The off-peak rate issue

Matanuska Electric Association has petitioned the Regulatory Commission of Alaska to eliminate its off-peak rate customers and make them pay at the full residential electric rate.

Off-peak rate customers are crying foul, and rightfully so. They point out that they made considerable investment in off-peak rate equipment at the urging of MEA and now believe for MEA to just throw their concerns and investment cost to the wind is a violation of trust.

We agree. It is not fair to be summarily cut off and cast to the wind.

These folks now pay $0.02321 per kWh for the off-peak power they consume during off-peak hours. At this price they are not paying their own way and the rest of us are subsidizing them. That, too, is just not fair to the rest of our members.

Our group believes there is a reasonable solution for the 50 off-peak users who MEA wants to eliminate. We suggest the following:

MEA pays Chugach Electric approximately $0.05 per kWh for what can be considered as off-peak power. To this number we must add MEA’s administrative expenses and reimbursement of line losses, which is probably less than $0.002 per kWh. This simply means we raise the rate to the off-peak customer from the present $0.0233 per kWh to $0.052 per kWh. Please note, these members have two meters; only one meter is attached to an off-peak timer and heating system. The other is billed at the regular rate as all other members.

There should also be a legitimate return on this class of customer. After all, they have been subsidized for many years by the rest of us. We propose that MEA charge $0.06 per kWh for off-peak rates or slightly over cost to cover intangibles and return reasonable margins.

Now just how does $0.06 per kWh compare to other energy costs?

It works out to $17.58 per million BTU of actual home heat. At $3.50 per gallon for a stove, heating oil produces a cost of $26.88 per million BTU of actual home heat using the most efficient heaters on the market. If normal gun-type furnaces are used, then the cost per million BTU rises to $29.41, and $3 per gallon of stove oil costs $23.04 per million BTU when burned in your Toyo or Monitor stove. As you can see, off-peak electrical power cost is significantly lower than heating oil.

Propane is a much higher cost than heating oil.

Coal at $140 per ton costs $23.33 per MBTU if your furnace is 60 percent efficient. Most coal furnaces are in the 45 percent range for efficiency.

The off-peak rate of $0.06 is the least-cost alternative and the best way to heat our homes and water if you cannot get natural gas. I recognize that it is a big jump from $0.02321 per kWh, but $0.06 is reasonable, more than competitive with other fuels and fair to all the other MEA members.

For the MEA administration and board to file a petition to eliminate this program without consulting with those involved is wrong. I believe that if you had more off-peak customers you could derive some excellent services with benefits to be shared by all.

It seems to me that if all MEA members who do not now get natural gas would use the off-peak program, then we could have a $2 million increase in margins annually at the $0.06. Surely a potential $2 million return is worthy of further consideration. With the possibility of hydro in the future, off-peak rates may become even more favorable.

Please, MEA, review the off-peak program for cost and load management. There are advantages to be gained for our members. This is an opportunity for MEA to be of service to those members who cannot get natural gas for heating and hot water. Do the right thing!

William A. Folsom is a candidate for election to the board of directors for Matanuska Electric Association and is a former MEA board member and president of the board.