GVEA rates show another increase as debates over state subsidies intensify
Published Monday, June 2, 2008
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Stumble It!Prepare for another surprise on your electric bill.
As of Sunday, GVEA rates for consumers went up by 3 cents per kilowatt hour because of rising oil prices. In addition, there was a general 2 percent increase.
The change will mean a rise of about $25 per month for the average residential consumer.
GVEA will now be charging $167 for 750 kilowatt hours, with $67 of that total due to the “fuel adjustment.”
The price for that amount of power in January was $135, while it was $89 at the start of 2005 and $78 in 2003.
Rising world oil prices are the key culprit in the rising rates. With the new rates, GVEA members will be paying about 22 cents per kilowatt hour, about double what it was five years ago.
The new GVEA plant at North Pole burns 3,500 gallons per hour of high-priced fuel.
Meanwhile, residential members of the Chugach Electric Association in Anchorage will see their average bills drop by about 3 percent as of June 1.
The utility relies on Cook Inlet natural gas, which is cheaper than North Slope oil.
The average Chugach member uses 700 kilowatt hours a month, at a cost of about $94. The same amount of power now costs $157 from GVEA.
Meanwhile, the rise in heating oil prices compared to natural gas means that we are now paying nearly four times as much for space heating on a per BTU basis as residents of the Anchorage area.
In his discussion of the energy problems facing Alaska today, Steve Haagenson likes to talk about the stages of grief.
In rural areas, people have accepted the problem and are in the last stage, “bleeding to death slowly” on oil they can not afford.
In Fairbanks, people are angry. In Anchorage, people are in denial.
“Nobody in this town is talking about it as a big topic,” he said during a presentation last week in Anchorage.
Haagenson, the former head of GVEA, is now executive director of the Alaska Energy Authority for the Palin administration, working to develop a statewide plan on energy issues.
The Southcentral region enjoys the lowest natural gas prices in the country. On average, according to Enstar, which serves Anchorage and environs, its customers pay 37 percent less than people in other parts of the U.S.
As long as that is the case, the sense of urgency attached to energy issues will be on the low end in Anchorage, while people in the rest of the state and who rely on heating oil for heating and electricity, will have a different view.
But any state plan for a broad-based energy subsidy will run into political trouble if the residents of Southcentral Alaska are denied an opportunity to partake.
As Alaska considers the governor’s plan to reduce energy prices, there are several aspects that need more debate.
First, it’s important to separate this from the natural gas pipeline to limit the potential for vote swapping. That means two special sessions are required.
Second, the relationship between energy consumption and conservation needs more analysis.
If the state reduces the price of energy with subsidies, the financial incentive for conservation disappears.
It’s going to be difficult to structure a state plan that lowers the price and encourages conservation.
And does every user of electricity, including the Fort Knox Mine and Alyeska Pipeline Service Co., need a 60 percent cut in electric rates?
The plan to give every recipient of the Permanent Fund Dividend $1,200 a year in the form of an energy debit card would mean $4,800 a year for a family of four.
In Anchorage and places in Southeast with hydro power, this could mean the state is paying the entire energy bill for some people. Should the payment plan be structured without regard to local costs?
Any measure adopted this year as a temporary subsidy for energy prices stands a real chance of becoming a permanent subsidy.
The conditions that justify a state subsidy today are likely to exist a year or two from now. The longer a state subsidy exists, the more difficult it will be for the state to end it.
It might help if whatever steps are taken this year come complete with specific warnings about reductions in the years ahead.
That’s no guarantee that future legislators will shut off the subsidy spigot, but it would be a sensible step.
Regarding consumption and conservation, if the state reduces electric rates by 60 percent, that may create an incentive in the Fairbanks area for people to shift to electric heat and increase the consumption of kilowatt hours.
The whole range of consequences — intended and otherwise — should be examined before the subsidy plan advances.
•••
FAIRBANKS DAY: The people at Pioneer Park are calling it a “Community Block Party.”
