If you live in the Fairbanks area, you might have noticed an increase on your monthly electric bill. That’s because Golden Valley Electric Association raised charges last month by about $9 on average to pay for fluctuating energy prices and maintenance costs.
The raise is effective from March 1 through May 31 and comes from the fuel and purchased power rate change dependent on the volatility of fuel oil prices, said Meadow Bailey, director of external affairs & public relations for Golden Valley.
“It reflects how much it costs to purchase fuel to generate power or purchase power from other utilities, if that’s a more cost-efficient alternative,” Bailey explained. “And the fuel prices have been fluctuating.”
The fuel and purchased power rate is one of the four charges the GVEA’s bill is made up from. The three other charges are: a customer charge for the availability of electric service that stayed flat for the past 18 months; a utility charge for operation costs adjusted semi-annually; and a regulatory cost charge set annually by the state Regulatory Commission.
While the three other rates have been relatively stable, the fuel and purchased power rate rate changes four times a year, when Golden Valley evaluates their recent spending and tries to predict its future costs, Bailey said.
“We are basically guessing what the prices will be in the next three months,” she said. “So then after the three months pass, we might have a difference between what we thought the fuel prices would be like and what they actually looked like.”
This time, Golden Valley spent more than they expected on fuel. In winter, the national average for a gallon of regular gasoline spiked several times, with the average increasing by 13 cents during the winter months alone, according to The American Automobile Association.
Besides higher fuel prices, Golden Valley also needed to pay unexpected maintenance costs in March and is planning more repairs in May, both of which will be covered by the two-month raise to the GVEA’s bills.
Comes June, the process might change again, but Golden Valley can’t say which direction yet.
“This rate fluctuates a lot, so it’s hard to say,” Bailey said. “Last quarter it was stable, the quarter before it was a decrease, and before that it was an increase. It fluctuates back and forth.”
Department staff said in the news release that “while GVEA cannot control the volatility of fuel oil pricing,” they are “constantly exploring ways to stabilize the F&PP rate for members,” for example by constantly evaluating the energy costs and choosing the most affordable source.
Contact staff writer Alena Naiden at 459-7587. Follow her at twitter.com/FDNMlocal.