HEA Members Forum Update

HEA/AEEC MEETINGS
Tuesday, June July 9, 2013
HEA members are welcome to attend.

10:00 AM: Ocean Renewable Power Company Presentation
At the request of the HEA Renewable Energy Committee, Doug Johnson of ORPC (http://www.orpc.co/ )will update the full HEA Board on their Cook Inlet tidal power generation pilot project. 

12:00 Noon: HEA Combined Committee/Board Meetings

The AEEC Combined Committee/Board Meeting will follow the HEA Meeting later in the afternoon.

Meetings will be at the Homer HEA Offices at 3977 Lake Street. 
Kenai offices are being remodeled so video conferencing still may not be available for the Central Kenai Peninsula.
Meeting agendas should be available by July 8 on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/318/Default.aspx.

NIKISKI STEAM TURBINE GENERATOR
The new steam turbine is running and generating electricity off waste heat from our old gas turbine. More good news -- Golden Valley Electric Association has agreed to buy that power between now and the end of this year when we stop buying energy from Chugach Electric Association. It's a good deal for both HEA and GVEA. We get revenue for energy produced before we need it, allowing us to keep the new turbine running during this time and work out any bugs in the Nikiski plant's upgrades. GVEA gets comparatively low cost energy from us for the next six months.

JULY RATE INCREASE
Look for a 4.39% increase on this month's residential electric bill (18.075 cents per kWh, up from 17.315 cents). This will cost the average 630 kWh residential energy consumer about $4.79 more than last month. 
 
9TH ANNUAL ALASKA RENEWABLE ENERGY FAIR
Mark your calendar -- August 10, 11:00 AM to 9:00 PM on the Anchorage parkstrip. It's fun for the whole family! Enjoy live music, crafts, great local food, informational booths, children’s activities, and interesting workshops. Admission is FREE and it’s guaranteed to be a great time! For more information contact Jenny Lynes at 907-929-7770 or j.lynes(at@)REalaska.org and check the website athttp://alaskarenewableenergy.org/ for updates on planning.

Have You Ever Considered Serving on the HEA Board of Directors?

With Mike Wiley's passing there's a vacant seat that the Board of Directors must fill. A packet for applicants is available on the HEA website at http://www.homerelectric.com/ and the deadline for filing is February 6. The BOD plans to interview folks on February 10 or 11 and make a selection then.

Decisions made by the HEA Board determine much more than your electric rate. The types and location of generation, transmission, and distribution projects approved have far reaching affects on communities, local economies, and the environment. For the best decisions, the BOD should represent a diversity of viewpoints and interests. Here's a chance for you to make a meaningful contribution to the Kenai Peninsula and your neighbors.

Contact Joe Gallagher at too-ate-3-2324 for more information.

HEA Members Forum Update

Regular HEA/AEEC Meetings
Tuesday, August 14, 2012

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Location: Meetings take place in the Homer Offices at 3977 Lake Street, 907-235-8551.  Video conferencing is available in the Kenai Offices at 280 Airport Way.  Draft agendas should available at least a day before meetings on the HEA website athttp://www.homerelectric.com/

BoardofDirectorsElections/
BoardMeetingInformation/Agendas/tabid/220/Default.aspx. There are sometimes last minute changes in scheduling, so check the website.

Tomorrow -- the 8th Annual Alaska Renewable Energy Fair
Saturday, August 11, 2012 -- 11:00 AM-9:00 PM -- Anchorage Parkstrip Between G & I Streets
This a FREE event with live music, food, a beer garden, craft and information booths, kids activities and renewable energy workshops.Go to http://alaskarenewableenergy.

org/events/alaska-renewable-
energy-fair/ for a complete list of activities.

New USDA-Funded Loans for Energy Upgrades
U.S. Agriculture Secretary Tom Vilsack recently announced a $250 million program to allow rural electric cooperative customers to take out USDA-funded loans to make energy upgrades and then pay back the loans through their monthly utility savings.

Like the Alaska Housing Finance Corporation rebate program, a certified energy auditor first evaluates the home and makes recommendations for upgrades. Unlike the AHFC program, qualifying homeowners will get an upfront loan rather than a partial rebate after work is completed.

Two-thirds of the savings resulting from the upgrades would go toward repaying the loan. For example, if the drop in energy use results in a $100 monthly savings, $66 would go toward satisfying the debt, and the homeowner’s bill would still be about $33 less than without the improvements. 

Clean Energy Ambassadors (http://

cleanenergyambassadors.ning.
com/) will host a webinar on August 23 the USDA's Rural Economic Development Energy Efficiency Effort. Register at https://cc.readytalk.com/r/hmxz86da07q1 if you're interested.

City of Homer Sewer Treatment Plant Winner of Great Alaska Energy Challenge
In May 2012 the facility received the Renewable Energy Alaska Project award for biggest reduction in electricity usage, having cut energy use by nearly one sixth, saving enough electricity to power over eight homes in one year!

Have You Voted That HEA Election Ballot?

If so, give yourself a pat on the back. 

If not, you still have time. 

Mail-in ballots must be received by HEA no later than May 2. 

Elect capable, responsible, Directors to the Homer Electric Association Board.

David Thomas (District 1)    Ed Oberts (District 2)    Jim Levine (District 3)

HEA Members may also vote in person at the Annual Meeting on May 3 at Homer High School.

HEA/AEEC Meetings Tuesday, December 13, 2011

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Warning: On the meeting calendar page of the HEA website when you "hover" the cursor over a meeting title an incorrect time is displayed. For example, 9:00 AM will be shown as the Operations Committee starting time. Click on the meeting title to get the right time.

Location: Meetings take place in the Kenai Offices at 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street, 907-235-8551. Draft agendas should be available prior to meetings on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

. There are sometimes last minute changes in scheduling, so check the website.