On Wednesday, starting at 1 p.m., there will be entertainment, free train rides, prizes, sales and discounts throughout the park.
Local nonprofit groups will have booths featuring their programs from 3 p.m. to 8 p.m.
For more details, call the park office at 459-1087.
•••
JUST PUBLISHED: Ron Smith, a retired biology professor from UAF, has authored a new book, “Interior & Northern Alaska: A Natural History.” It’s like a one-volume encyclopedia about all forms of life in our part of the state.
Smith’s book is available at Gulliver’s, the UA Museum of the North, the Riverboat Discovery gift shop, the UAF Bookstore and at the Alaska Bird Observatory, among other places.
He is to have a book signing and reception at the bird observatory Friday June 13 at 5 p.m. On June 14, he is to give a presentation at UAF at 1 p.m. as part of the Alaska Book Festival.
•••
MAY DAYS: The National Weather Service reports that the climate prediction center predicts a “slightly increased” chance that June temperatures will be significantly above normal.
May ended with cool weather. If the low of 32 on Friday is the last freeze of the season, it would be the second-latest freeze in the last 45 years, about two weeks later than the average.
Dermot Cole can be reached at cole@newsminer.com or 459-7530.
Community Discussion
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A well -written article. It is substantive in a way many other articles about this energy crisis have not been.
Dermot is correct in that the energy crisis is not a significant concern for Anchorage- nor Southeast Alaska...
Energy conservation has been talked to death. Lets face it, most homes built in the Interior are already very well built. It is simply a requirement where temperatures dip down to -50 below. Even before the recent run-up in fuel prices homes were built here to much higher standards than almost every other part of the USA.
Where the lower 48 might use 2" X 4" walls and R-11 insulation, even the cheapest house here is almost always going to have 2" X 6" walls with a minimum of R-19 insulation. Most walls are around R-25 where foam board is also used as an added layer of insulation. And our windows are better here, too. Honestly, are there any homes out there with single pane windows?
The bigger issue is how much we are spending for expensive oil heat where better alternatives are available. We need the state to move forward and build a natural gas pipeline ASAP. The project has been studied to death for over 50 years. The people of this state have voted to build a pipeline from the North Slope to Valdez- yet we still have dithering in Juneau about what to do.
Yikes.
If the state uses the massive surpluses we've had from the record price of oil to build this pipeline it would be the best thing we ever did. Getting affordable, clean, natural gas to the Interior within five years would go a long way towards solving our energy crisis.
Waiting until 2020 for gas is NOT an option for us.
Develop hydro now sack G.V.E.A. burn coal whatever it takes I am tired to death of being raped by big oil and our elected officials.
Study study study. We need relief now or this winter will be ugly like never before. I am the last one looking for a hand out but with a family of 6 to feed and house how can anybody make it. last winter we paid 1800.00 for heating fuel and watched our electric bill go up 30.00 every month. That is with conserving keeping heat set at 65 no lights on all things not needed unpluged coffee pot charges etc. Not to mention the cost of gas averaged 100.00 per week just getting back and forth to work now coming up on 200.00 per week. Where does it end?
It ends in Novemeber out with the old in with the new...
It seems to me (at least in Fairbanks), that a method for almost immediate impact already exist. By the state providing a immediate cash infusion into the Borough budget, that property taxes would have to be reduced. That would provide a monthly reduction for those who need it most (homeowners) (i.e. those who most are dealing with heating oil prices). I know that those who dont have homes have issues with fuel too, but the owners of their rental properties do have the option of passing the savings onto their renters.
This infusion into local budgets could occur by region. If property taxes are low in a region, the infusion could be distributed by local govt officials as a subsidy (as needed).
I see no reason for debit cards/large policy. Use the tools already on hand, and help those who need it. If Anchorage and Juneau are not in crisis, let them help those that are. That is what makes Alaska great. The community!!!!!!
We need that coal plant in Healy running.
