Customers speak out against petition to end off-peak power program

MAT-SU — The meter may be running out for Barry Stanley and about 49 other Matanuska Electric Association customers.

As part of MEA’s Off-Peak Thermal Storage Program, Stanley pays significantly less for part of his electricity usage — as much as 374 percent less. The Willow resident and others in the program have installed thermal units that run during off-peak times and store heat to use during peak usage hours. That means less stress on the system during times when the call for power on MEA’s grid is at its peak.

If MEA has its druthers, that savings will come to an end next year. The cooperative has petitioned the Regulatory Commission of Alaska to discontinue the program and phase it out over the next 12 months.

At first glance, the program makes sense for the co-op and customers, said MEA spokeswoman Cheryll Heinze. But it actually costs MEA more than it pays its power supplier, Chugach Electric Association, she said. Chugach doesn’t give MEA a break for off-peak power, so there is no savings to pass on to Stanley and others in the program, Heinze said.

The Off-Peak Thermal Storage Program’s 50 participants is a very small percentage of MEA’s customer base of 55,000, Heinze said, and overall cost is about $50,000 a year over and above what it takes to buy the power and deliver it. The 91 cents every other customer pays a year to subsidize the off-peak users is an unfair outlay to them, she said.

“It’s not about the money, it’s about fairness,” she said. “It’s in our (mission) that we have to deliver the least cost reliable power. We can’t say to the rest of the membership they have to bear this cost. This program really never should’ve gone out there. It was done by a previous administration, and now we’re having to deal with it.”

In fact, the program started in 1995 and was renewed in 2006. For Stanley, it meant he could provide hot water to his house in Willow, where there is no access to natural gas and the only other viable options are oil and propane. He had a thermal storage system installed about 12 years ago and uses it fill two large hot water heaters.

“Part of the reason I did that is my floor plan didn’t allow for an oil or propane heater without a vent,” said Stanley, who also has filed an official comment with the RCA objecting to MEA’s proposal to discontinue the program. “If I lose the off-peak, I’m going to pay full price for the electricity, off-peak or not, which is going to quadruple my water heat cost. That, or I’m going to have to figure out a way to switch to oil. That would be pretty costly, and for my floor plan it would be difficult to do.”

The savings to off-peak program customers are significant, Heinze said. Regular members pay 10.9 cents per kilowatt-hour, while those in the off-peak program pay 2.3 cents for electricity used for their storage units. Based on an average household use of 800kWh per month, those in the program would have an electricity bill of $18.27, compared to $68.71 for regular customers.

If the program is that costly to MEA, why did it implement it in the first place?

“I have no idea,” Heinze said. “That’s the question of the year. I asked the same thing of (MEA General Manager) Joe (Griffith) and he said, ‘You got me.’ We feel real bad that we have to be the bad guy. … But over the years, they saved a lot of money, so good for them.”

That savings isn’t comforting to those who will be faced with some expensive decisions if the RCA grants MEA’s request.

Wasilla area residents William and Kathryn Broady also filed a comment with the RCA urging it to allow off-peak storage to remain. They’re among the earliest users, signing on in 1996.

“We entered into a good faith agreement with MEA,” they wrote. “We purchased and installed thermal storage heaters and a large-capacity hot-water heater, as well as the metering equipment. Since that time we have been using this system in compliance with the program.”

Last year, they also purchased a new heating unit. If the request is granted, “it will cause us a financial hardship, as we would need to replace our entire heating system in our home as well as the water heating system. We are in our 60s and are retiring this summer. We will be living on a much-reduced income in retirement and this would be very difficult for us.”

William Broady estimates it would cost him about $10,000 to change systems. As for the program not being cost-effective, perhaps MEA has itself to blame for that, he said.

“I was just surprised by this,” he said, adding that if the program were larger, perhaps it would be more viable. “When they initially did it, they never really did push the program, so it’s partially their fault for not pushing it, and I’m not sure why they didn’t.”

Just how expensive it would become for off-peak program customers is hard to estimate, said Tony Vargo, a heating/ventilation/air-conditioning consultant for Northern Heating and Air Conditioning in Wasilla. He’s already had one MEA customer inquire about changing systems.

A new heating system, depending on availability of natural gas or home renovations, to switch to oil or propane start at about $8,000 to $10,000 on average, he said. But those costs could increase greatly depending on other factors.

“It’s not going to be cheap to replace them, especially if they have to run oil tanks or oil lines, or if they have to run gas to the house,” he said of the thermal storage units. “That could cost $14,000 or more, even if they can get it.”

Being off the program doesn’t mean the thermal storage units won’t still work, Vargo said. People can still use them like normal, but they’ll pay full price for the electricity to run them and the units will cost more to operate than traditional space heating systems.

What he fears many program users will be forced to do is continue using the thermal units and pay significantly higher monthly bills because they can’t afford a cash layout to change.

“What they’re going to do is continue to be on it,” he said. “They’re going to pay that monthly (bill) because they can’t put in new.”

Asked if MEA has considered reimbursing off-peak customers for costs associated with changing heating systems, Heinze said no, but wouldn’t exclude that possibility.

“Not at this point, but we haven’t made that final decision, so we haven’t come to that yet,” she said, adding MEA isn’t insensitive to the economic realities of those who use the program. “Oh, they’re not happy, not one bit happy. Because of that, we just delivered to the RCA a request for postponement (of its decision) for a month, because those 50 people are very unhappy.”

For Stanley, he doesn’t understand why MEA simply couldn’t adjust its rates rather than stop the program altogether. And while he hopes his and others’ comments to the RCA have some sway, he’s not banking on it.

“I’m hoping they don’t grant their request and we can continue on like we are,” he said. “In the current climate of government we have nowadays, though, I expect nothing. I’ll just be out of luck.”

Contact Greg Johnson at greg.johnson@frontiersman.com or 352-2269.