Your HEA Account Number is Being Changed
To accommodate the growing number of HEA members all account numbers will gain an additional digit. For example, if your account number was 12345-01 it will now be 12345-001. Check your next HEA statement for your new number and be sure to use it when referring to your account. Don't forget to notify your bank or other bill pay service of the change too. Contact HEA Member Services if you have questions (907-283-5831, 907-235-8551, 800-478-8551).

AEEC Meeting Minutes Now Available
The Alaska Electric & Energy Cooperative, Inc. is HEA's generation and transmission arm. HEA and AEEC Directors are the same people. Most of the major expenses for the Independent Light project have been incurred in the name of AEEC. While HEA Board meeting minutes have been posted for some time, AEEC meeting minutes were not available until now. HEA Members Forum has encouraged HEA staff and Board to post these and other information about AEEC for at least two years. Unfortunately, the minutes do not reflect how individual Directors have voted on various resolutions or include copies of those documents. Without such it is difficult for HEA members to evaluate Director performance but one can at lease get a sense of what transpired and when specific decisions were made. So, Kudos to Directors Debbie Debnam and Jim Levine for helping HEA take this step toward somewhat greater transparency. Go to http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/AEECMinutes/tabid/302/Default.aspx for the minutes.

Monthly HEA Manager's Reports
Remember that you can download copies of Brad Janorschke's short monthly summary of recent coop developments and actions.  Each report serves as the core of an update presented to Directors at the monthly HEA/AEEC meetings. While not as detailed as the in-person reports, website versions provide some useful information for any HEA member interested in tracking what management has to say about the coop. Go to http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/ManagersReports/tabid/222/Default.aspx and click on the date of the report(s) you want.

New HEA Rate Plan Coming January 1
There will be a single energy rate for all residential members with a new 150 kWh minimum charge and the present $11 per month customer charge will increase to $15.  The HEA billing system may not be ready by then to accommodate the new minimum energy charge. In that case HEA will request a waiver from the Regulatory Commission of Alaska to postpone adding the energy minimum until billing software upgrades are completed.
           
Grant Lake/ Grant Creek Hydroelectric Project
Over the last four years HEA members have been pressing the coop to add renewable technology options to our energy "portfolio." HEA management and engineers have not appeared overly eager, however, dragging their feet particularly hard with respect to wind power.  The controversial Grant Lake/Grant Creek small hydro project is HEA's first serious effort to respond to member desire for renewable energy. The project has been in the news quite a bit -- especially in recent months. Field studies must continue through 2012 and until they are completed a construction license application can't be submitted to the Federal Energy Regulatory Commission (FERC). Nonetheless, Kenai Hydro (HEA) recently submitted a grant request to the Alaska Energy Authority for construction money. That strikes some HEA members as proof that management plans to proceed with the project regardless of what the study data indicates. General Manager Brad Janorschke claims that nothing could be farther from the truth. In a September newspaper opinion piece he stated that, "If the studies show that there would be a serious impact to the overall health of the Kenai River watershed, HEA will not proceed with the project." Critics of the project find that difficult to believe, given the request to AEA for construction funds. And many feel the FERC permitting process is more about enabling projects than actually evaluating them on their merits. 

While HEA members seem to want our coop to embrace renewable technology it's probably not just for the bragging rights. Most likely they want to see renewable projects make economic, social, and environmental sense. If built, will the Grant Lake project ultimately prove harmful to the Kenai River watershed ecosystem and the economy of the surrounding area? Or can the project be designed, built, and operated so it doesn't cause undue harm? And either way, will the ultimate cost per kWh be competitive with other options? If you don't know enough about this project to have an opinion why not do a little reading? Then let your HEA Board know how you feel.

Get information and the HEA management perspective.
http://www.kenaihydro.com/index.php or contact Mike Salzetti at 283-2375.

Learn about the Federal Energy Regulatory Commission
(it's mission, and the licensing process)
http://www.ferc.gov/

Get more information and the skeptics' perspective.
Resurrection Bay Conservation Alliance
http://www.rbca-alaska.org/page8/page24/page24.html

Alaska Center For the Environment
http://akcenter.org/forests-and-wildlife/chugach/kenai-hydro

Hydropower Reform Coalition
http://www.hydroreform.org/

Dec. 7 Wind Power in AK Forum

Fire Island, Kodiak & More

6-8pm * Anchorage Museum * 625 C Street * FREE Live Podcast: www1.gotomeeting.com/register/287610025  Presenters: Darron Scott, CEO of Kodiak Electric Association Suzanne Gibson, CIRI Sr. Energy Development Director Rich Stromberg, Alaska Energy Authority Wind Program Manager More info: www.REalaska.org, 907.929.7770

Regular July HEA/AEEC Meetings

Meetings take place this week at the Homer Offices, 3977 Lake Street. Video conferencing is available in the Kenai Offices at 280 Airport Way, 907-283-5831.

Tuesday, July 12, 2011

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Draft agendas are available on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

. There are sometimes last minute changes in scheduling.

Excerpts from the June HEA Manager's Report

Regulatory Commission of Alaska (RCA) Docket regarding the HEA/AEEC relationship – The RCA docket that questions the relationship between HEA and AEEC is still open. The deadline of May 27 was extended until June 27, 2011. It appears that questions posed by the petitioners are related to governance and legal matters. [This matter is the subject of a formal compliant filed by seven HEA members concerned about possible inappropriate management practices.]

Renewables
Tidal Power – HEA staff met with ORPC [Ocean Renewable Power Company] representatives on June 1 to discuss
how to continue to develop a tidal power pilot project in Cook Inlet. The discussion went well as the parties look to conduct research, develop project plans, indentify grid interconnection, update project costs, and establish a legislative strategy prior to the end of this year.

Watana [proposed Susitna Dam] – Alaska Energy Authority and their engineering contractor met with some of the Railbelt engineers June 8 to discuss the proposed project. Most of the discussion centered on establishing the appropriate size of project for the Railbelt. The 600 MW size identified in the Railbelt Integrated Resource Plan appears to be acceptable amongst the utilities.

