MEA: rates to increase nearly 23 percent

MAT-SU — Matanuska Electric Association ratepayers can expect to see rates climb nearly 23 percent during the next 18 months.

According to information released by the utility today, the increase is driven by the cost of natural gas for and construction of the Eklutna Generation Station, which is set to begin operation at the beginning of 2015.

“It is important to MEA that we are transparent with our members and give them the opportunity to take steps to reduce their electric bill and plan their budget,” said Joe Griffith, general manager of MEA. “We strive every day to deliver reliable service and keep rates as low as possible, and we hope our members will use the resources available on our website and others to manage their bills through efficiency measures as well.”

Specifically, the MEA board of directors approved a 2.19 percent increase Aug. 11 for the fourth quarter 2014. But during the course of the next year and a half, MEA says ratepayers should prepare for an additional increase in rates of approximately 15 percent to 20 percent.

MEA says ratepayer that use an average of 700 kilowatt-hours of electricity monthly will see a monthly increase of about $1.70 during the fourth quarter of 2014.

While gas and other fuel costs are about 60 percent of the increase, construction costs make up the other 40 percent, MEA spokesperson Julie Estey said.

Rates also would have increased if MEA had continued buying power from Chugach Electric Association, she said. Several years ago when it came time for MEA to renew the power contract, supplying its own power was the most affordable option, Estey said.

“When we received the numbers, this was the most economic option,” she said.

There’s no way to know what the exact cost would be today though, Estey said.

Alaska electric utilities are all in a similar boat, facing the need to replace aging infrastructure and higher gas prices with the end of Cook Inlet “legacy gas contracts,” she said.

“Legacy gas contracts” refers to natural gas sales agreements established 20 to 30 years ago at rates much lower than current prices. Those contracts are expiring for companies like Chugach Electric and new contracts for Cook Inlet gas are priced higher, Estey said.

Announced early Friday, groups, like the Mat-Su Borough School District, are still working to determine what the change will mean for their budgets. But it isn’t too soon to say such an increase will have significant impacts on the school district’s budget, according to Luke Fulp, chief financial officer for the Mat-Su district.

Contact Heather A. Resz at 352-2268 or heather.resz@frontiersman.com.