt obligations, as well as examine the equitability of rates among the various customer classes. This project was broken down into three steps: determining the revenue requirement, allocating the costs among the various customer classes and designing rates.

The study showed that overall electric rate revenues warranted a decrease of $3 million annually or 1.3%. The study also showed that the rate structures needed adjustments. The Board decided to use this rare opportunity of a decrease in revenues to propose rate design changes that would bring the different rate classes closer to true cost of service. The cost of service study offers a comprehensive review of all rates to ensure that each member, regardless of rate classification, pays his/her fair share.

In mid-December 2016, GVEA filed its 2016 Electric System Rate Study with the Regulatory Commission of Alaska (RCA) seeking approval to implement a revenue requirement decrease and proposed rate design changes. Although GVEA is requesting a revenue requirement decrease, many of our members will be seeing an increase to their monthly bills due to the proposed rate design changes. Below are two tables for use by Residential members.

If you would like to utilize a bill calculator to determine how the new rates will affect for your own bill, click here.

 

The following table provides a comparison of current rates and new rates:

Residential Rates

Current Rates

New Rates

Customer Charge

$17.50

$22.50

Utility Charge

$0.11631 per kWh

$0.11404 per kWh

Fuel & Purchased Power Charge

Neither of these charges are impacted by the General Rate Case currently before the RCA.

Regulatory Cost Charge

 

The following table provides a Residential Rate impact comparison based on monthly kWh usage:

Monthly kWh Usage

Current Monthly Charge

New Monthly Charge

Change in $

0

$  17.50

$  22.50

$5.00

200

$  57.41

$  62.09

$4.68

400

$  97.32

$101.68

$4.36

 (Average Usage)    600

$137.23

$141.27

$4.03

800

$177.14

$180.86

$3.71

1,000

$217.06

$220.45

$3.39

1,200

$256.97

$260.03

$3.07

 

Summary of the RCA's Approval of GVEA's Electric Rate Study: All rates proposed by GVEA are subject to review and approval by the RCA before they become effective. By Alaska law, the RCA had up to 15 months to issue a final order in this proceeding. In December 2017, the RCA accepted an agreement entered into by GVEA and the Office of the Attorney General, Regulatory Affairs and Public Advocacy (RAPA), which resolved all disputed issues in GVEA's filing. An integral piece to the agreement was the safe and successful restart of Healy Unit 2, as it affected the implementation of the proposed rates. 

 

A full copy of GVEA’s filing can be found on the RCA’s website:www.rca.alaska.gov

To read a related article (with various links) on GVEA's blog site, click here. 

To access GVEA's web page that addresses current rates, visit: http://gvea.com/rates/rates 

 

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