Fire Island – Based on a June 10 press release, Chugach Electric Association (CEA) and Cook Inlet region, Inc. (CIRI) have come to terms on wind energy output from the Fire Island Project. CEA has agreed to pay CIRI a net cost of $97.00 per MWh for 25 years beginning December 31, 2012. The proposed power purchase agreement will require Regulatory Commission of Alaska (RCA) approval.

Bernice Lake Generation –Chugach Electric Association’s (CEA) board of directors has approved the sale of the Bernice Lake Generation Facility located in Nikiski to AEEC. At this time negotiation of final documents is substantially complete, but the documents have not been executed. Although HEA/AEEC and CEA have agreed to the sale, the final sales transaction is contingent on several things including approval from the Regulatory Commission of Alaska (RCA). Assuming the asset sale takes place, the roughly 67 MW facility will be used to supplement the peaking and backup generation planned for Soldotna. The Bernice Lake generation does not replace the current LM6000 [single cycle gas turbine generator] scheduled for the Soldotna site. [Hopefully this will eliminate future purchase of a second turbine for Soldotna, however.]

HEAMF clarification notes and comment were added in [brackets]. HEA Manager's reports can be downloaded from the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/ManagersReports/tabid/222/Default.aspx. 

Election and Meeting Reminder

A Final Reminder!

2011 Annual HEA Meeting of the Members

Thursday, May 5 at Soldotna High School
Registration 4:30 PM - 6:30 PM, Membership Meeting Starts 6:00 PM

Don't Forget to Vote
District 1: incumbent David Thomas of Kenai
District 2: Dick Waisanen of Soldotna
District 3: Malcolm Gaylord of Homer

HEA must receive mail-in ballots by 4:00 PM, May 4. Members can also vote at the Annual Meeting but need to register there first. 

Where is Soldotna High?
425 W. Marydale Ave. Soldotna, AK 99669
907-262-7411 

Check out the Google map:
http://high-schools.com/schools/8791/soldotna-high-school.html

Turn west on Maydale Dr. from N. Binkley St. or the Kenai Spur Highway. Continue west to Sohi Ln. and you should be able to see the school. If you come to Ridgewood Dr. or River Watch Dr. you've gone to far.

HEA Members Forum Update

2011 Annual HEA Meeting of the Members
Thursday, May 5 at Soldotna High School
Registration 4:30 PM - 6:30 PM, Membership Meeting Starts 6:00 PM

Other May HEA/AEEC Meetings will take place at the 
Homer Offices, 3977 Lake Street.
Video conferencing is available in the Kenai Offices at 280 Airport Way.

Tuesday, May 10, 2011

10:00 AM -- Operations and Special Projects

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Agendas are usually available the day before meetings. There are sometimes last minute changes in the meeting schedule. Check for updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections -- Don't Forget to Vote

District 1: incumbent David Thomas of Kenai

District 2: Dick Waisanen of Soldotna
District 3: Malcolm Gaylord of Homer

HEA must receive mail-in ballots by 4:00 PM, May 4. Members may vote in person at the May 5 Annual Meeting at the Soldotna High School but will need to register there. You can only vote for a candidate in the district where you live.

Rate Decoupling and Energy Efficiency and Conservation Programs Technical Conference
April 19 &20, 9:00 a.m. to 4:00 p.m.
East Hearing Room of the Regulatory Commission of Alaska
701 West Eighth Avenue, Suite 300, Anchorage, Alaska 99501

This technical conference will feature a presentation on the topics of rate decoupling and energy efficiency and conservation programs by Richard Sedano, a Principal and Director of The Regulatory Assistance Project. The presentation on rate decoupling is tentatively scheduled for Tuesday, April 19th, with the presentation on energy efficiency and conservation programs to follow on Wednesday, April 20th. Any entity interested in reviewing transcripts of this technical conference may consult the Commission’s website at http://rca.alaska.gov and type in Docket “I-11-004” in the Find a Matter search box.

Don't Forget the 2011 Business of Clean Energy in Alaska Conference
April 28 & 29 at the Dena'ina Center in Anchorage
For more information, go to www.BCEAconference.com, or contact Renewable Energy Alaska Project (REAP) at info@realaska.org or 907-929-7770.

Regulatory Commission of Alaska Adopts Revised Net Metering Interconnection Rules
Draft rules from January 2011 (RCA Docket R-09-02) were slightly modified to resolve potential conflicts between utility and customer over an "external disconnect switch." In general, these regulations appear to be reasonable and should not impose unnecessary expense to HEA members who wish to participate in net metering. The regulations go to the Department of Law for review but should be finalized without major change by May 5, 2011.

Regulatory Commission of Alaska Reauthorized -- But Only for 2 Years
The Alaska Senate passed HB 24 on April 17, 2011 by unanimous vote, extending the RCA through June 2013. The Senate modified language in HB 24 to require the RCA to provide the Legislature with a proposal to "reduce the statutory timeline for tariff filings that change a utility's revenue requirement or rate design." This must be done by January 17, 2012. Clearly this is a result of utility lobbying to make it easier and faster to increase your rates.

Independent Light $$
A Groundbreaking Ceremony is slated for the Nikiski Combined Cycle Conversion (NCCC) Project April 28, 2011, at 10:00 a.m. At the ceremony, HEA will announce the award of the project contractor and will offer Nikiski Plant tours for anyone interested. If you are interested in attending but don't receive an invitation, contact Joe Gallagher at jgallagher@homerelectric.com.

Cook Inlet Tidal Power
Ocean Renewable Power Company (ORPC) and Homer Electric Association (HEA) announced plans to collaborate on a hydrokinetic power pilot project near the East Forelands. ORPC has been developing unique tidal power systems and projects since 2004. ORPC has a preliminary permit from the Federal Energy Regulatory Commission (FERC) that allows three years to carry out studies and then submit a license application for an actual pilot project of up to 5 megawatts (HEA’s average load is currently 60 megawatts). It's possible that one or more 150-kilowatt generators could be deployed for testing in the inlet as early as 2013. HEA and ORPC are attempting to draft a Letter of Intent which defines the project scope and responsibilities.