GVEA has failed us on this, call your board members and ask them about it.
All of us all across the state are in the same boat. We need to get our governor, legislators, and our congressional delegation working together to adopt the following:
* Advocate that the legislature and Governor to develop a State Energy Policy and Plan (See “State of Alaska Energy Policy and Strategy Recommendations”)
o Alaska must provide energy equality for all the citizens of Alaska
o Energy must be affordable, reliable, and long-term
o Energy conservation must be encouraged for all Alaskans
o Alaska must work toward a common state-wide energy grid
o Energy alternative research and development must be encouraged and supported
o Non-renewable oil and gas set-asides need to be adopted to allow for in-state use
o Energy providers and producers must plan collectively for energy infrastructure development
o Alaska must be on a path of energy self-sufficiency by 2010 and energy self-sufficient by 2025
We also need to cap our fuel costs to stabilize our electricity costs and fuel needs so that our people can Subsistence hunt, fish, and gather, our fishermen can commercial fish, our food and clothing can be delivered by air at a reasonable cost, keep our schools open, and allow people in our villages to travel to our urban centers without going bankrupt.
We need an Energy Czar with cabinet level status with an Energy Department to work on resolving our energy challenges 24/7.
In addition, thought must be give to the state reimbursing communities that waive the sales taxes on electricity and fuel sales.
Boy I sure am glad GVEA went with an energy efficient method for the North Pole plant! 85,000 gallons of diesel a day to make heat for 15,000 people.......genius I tell you!
Andora,
>>o Alaska must work toward a common state-wide energy grid<<
Do you understand this is beyond unafforable to almost impossible? Do a little research on transmission line loss and cost of construction , you'll see the your "energy grid" concept doesn't work.
Sounds like to me we need to call CUBA and see how Castro did it. GOvernment has all the answers to your problems, just turn everything over to the "hard working public officals" and see how soon all your problems will go away. GIVE ME<<< GIVE ME>>>
When we built our home in 2001 we had Natural Gas running down our street so this is the heat souce we went with. It was much cheaper then and it burns clean, I thought it was a no brainer. Now 7 years later we who are on Natural Gas are paying the same as those who are on heating oil. I did not know at the time that Natural Gas in Fairbanks was being trucked up from Anchorage and unregulated by the state, my fault. At this point I feel anyone living north of Anchorage deserves some type of break on our heat and electricity. We built our house well, we are keeping our heat down, and I have down everything within my budget to better insulate our house, but it still does not do the job. The state needs to draw a line in the sand and say anyone living north of this line needs to have an adjustment to bring whatever type of heat one is on and electricity down to the level that Anchorage pays. This would apply to cities, village's, or wherever you live. I would just as soon see the state pay the oil dealers, Natural Gas company, and Electric utility directly to bring these rates down. If the State does not like this plan, I would hope they could buy my house at current Borough appraisal and I will move to Anchorage and have cheap heat and electricity. I know with the current amount of houses on the market in Fairbanks mine would never sell in time before I ran out of money. I'm not looking for a handout from the state, but rather a fuel adjustment. These are just my thoughts and I know many of you will not agree with them! I'm still angry seeing the electricity article before having enough coffee in my system.
And to think that the man who ran GVEA is now going to cure our energy needs. Under his leadership, it shouldn't take Anchorage and Southeast long to get to where the rest of the State is in paying high prices. Haagenson and his stages of grief, will Dr, Phil be up to do a show on Fairbanks and the "Fairbanks House" and it's denial of heating it. Maybe Haagenson's solution will be to provide free counseling to all who think they are cold and spending too much money on fuel. Is this guy for real.
We are getting closer and closer to that first frost and cold weather. By the sounds of the GVEA announcement, it is going to get ugly this coming fall/winter. We need something done NOW. Gov Palin, it sure is a nasty break that you are at the helm of this sinking ship, but we are going to need more of OUR money back for this winter!! As far as GVEA, I sure dont feel like a COOP member as I have in the past. I feel like a customer that is getting the shaft on a service I need.
