MEA requests ninth consecutive rate decrease

MAT-SU -- Matanuska Electric Association's board of directors voted unanimously last week to decrease rates by three percent -- the 15th rate reduction approval since 1996.

The proposed reduction must be approved by the Regulatory Commission of Alaska before it goes into effect, and, if approved, MEA members will see the reduction by the first week of January.

Mike Pauley, MEA's spokesman, said the reduction would mean the average MEA consumer, who uses about 800 kilowatt hours per month, would end up paying about $26 less each year, or about $2 each month. But, Pauley pointed out, that's only part of the picture.

"The thing that's more impressive is, that's just this reduction," Pauley said. "When you add the cumulative effect together, what it comes out to is $139.44 a year, or $11.62 a month. It's like a month and a half of free electricity."

The reduction follows a 1.5 percent reduction approved in August and eight previous quarterly reductions. At a time when many companies are reporting declining revenues, Pauley cited several reasons for MEA's ability to consistently decrease rates, putting general efficiency at the top of the list.

"There's never any one big explanation," Pauley said. "[But] we are always looking for ways to try to do things for less."

Although he said he hesitated to talk about employee statistics at the risk of sounding as though the decreases have come on the backs of overburdened employees, Pauley did say employee numbers have gone down considerably.

At the end of 1995, Pauley said, MEA had about 28,000 members, whose service was provided by 141 staff members. One year ago, MEA listed about 34,000 members and 118 staff members, a 22-percent increase in membership and an 18-percent decrease in staff.

Most of those positions, Pauley said, have been phased out through attrition. In the general manager's office, for example, one secretary now handles a job that was previously divided between two positions.

One thing that has helped MEA reduce costs, Pauley said, has been the population growth. Although it means some line extensions have taken place and MEA's service area has grown, much of the added population has resulted in a more dense service area.

"It makes a big difference whether you have five customers per mile of line or 20," Pauley said. There are more demands in some areas, such as customer service, but having more people split the bill helps. "That is offset somewhat, but the net effect is positive, from having more people share the burden, so to speak."

Pauley added that the cooperative constantly looks for ways to cut costs internally to keep costs down.

"Everything gets analyzed," Pauley said. He mentioned one example, a contract with a coffee provider that was cut recently. Now, Pauley said, coffee is purchased in bulk instead.

"It's not huge things, but the cumulative effect makes a big difference," Pauley said.

At the board meeting last week, board member Michael Janecek asked whether it would be more efficient for MEA to make larger reductions less frequently than to reduce costs by one percent, one-and-a-half percent and three percent, the amounts of the last three reductions.

At the meeting, MEA General Manager Wayne Carmony said MEA must make a rate filing with the Regulatory Commission each quarter, regardless of whether there's a change in rates.

Pauley said that rate filing includes MEA's most recent financial statistics, operating costs and other financial information to justify their current rates. Whether the rates go up, down or don't change at all, Pauley said, the filing must be made. In addition, he said, the rates are reflective of how closely MEA is operating to the formula it uses to help determine fair rates. If the co-op's income rises above a certain percentage in that formula, rates must be reduced to keep that balance in check. Reducing rates by one big chunk could tip that balance in the wrong direction.

"You couldn't really say you're going to take a whole bunch of small rate decreases and roll them up into one," Pauley said.

Pauley added that, although MEA is reducing rates, Chugach Electric Association, MEA's power provider, will be arguing their case in front of the Regulatory Commission, requesting a 5.6-percent increase in the rates MEA pays Chugach for power. MEA is contesting the increase, and is instead asking for a decrease in those rates, but the end result could be that, although MEA has reduced rates, electricity is more costly to Valley consumers.

"The frustrating thing that we always have to deal with is that people may read in the paper the we're decreasing rates, but when they look at their bill, it's not a whole lot different," Pauley said. "The positive angle is that if we weren't doing anything [to cut costs], then people would be paying $139 more a year."