HEA Rate Plan
The RCA has granted Land’s End Acquisition Corporation (LEAC) request to intervene in hearings on HEA's plan to restructure electric rates. Remember, the biggest sticking point is the proposed "minimum energy charge" which seems to be in conflict with Alaska Administrative Code. The RCA requested that previous hearing dates be changed to accommodate the Commission’s schedule. Intervening parties, the Attorney General’s Office (RAPA), and HEA have presented a mutually agreed upon revised hearing schedule for RCA consideration. The proposed final hearing would be during the week of September 26th. HEA is waiting for RAPA to reply to its legal brief on the proposed minimum energy charge.

"Watt’s New" -- From HEA
This is a new email public relations effort to deliver up-to-date news to members. It will encourage members to visit the HEA website where more detailed information can be found. The first “Watt’s New” blitz was sent to 7,900 members on April 1 and will be disseminated at least once a month -- more frequently depending on HEA events. It seems like a good idea. Contact Sandra at sghromley@homerelectric.com or 907-283-5831 if you're interested in signing on.

HEAMF Election Update

HEA Board of Directors Election Ballots will be mailed to members on Friday.  Your vte is vitally important.  We believe these superior candidates deserve your support:

David Thomas
(District 1: Kenai, Nikiski, parts of Soldotna area)

Dick Waisanen
(District 2: Soldotna, Sterling, part of Kasilof)

Malcolm Gaylord
(District 3: part of Kasilof and south to Kachemak Bay area)

For too many years our electric coop Board was pretty much a closed club simply because few HEA members took much interest. Most didn’t even bother to vote on who would represent them. Consequently, members were provided little information and management did pretty much what it wanted, decisions rubber stamped by the Board. We believe that cost us all a lot of money in the form of higher rates and questionable management practices and almost entangled us in the failed Healy 2 coal plant.

Things have improved since then. The Healy 2 debacle opened a lot of eyes and encouraged many HEA members to speak out for more open governance and better accountability. Over the last three or four years almost all new people have come to serve on the HEA Board of Directors. Communication with the membership is getting better.

But there’s still room for improvement. After Healy 2, the largest change in HEA history was made without significant input from the membership. The Independent Light project committed us to converting our Distribution Cooperative into a Generation and Transmission Cooperative, $180 million in new debt, and continuing dependence on natural gas. Its merits or flaws aside, such a huge change should have been proposed and explained to HEA members in advance and approved or rejected by their vote.

Let’s keep moving toward more open governance and better member involvement by electing Directors truly dedicated to member control -- people capable of independent thinking who will not simply follow management’s lead.

Vote for

David Thomas (District 1) Dick Waisanen (District 2) Malcolm Gaylord (District 3)

HEA Member Forum Update

March HEA/AEEC Meetings
These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, March 1, 2011 (tentative)           
2:00 PM -- Operations and Special Projects

Tuesday, March 8, 2011
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Agendas are usually available the day before meetings. There are sometimes last minute changes in the meeting schedule. Check for updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections
How satisfied you are with your HEA district’s HEA Director? Do you want to him to serve another 3 year term or would you prefer to elect someone new? Maybe you would even like to run yourself. Members interested in being on the ballot must fill out a candidacy packet and gather at least 15 signatures from valid Homer Electric members living in his or her district. Packets are available at HEA offices in Kenai and Homer and on-line at www.homerelectric.com. The deadline to submit them is 5 PM on March 4, 2011.

Remember, Directors are elected by district -- you can only run or vote for a candidate in the district where you live. This year incumbents David Thomas (District 1, Kenai-Nikiski), Tim Evans (District 2, Soldotna –Sterling - Kasilof), and Mike Wiley (District 3, Ninilchik-Homer-Seldovia) must run to stay on the HEA Board. District boundaries were changed recently -- if you aren't sure of your district, maps are available on-line at www.homerelectric.com/Board of Directors & Elections/District Map.

Ballots will be mailed to you on April 1, 2011. They can be returned by mail or you can vote in person at the HEA annual meeting on May 5 at the Soldotna High School. There will be no ballot propositions included on this year's ballot.

Comment on Net Metering Interconnection Rules by March 11
Since March 2009 the Regulatory Commission of Alaska (RCA) has been considering potential rules governing interconnection of solar arrays, wind turbines and other customer owned generation technology to electric utility systems (Docket R-09-2). Your final opportunity for input has been scheduled and the deadline for comment is 4:00 PM on March 11, 2011. Comments may be submitted via the Internet or by mail. Following a number of technical conferences and public comment periods RCA staff recently produced draft regulations for possible adoption (attached). Unfortunately, utilities in other states have sometimes made such rules unnecessarily burdensome as a way to discourage net metering. While the RCA staff proposal doesn't seem aimed at doing so, some people feel its insurance and disconnect location requirements might impose costs that would render some net metering installations unaffordable. You can find more information and follow this issue by visiting http://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx at the RCA website.




Support the Regulatory Commission of Alaska (RCA)
The RCA is the main agency looking out for utility ratepayers interests but it's scheduled to terminate on June 30, 2011 unless the present Alaska Legislature votes to keep it going. In it's October 16, 2010 audit report the Legislative Budget and Audit Committee found that the RCA does indeed fulfill an important public need and so recommends that it be extended through June 30, 2019. Go to http://www.legaudit.state.ak.us/pages/audits/2011/pdf/20067rpt.pdf for copy of the report. HB 24 (Extend Regulatory Commission of Alaska Sunset) has been introduced in the State House and referred to Labor and Commerce & Finance Committees. It wouldn't hurt to contact some key Legislators and put in a good word for passage of HB 24 to extend the RCA.