The good ol' boy club... GVEA Directors. Good benefits, Great Vacations, All while being able to screw the users. Sack the board! Start with Schikora, cut the head of the snake off and the rest will die.
DNM - Why do you continue to do a disservice to your readers? This is another opinion piece masquerading as news. Not until the end of the article is it apparent (and only to those who know him) that this is an opinion column written by Dermot.
That said, I'd like someone from GVEA to tell us what percentage of its total generating capacity uses petroleum products to generate electricity. I'd also like them to explain why they told us they built the North Pole plant to burn naphtha because it was so "cheap" and was basically a waste product that was reinjected into the line and sent out.
Check with PolarConsults of Anchorage and they will tell you that the myth of line loss and the inability to transmit energy long distances is just that, a myth. Alaska can't afford to provide equal energy costs to all Alaskans as required by our constitution without stringing wire to as many of our communities as we can. Small communities can't afford diesel generation any more and any new technology that is available has a very high front end cost that is out of reach for small villages.
The only solution are regional grids and each of our regions of our state need to start reaching into the Railbelt Energy Grid.
If we are all Alaskans and we are supposed to be one state, why should only people in Fairbanks, Anchorage, Mat-Su, Kenai, and Juneau have low cost energy?
The money that has been used to build the Railbelt Energy Grid was state money that belonged to all of us. So I am saying that a state-wide grid is affordable and is the only way to ensure that all Alaskans are treated fairly in energy distribution.
And finally, if we all want low cost energy into the forseeable future, we should build a natural gas electrical generator on the North Slope and have that energy transmitted on electrical lines to Fairbanks. We could then expand the energy grid to connect to the rest of the state, energize the Interior villages, down to Nenana, west to the Kotzebue region, down to the Bethel region, over to Bristol Bay, and then over to Homer.
outraged is right. GVEA has a source of cheap clean power and refuses to bring its Healy plant online. I can see it from my window and it is a constant reminder of the lies GVEA tells of having to raise our rates due to the rising cost of oil. Coal is nowhere near the cost. GVEA apparently has a problem with Usibelli and is willing to let its customers pay through their noses rather than bring its plant online. Apparently RCA is willing to "Fuel" the fantasy as I for one have written them protesting the validity of rate increases based on a costly built powerplant sitting here unused. GVEA is lying to its members. Amanda McCaleb
Andora, a GVEA representative was on a local talk show and estimated a cost of 1 billion dollars per mile for electrical lines from the slope. This represented also had a answer of why any solution could not be done. Maybe GVEA is to busy with telecommunications to bother with energy needs. Remember the battery plant was to benefit all of us, then it was put in and we found out it only benefited downtown, but we all get to pay for it.
Wow--even little old Copper Valley Electric Association (CVEA) which supplies power from Valdez all the way north past Glennallen switches to hydro in the summer (and our electric bills drop substantially). I can't imagine why a larger cooperative with more members wouldn't have gone to that for the summer months years ago. It looks like I'd pay more for heating oil through Fisher's and Crowley in Copper Center, but my electric bill in the summer would be substantially less. Are they even talking about hydro in the GVEA Board meetings?
This is what I received from PolarConsults regarding transmitting energy long distances for a lot less than has been indicated by comments in this debate. Please review and contact Mr. Ausman if you have any questions.
"We certainly agree with your comments that Rural Alaska has a transportation problem which causes energy to be very expensive. We are currently developing the technology and systems to provide a much lower cost system of intertieing energy resources and rural communities together using a special single wire Direct Current system. We have been funded by the Denali Commission for Phase I of this project and since receiving good reports from our key inverter technology supplier, we can now request Phase II funding. This Phase consists of building equipment and the special transmission system and testing to verify designs. Phase III of the project will be a 25 mile interconnection between Mt. Village and St. Marys.
