FAIRBANKS - Falling oil prices should drop Fairbanks electricity prices between $6 and $13 for the average customer, but not until March.
As gasoline costs have dropped to near $3 a gallon in Fairbanks, Golden Valley Electric Association CEO Cory Borgeson said he's been getting calls from members asking if there will be a similar drop to GVEA's fuel charge.
GVEA sets its rates for each quarter based on the anticipated power generation costs. The fuel charge did drop slightly in November, but a larger adjustment is expected next quarter, which begins in March, he said. Even then, the electricity bill won't fall as fast as the price at the gas pump because only 29 percent of GVEA's electricity come from oil, he said.
Most likely, electricity prices will drop between 1 and 2 cents per kilowatt hour. That would lead to a $6 to $13 reduction to the average residential customer, who uses 660 KWH per month.
"We're pretty certain it's going down because we had projected fuel costs based on $85 a barrel for oil and we're under $60 a barrel for oil today," Borgeson said.
GVEA generates most of its electricity from coal. It now charges residential customers about 20 cents per kilowatt hour, which puts Fairbanks' electricity costs at well above Anchorage, but below much of rural Alaska, Borgeson said.
Next year, GVEA plans to open the Healy Unit 2, a coal power plant that's forecast to help lower electricity rates by moving more of the power generation to inexpensive coal. Healy Unit 2 used to be known as the Healy Clean Coal Plant. It was built in the mid-1990s but was mothballed because the technology didn't work as planned. GVEA bought the plant in 2013 and has been upgrading it to begin operations next year.
Contact staff writer Sam Friedman at 459-7545. Follow him on Twitter, @FDNMcrime.