Finance Committee
Co-Chairmen:  Representative_Bill_Stoltze ( email at @ ) legis.state.ak.us
Co-Chairmen: Representative_Bill_Thomas ( email at @ ) legis.state.ak.us
Vice-Chair: Representative_Anna_Fairclough ( email at @ ) legis.state.ak.us

Labor & Commerce Committee
Chairman: Representative_Kurt_Olson ( email at @ ) legis.state.ak.us
Vice-Chair: Representative_Craig_Johnson ( email at @ ) legis.state.ak.us
Member: Representative_Paul_Seaton ( email at @ ) legis.state.ak.us

HEA/AEEC Proposed Rate Plan
The RCA has scheduled a hearing on HEA's proposed rate plan for Oct. 24 at 9 a.m. in Anchorage. There will be no interim rate change, as originally requested by HEA. You will see the change in your bill when and if the plan is approved by the RCA. Land's End Acquisition Corporation filed a request to intervene (formally participate) in the process and HEA filed a motion opposing that. The RCA has not decided whether or not to approve Land's End's request. Land's End's John Faulkner contends HEA hasn't adequately explained the need for or specific details of the proposed rate changes. If you want more detail, this and related documents are available on the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0.

Independent Light $$
There have been no significant developments since the January 23 HEAMF update. Work at all sites is progressing more or less as planned. Alaska Energy & Electric Cooperative Resolutions 01.2011.05 (Procurement of Emergency Diesel Generator),  01.2011.06 (Procurement of Water Treatment Equipment), and 01.2011.07 (Wholesale Power and Resource Agreement Amendment were approved at the February 8 HEA/AEEC meetings.
 
Alaska Railbelt Cooperative Transmission and Energy Cooperative (ARCTEC)
This newly formed collaboration between HEA, Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association, and the City of Seward has developed a draft $91,500,000 Capital Budget Request for state funding.

Bradley Lake/Battle Creek Diversion (increase power output) $20,000,000
Mount Spurr Geothermal Commercial Well Test $6,000,000
Seward Power Plant Integration $4,000,000
Assorted Transmission Line Upgrades and Repairs $56,500,000
Railbelt Integration of Renewables Scoping Study $5,000,000

According the HEA General Manager Brad Janorschke, ARCTEC's number one priority is the Susitna hydroelectric project, number two being ORMAT's Mt. Spurr geothermal project.

What About Smaller Renewable Energy Projects?
At the February 8 HEA/AEEC meetings Director Bill Fry Questioned General Manager Janorschke about the apparent slow pace of the cooperative's embrace of small scale renewable energy projects. Directors Jim Levine and Tim Evans added their voices to Fry's question, while Director Mike Wiley expressed his own desire to see more focus on energy efficiency and conservation. Janorschke reviewed the continuing effort to move forward with the Grant Lake small hydroelectric project through expanded studies and design modifications, in part based upon concerns raised by opponents of the the plan. For example, recent design modifications could result in reduction of dam height and minimization of lake level fluctuations to eleven feet. He also told Directors that HEA remains open to participation in potential tidal power pilot projects. On the other hand, it was clear from this discussion that Janorschke continues to have a negative view of wind projects such as Fire Island and Kenai Winds. Director Evans asked if ARCTEC might help with smaller projects but Janorschke and Director Debbie Debnam didn't think it was likely. In the end, it was decided to add the issue of renewable energy and energy efficiency/conservation to the agenda for the upcoming strategic planning session this spring.

2011 Financial Audit
HEA/AEEC will be going through auditing this month. Results will be reported to the Board in March. Contact Finance Director Carrie Buckley at cbuckley ( email at @ ) homerelectric.com for more information on this process.

HEA Members Forum Update

February HEA/AEEC Meetings

These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, February 1, 2011 (tentative)            

2:00 PM -- Operations and Special Projects

Tuesday, February 8, 2011 

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Check for meeting calendar updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections
The HEA Board election season is coming. The application period for candidates usually starts in February and runs through the first week in March (the 5th, last year). Ballots go out to members about a week after that and can be returned through early May. This year David Thomas (District 1), Tim Evans (District 2), and Mike Wiley (District 3) must run if they want to stay on the HEA Board. In preparation HEA Resolutions 45.2011.02 (Appointment of Election Committee) and 45.2011.03 (Voting Eligibility Record Date) were passed at the January 18 HEA/AEEC meetings. There was some discussion of the the need to prepare ballot Initiatives for HEA members to vote on. Apparently certain bylaws changes sought by the Board must be approved by the general HEA membership. further discussion was moved to the February meetings -- more detail on this will follow then.

Now is the time for you to be thinking about how satisfied you are with your district’s HEA Director. Would you like to see him continue on the Board for another 3 year term or would you prefer to elect someone new? Maybe you would even like to run yourself.

HEA/AEEC Proposed Rate Plan -- HEA reply
Since the RCA suspended the HEA/AEEC request for approval of the plan (Order U-10-97, Order No. 1), the cooperative has submitted a 19 page brief in defense of the minimum energy charge. In part it argues that if, as stated by the RCA suspension order, the minimum energy charge is in conflict with Alaska Administrative Code 3 AAC 48.805 the RCA should waive requirements that the new rate plan comply. If you want more detail, this and related documents are available on the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0.

Independent Light $$
There have been no significant developments since our January 6 HEAMF update. Alaska Energy & Electric Cooperative Resolution 01.2011.01 (Approval of Construction Work Plan) was passed at the January 18 HEA/AEEC meetings. Most of the plan's $200 million expense is for the Independent Light project ($180 million). The remaining $10 million is primarily for work on Sterling and Bernice Lake substations. AEEC Resolutions 01.2011.02 and 01.2011.03 amending HEA/AEEC loans and agreements with the National Rural Utilities Cooperative were passed. These are technical changes needed to accommodate a drop in “margins” expected during construction of Independent Light facilities (margin is the difference between an electric  cooperative’s costs and revenues).
  