It may be of interest to you that a HVDC powerline from the North Slope to Fairbanks and beyond can transport the electricity made from natural gas at a lower price than a gas pipeline. As a result, the bullet pipeline will not be required if its major purpose is to provide gas to generate electricity. Suppose the main gas line is delayed or not built at all and the base value of the Prudhoe gas is set by its being stranded. A generation plant built on the North Slope will have the following advantages. A gas conditioning plant to remove the CO2 from the gas is not needed as gas with CO2 can be used directly in a gas turbine plant. Turbines are more efficient and can generate more electricity because of the lower ambient temperature of the Slope. Exhaust CO2 gas can be sequestered back into the field and used to extract more oil. There will be no carbon tax on this plant. The DC power line can have branches into the central Alaska's river systems and connect to regional lower voltage single wire DC grids such as we are developing. It is potentially feasible for electricity to be so inexpensive as to be used for heat in buildings, and perhaps to provide fuel for vehicles and boats as hydrogen.
Distributed generation sources are more robust than a single source. It is easy to envision many rural resources and systems feeding into a large Alaskan grid. The current requirements point toward using gas for the long term the use of renewables distributed over a grid will allow Alaska to emulate Norway that generates 95% of its electricity with hydro.
If I can answer questions please contact me.
Earle Ausman, P.E., President Polarconsult Alaska Inc.
1503 West 33rd Ave., Suite 310, Anchorage, Alaska
907-258-2420
Honestly, this whole energy debate is nothing short of amusing, and yes, I do pay the same GVEA rates as we all do, and the same price at the pump at Fred's like we all do.
If you want to pay less for energy, then use less!
Simple as that.
If you really can't use any less than you already do (and odds are you can in fact lower your consumption), then you simply have to live with the free market reality. Don't like that? Too bad. You simply can't have it both ways, the free market where it's beneficial to you, and the regulated market when you don't like the free market outcome.
"Ditto" on the Healy power plant. Here is a resource already connected to our Interior grid system and it is just setting there. When you ask GVEA directors why it isn't being used, you get a "knowing all" look that you just can't comprehend the problems that this plant would bring with it. When you inquire as to what these problems may be, you get no reply because of all the legal hassles GVEA has been through with AEIDA and the directors are not allowed to talk about it. Well GVEA, try explaining it so that I "can" understand why it isn't being used. C'mon News Miner, where are all of your investigative staff when it comes to this issue. The Healy power plant could offer immediate relief that we don't have to wait until 2020 to help reduce our enery costs. With these increases, a person would be crazy to think that plugging in a hybrid car is going to reduce his transportation costs! Nuff said.
Peanut ....that is the assinine mentality that I am really tired of hearing. We are using less bud, the problem is that even using less is still more expensive than when you were using more. Are we at the point that our society has regressed to candles and woodstoves and demoing half your house and living on the living room on the floor? The free market is combobulation of corruption plain and simple. Thats a ridiculous response to a BS crisis!
I find it interesting that GVEA is saying the complete opposite of Polar consults when it comes to an electric line. Maybe the people out on old Murphy Dome Road and other places were lucky that GVEA never got power lines to them. We tend to forget there are many places in this borough that are not on the grid. Ask people at Haystack what GVEA charged them for their lines, it might surprise people the thousands of dollars paid by each home owner who wanted to be hooked up. Look at what GVEA is charging for a power line pole for your home to be hooked up, they use to be free. The radius of power in this borough is very limited, go north 13 miles and you are off the grid.
Cub, I believe that your premise is flawed. You seem to believe that you are somehow entitled to inexpensive energy.
The fundamental issue is that we were spoiled by decades of cheap energy, and our lives were built around the notion that a gallon of gas will always be the least expensive retail liquid available. When I arrived in Fairbanks many years ago, I paid $1.17 for a gallon of gas, which was less than the price of a gallon of spring water, milk, (good) beer, laundry detergent, or any other liquid known to man.
That former situation, not the current one, was just unreasonable.