New Regional Generation and Transmission Coop
HEA/AEEC joined Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association, and the City of Seward to form the Alaska Railbelt Cooperative Transmission and Energy Cooperative (ARCTEC). Anchorage Municipal Light and Power declined to participate. The Members Forum has long supported greater cooperation between railbelt utilities. Articles of incorporation were filed with the Division of Corporations, business and Professional Licensing (http://www.commerce.state.ak.us/occ/) on December 23, 2010. ARCTEC is an outgrowth of the Greater Railbelt Energy and Transmission Corporation (GRETC) legislation which failed last year. The objective is to have a mechanism to cooperatively pursue projects that are just too large and costly for a single utility. According to HEA manager Brad Janorschke, there will be a strong emphasis on developing large scale renewable energy sources such as geothermal, hydroelectric, and tidal projects. ARCTEC bylaws are presently being developed. HEA Resolution 45.2011.01 (Appointment of ARCTEC Representatives -- Debbie Debnam and Brad Janorschke) was passed at the January 18 HEA/AEEC meetings.

Grant Lake Small Hydro Project
According to General Manager Janorschke the Alaska Energy Authority has approved $1.1 million of a $1.5 million HEA/AEEC grant request for the Grant lake project. He cautioned the Board that this must also be approved by the Legislature, so it’s not a “done deal” yet. This money would help offset ongoing field studies and permit application efforts. The project continues to be very controversial among Moose Pass residents and some HEA members.

Cook Inlet Tidal Power Pilot Project
According to HEA General Manager Brad Janorschke, a hydrokinetic energy company contacted HEA about possible partnership in some kind of pilot project. This could be some place near the Forelands. The company also appears interested in tidal prospects around Kachemak Bay. Janorschke says he was told they would be in touch again soon with some kind of specific plan.  

AKPIRG Utility Work
The Alaska Public Interest Research Group (AKPIRG) is taking an interest in utility consumer affairs and has recently hired a young woman named Kathleen Cogan to work with railbelt ratepayers. A main main part of her work will involve helping utility ratepayers from Golden Valley Electric Association to Homer Electric Association elect or reelect good people to the utility Boards. Kathleen works out of the Anchorage AKPIRG office but will travel to other railbelt communities on a regular basis. She will visit Homer this week where she can be reached at the Cook Inetkeeper offices.

Better Record Keeping ?
At the January 18 HEA/AEEC meetings Mike Wiley continued to press for more detailed meeting minutes. David Thomas expressed concern that putting too much detail into the minutes could be counterproductive. He especially doesn’t think various Directors’ comments prior to voting on resolutions should be included. While many Directors express resistance to putting specifics in the minutes, Jim Levine agreed with Mike Wiley and moved that, at the very least, topics of comments made by HEA members attending meetings should be noted in minutes. The motion was passed.

Fewer Secrets, At Least
HEA resolution 45.2011.04 (Approval of the 2011 Equity Management Plan) was approved at the January 18 HEA/AEEC meetings. HEA/AEEC filed a petition with the Regulatory Commission of Alaska in November to classify it’s 2010 Equity Management Plan confidential. In December the RCA denied that petition (U-10-85, Order No. 2). According to General Manager Janorschke the Commission will now probably require a copy of the EMP be provided for interested members of the public with only legitimately sensitive information redacted. Hopefully this will also apply to the 2011 EMP. 

HEA Members Forum Update

January HEA/AEEC Meetings
These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, January 18, 2011 (tentative)
10:00 AM -- Operations and Special Projects

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Check for meeting calendar updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

No More Secrets for Now
Last November HEA/AEEC filed a petition with the Regulatory Commission of Alaska to classify it’s 2010 Equity Management Plan as confidential. This would keep a lot of information about how the coop conducts business out of the hands of HEA members -- or anyone else for that matter. Several HEA members followed up with a request for a stay pending resolution of a previously filed informal complaint. On December 17, 2010 the RCA denied the HEA/AEEC petition for confidentiality (U-10-85, Order No. 2). The coop may reapply if willing to supply meaningful justification for such blanket confidentiality.

HEA/AEEC Rate Plan on Hold
The proposed new rate design was filed with the RCA on November 9, 2010. Under the plan, the present $11.00 monthly residential customer charge would increase to $15.00 and a minimum monthly 150 kWh energy charge would be added. After receiving 22 public comments, all but one opposing the plan, the RCA suspended the HEA/AEEC request for approval (Order U-10-97, Order No. 1). The December 17, 2010 stay requires HEA/AEEC to submit a brief addressing how the proposed “minimum energy charge” complies with relevant Alaska Administrative Code. It also schedules further investigation, invites petitions to intervene from interested parties and participation by the Attorney General, and appoints an administrative law judge to conduct the docket. The deadline for petitions to intervene is 4 p.m., January 18, 2011. A prehearing scheduling conference for the matter will be held in the Commission’s East Hearing Room at 9 a.m. on February 4, 2011. Go to the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0 for documents relating to HEA/AEEC.

WPCRA vs. COPA -- Say What?
Given the RCA stay of HEA/AEEC’s proposed rate plan this might be moot but here goes anyway. One of the complaints against the rate plan was a move to replace the Wholesale Power Cost Rate Adjustment (WPCRA) with a Cost of Power Adjustment (COPA). Remember, the WPCRA is that fluctuating cost HEA has to pay for energy, mostly reflecting the price of natural gas. It’s passed through to you. According to a December 6, 2010 letter from RCA staff, unlike the WPCRA, the COPA would allow HEA/AEEC to change rates associated with fuel and purchased power absent the normal RCA rate proceeding. It looks like going to the COPA would result in an instant rate increase as well. When the new rate plan was presented to HEA members the WPCRA was less than one cent (.00715) per kWh. The figure given for the COPA under the new plan was 2.862 cents per kWh -- much higher. What extra things does it include? While this information has been requested many times, there has as yet been no side-by-side comparison of these two computations. HEA’s Joe Gallagher is trying to get this for us but has so far been unable to deliver.

Independent Light $$
Phase One of the Independent Light project, upgrade of the Nikiski plant, is proceeding as planned according to the December 14, 2010 update from the HEA/AEEC engineering staff. At that time design work was 90 percent complete and construction bids were expected to go out last month. A contract should be awarded in February 2011, work should be completed by 2012, and the new steam turbine should be in commercial operation by the 4th quarter of that year. This upgrade is expected to improve efficiency of the plant by 40 percent without burning any extra fuel, allowing it to generate most of the baseload requirements for the HEA/AEEC service area.

Phase Two of the project, addition of new gas generation facilities at Soldotna to supply “peaking” and reserve energy, is moving forward as well. Additional property has been purchased at the old “Soldotna 1” site, Stanley Consultants was awarded a contract for up to $3,300,000 for facility design, and purchase of one gas turbine generator for approximately $22,700,000 was authorized. HEA/AEEC Directors declined to authorize purchase of two units as originally envisioned by management. Discussion of the enabling resolution (10-34) indicated that some Directors have misgivings about investing so much money in new natural gas hardware and would like to investigate other renewable energy sources. This decision will be revisited in the near future.

Cook Inlet Natural Gas Storage Alaska (CINGSA)
With diminishing Cook Inlet natural gas supplies, keeping the heat and lights on during winter cold snaps is becoming iffy. This is a growing concern for HEA/AEEC, especially with at least one new gas turbine slated for Soldotna. As a partial solution, CINGSA proposes an underground storage facility in Kenai to hold natural gas during times of low demand and then withdraw the gas during peak demand (winter). At the December 14, 2010 HEA/AEEC meetings AEEC Resolution 10-31 was approved authorizing HEA General Manager Janorschke to sign a contract committing HEA/AEEC as a customer of the CINGSA project. Other CINGSA customers include Enstar, Municipal Light and Power of Anchorage, and Chugach Electric Association. If the project is successfully developed HEA/AEEC commits to a 20-year contract. The coop would pay monthly fees for its share of storage capacity and the amounts of gas it injects or withdraws. It will also need to supply (purchase) gas and pay for the energy used to inject or withdraw it. There will be added charges if amounts of gas stored, injected, and withdrawn exceed that allowed by the contract. While speculative, estimates of cost to HEA/AEEC range between $900,000 and $1,988,000 per year.


AEEC Board Meeting Minutes and Voting Record
A small concession was won at the December 14, 2010 HEA/AEEC meetings. In response to a HEAMF request, Directors approved a motion to start posting Alaska Electric and Energy Cooperative Board meeting minutes on the HEA website as is already done for HEA Board meetings. This is important because the minutes contain a record of how Directors vote on various resolutions. It’s one way for HEA members to evaluate Director performance and make good decisions at annual Board elections. But more needs to be done.

Since inception in 2002 the AEEC has been more or less invisible to HEA members. There is little information provided on the HEA website -- only meeting notices and agendas. Considering that the present conversion from a distribution utility to a generation &transmission utility is likely the largest, most costly event in our coop’s history and is being accomplished primarily through the AEEC, this seems like a significant omission. For some time we have requested that HEA fully disclose and explain to members the HEA/AEEC relationship. This should include posting of AEEC organizational documents such as bylaws, Board policies, Board member information, and other pertinent materials on the HEA website -- or on a new AEEC site. HEA members are not also AEEC members. AEEC has no debt limit. Consequently, it should be made clear how HEA members can have a voice in AEEC affairs, what measures are in place to prevent unlimited borrowing through the AEEC, and what checks and balances preclude bad decisions by those who conduct AEEC business.

HEA Members Forum Update

Last Chance to Comment on the New HEA Rate Plan
The new HEA rate plan was filed with the Regulatory Commission of Alaska on November 2, 2010. It is undergoing a 45-day review by RCA staff. At the end if this period (around December 17) staff will present recommendations to Commissioners and a docket will be open for further investigation. This will likely include a 20-day public review process. Watch for notice of this if you have concerns or suggestions about the proposed rate plan that you would like to bring before the RCA.

Weigh in on New Energy Efficiency Standards
The RCA is considering adoption of new amendments to the Public Utilities Regulatory Policies Act which are intended to encourage energy efficiency, among other things. As might be expected, the RCA staff suggests against adopting the federal standards but does propose some modest increase in state regulatory support for energy efficiency. You have until December 9 to submit comments. See the attached summary for more information and go to the source at http://rca.alaska.gov/RCAWeb/Dockets/DocketDetails.aspx?id=ccbcfb40-5010-41c7-af3d-d2e42b57241d.



Independent Light -- Not the Brightest Bulb
Through it’s shadow corporation, the Alaska Electric and Energy Cooperative, Inc., HEA approved spending another $4.5 million on equipment and design engineering services for the Nikiski facility and old Soldotna 1 site. Most of this, $3.3 million, went to the latter. For the most part people see the logic in spending money to improve efficiency of the Nikiski plant. But to many, in a situation where the natural gas supply is questionable, spending millions on new stand-by gas turbines for Soldotna seems like a bad choice. All the more so, given that Anchorage Municipal Light & Power offered a power purchase agreement that one HEA Board member reputedly deemed “a pretty good deal.” As one former HEA electrical engineer recently pointed out, it’s unlikely we can ever recover the cost of new Soldotna turbines. With no one but ourselves to sell power to, they will stand idle most of the time and never generate revenue.

Alaska Railbelt Cooperative Transmission and Energy Company (ARCTEC)
HEA and other railbelt utilities continue to work on draft articles of incorporation for this potential confederation aimed at improved collaboration. The stated intent is to improve prospects for dealing with natural gas supply problems, better address transmission issues, and pursue utility scale alternative energy opportunities. According to HEA General Manager Brad Janorschke, utilities hope to come to agreement and file the articles by the end of this month (November). We agree that better collaboration will be needed to effectively meet railbelt energy needs in the coming years. Such efforts are to be commended, assuming that ratepayer interests are being taken into consideration. Unfortunately, as is so often the case, this process is being conducted behind closed doors.