Sure, it sucks for those who built 3,000 sqft homes back in the day and now have to heat them even though they could live in a house half the size just fine. It sucks for those who drive that V8 that no one wants to buy from them even at a fraction of what they still owe on it. Then again, Reality is a harsh Mistress.
In our global economy cheap energy will never return, no amount of foot stomping will change that.
Diversify the energy supply (non trivially): burn more coal.
Coal is not an option for one and only one reason: politics.
At the next election, ask yourself: is my elected representative helping or hindering our energy companies from using all non trivial energy resources in order to keep energy prices low?
Maybe GVEA should stop spending money trying to become an internet service provider. It makes me wonder just how much money they funnel into AlasConnect. Why is our electric company also providing network support services? Take the money you are wasting in antennas, wireless spectrum, and network engineers, and invest in cheaper energy.
Build the Susitna Dam. Look at the cost per kilowatt at the Bradley Lake dam somewhere around 4 cents.
Griffin,
Not true power goes out past 42 mile Steese highway...
almost to 30 miles on Chena Hot Springs road...
and down the Parks and Richardson highways...
I'm not defending GVEA just pointing out Griffins error.
Boy it really makes your day when you get to read the paper and find out good ol gvea is raising the rates again and boy howdy gas rose a few cents over night yee haa. Did anyones paycheck go up overnite. Dang mine didnt either. We read eveyday about the energy crisis and how bad people have it and i think it sucks. But do any of our politicians or leaders really care hell no they dont thats the plain truth. The govenor had a idea for the debit cards could of helped but oh no thats a bad idea them leaders dont think thats a good idea we cant give out that money and help anyone then they could not spend it. Gvea go on coal you can kiss that goodbye then how are they gonna rip us off every month with the high bill they wont change they love seeing all those big checks from customers every month why would they want to change. Bottom line were screwed so turn all your lights of turn the thermostat down to fifty wear a snowsuit while you read by candlelite and when you need food at fifty below walk to the store. If them so called leaders wanted to help give every eighteen and older alaskan a five thousand dollar pfd this month from all the oil funds the state now has an abundance of now so we can buy fuel and electric. Oh but dont do that thats a handout even though the oil and resources belong to us alaskans not just the politicians. Well ihave used all my electricity for the month so have to unplug computer
Why doesn't that state of alaska take the proposed welfare money that will be gone in a year and use it to develope natural gas in the matsu and nenana basins? Increase the supply and the price will go down.
Here's some perspective for you. I have an electric log splitter that runs at 120v and 15amp. I can split with it for an HOUR and the total cost of that WORK performed is 40 CENTS! Your tellin me we're getting ripped off on the cost of electricity, I'm outraged, I should be able to pay someone a nickel to split all that wood. Sheesh.....
Did they ever say what happened to the big power outage on Friday? All of Fairbanks, North Pole and Two Rivers was out. It was out for almost an hour, so do we get our money back?
One way to take Anchorage on and make them feel the cold.
Elect representives who can and will build networks with the out laying areas then they will have the clout to send a chill into Anchorage. Support
Joe Paskvan State Senate District E
Karl Kassel State Representative District 7
David Guttenberg State Representative District 8
Scott Kawasaki State Representative District 9
John Brown State Representative District 10
Corey D. Allen State Representative District 11.
Everyone whines about the cost of our utilities when in actuality it is our own fault for allowing the utilities to be sold to private industry. If they had not been sold we would still have control over rates. The baby has been thrown out with the bathwater. Time to get over it and open the checkbook.
Oh yeah, what happened to the so called didvidend the city received from the sale of M.U.S.? Do you suppose the ex Mayor got that too?
Yeah, that pipeline that runs through our town really helps lower our heating bills. *HA!*
Wasn't that one of the selling points of the Pipeline?
The Governor has to step in an use some executive power to kick start that Healy Clean Coal Plant. That would buy us time to get a good energy plan going.
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