Renewable Double Speak
While all of the HEA Directors say they favor adding more renewable energy sources to our energy mix, General Manager Janorschke has joined with other railbelt utility managers in signing the attached letter to the RCA and legislative leaders complaining that integrating renewable energy into the existing generation scheme is just too difficult. While the letter claims it isn’t a rejection of renewable technologies, it sure comes out reading like one. These utilities have failed to work with each other or potential independent power producers like Fire Island Wind (CIRI) or Kenai Winds to find ways to overcome integration challenges. HEA has committed to spending $180 million (plus) on natural gas generation but only $2-3 million on a single, very controversial, small hydroelectric project and not a dime on technology to balance fluctuations from wind generators. Railbelt utilities predict potentially high costs associated with integrating renewable energy but think nothing of increasing our dependency natural gas, even if we need to import it in liquefied form from outside. Wonder what that’s going to cost?



December HEA/AEEC Meetings
These meetings will all take place in Kenai at the Central Peninsula Offices, 280 Airport Way.

Tuesday, December 7, 2010
2:00 PM -- Operations and Special Projects

Tuesday, December 14, 2010
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Download draft agendas at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx. Video conferencing is available in the Homer Offices at 3977 Lake Street -- call either HEA office at 283-5831 (Kenai) or 235-8551 (Homer).

This Week's HEA/AEEC Meetings

These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way.

Tuesday, September 14, 2010
9:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:30 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Download draft agendas at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.
Video conferencing is available in the Homer Offices at 3977 Lake Street.

Next Week's Area Meetings
The proposed new rate structure will be the main focus of the General Manager's presentation.

Anchor Point, 5:30 PM, Monday September 27, Chapman School
Kasilof, 5:30 PM, Tuesday September 28, Tustumena School
Sterling, 5:30 PM, Wednesday September 29, Senior Center
Nikisiki, 5:30 PM, Thursday September 30, Community Center

These meetings are typically a venue for HEA management to express it's point of view in a controlled situation, absent divergent outlooks. Free food and the promise of drawing prizes seem to be uppermost in attending HEA members' minds. Nonetheless, it is an opportunity for you to raise questions and express your own opinions regarding any HEA issue.

August HEA Meeting Schedule

All meetings will take place in the Board room of the HEA offices in Homer at 3977 Lake Street. Video conferencing is available at the HEA offices in Kenai at 280 Airport Way. Meeting agendas can be found on the HEA website at http://www.homerelectric.com/. Contact Joe Gallagher at jgallagher (email at) homerelectric.com or 907-283-2324 for more information.

Tuesday, August 17, 2010
10:00 AM -- HEA Operations Committee Meeting
12:30 PM -- HEA Finacne Committee Meeting
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Wednesday, August 18, 2010
9:00 AM Final Ratemaking Presentation by Consulting Firm RW Beck

HEA Members Forum Update

HEA Plans Rate Structure Change
Every HEA member has a big stake in this ratemaking process. The outcome will affect the finances of Kenai Peninsula families and businesses for the foreseeable future. Electric rates will increase. They jump two percent this October. They're expected to reach 20-25 cents per kWh by 2014. A new rate structure probably can’t prevent that but HEA members should be wondering just what it might do.

Can it be fair to all classes of ratepayers (residential, commercial, industrial) in all areas?
What will it mean for low wage workers and people on fixed incomes?
Will it promote energy efficiency and conservation?
Can it do anything to stabilize electric rates?
Will it be easy for HEA members to understand?

Attend the Ratemaking Workshop on Wednesday, August 18
Come to the HEA Homer Board Room at 9:00 AM -- video conferencing available at Kenai HEA offices for central peninsula members. This will be the last opportunity for you to learn more about three potential residential rate options under consideration:

1. Raise the present $11.00 per month residential customer charge to around $90.00 (the estimated monthly cost to HEA to provide service) and lower the per kWh energy charge.

2. Raise the $11.00 customer charge to $15.00 and increase the per kWh energy charge.

3. Raise the $11.00 customer charge to $15.00 and require a minimum monthly energy payment based upon 300 kWh of electricity ($36.26). All residential customers would then pay at least $52 per month.

Those options are at the core of this process but only reflect part of the background discussion. For example, there is the issue of basic kWh rate design -- should it be uniform or variable based upon differing levels of consumption, peak vs. off-peak use, summer vs. winter? There are other issues too but no space for discussion here.

Now is the Time to Get Involved
A draft rate plan is expected by the end of this month. The plan will be presented to members at September HEA regional meetings. By then the opportunity for input will be limited -- final rate design will be adopted in October. If you want to help determine how the final plan looks, go to the HEA website (http://www.homerelectric.com/) and read Rate Design: Making It Fair and Promoting Conservation. Try to attend the August 17 HEA Board meeting. Participate in the August 18 ratemaking workshop. Ask questions, explain your priorities, and make suggestions.


BASICS OF ELECTRIC UTILITY RATEMAKING
Electric utility rates include two basic charges, one for recovering “fixed costs” and the other for recovering “variable costs.” For this discussion let’s ignore the taxes and surcharges typically tacked on to your electric bill.

Fixed Costs
These include expenses the utility incurs by just having a customer tied into the system -- wire, poles, buildings and everything needed to provide basic service. These costs have nothing to do with how much or how little energy a customer uses and do not fluctuate.

Variable Costs
These include expenses the utility incurs for equipment, over and above the basics, required by high demand customers and for acquiring the energy it distributes to us. These costs vary depending upon how “big” a service capacity is installed for the customer and how much energy is consumed each month.

Utilities generally consider it good policy to recover fixed costs through fixed charges (the “customer charge”) and variable costs through variable charges (the “energy charge” or “per kWh” charges).