The high cost of electricity in Rural Alaska might be getting a little cheaper, as utilities buy their annual fuel supplies with low oil prices. But not all will benefit, because of the formula for state fuel cost assistance.
We asked Alaska Village Electric Cooperative President and CEO Meera Kohler is the cost of electricity would be going down any time soon.
“It will be going down,” she said. “How soon remains to be seen.”
AVEC provides power for much of rural Alaska.
“We were successful in locking in some fuel earlier this year for a better price than we’ve been paying last year, although the price we got last year was a really good price too,” she said.
Kohler says Bethel may start to see savings in September, but those savings will only affect certain groups. Residents and those who benefit from the state Power Cost Equalization (PCE) subsidy will probably not see a change.
When the price of fuel goes down the subsidy does too, and the price stays the same for PCE users, Kohler says.
She says the cost per kilowatt-hour could go down as much as 8 cents. That might not sound like much, but for businesses, which don’t get PCE, this could be a big deal. To look at how big, I talked to the person who pays KYUK’s power bill, my boss Mike Martz.
” Oh you want to see the bills? We pay them separately but we have three.We just looked at one bill, KYUK’s most expensive,” Martz said. “Well ok, this was 5321 Kilowatt-hours.”
The amount of power KYUK uses in a month for this one bill.
“Times .2319,” Martz said.
That’s the current fuel rate, just under 25 cents per Kilowatt-hour.
“Equals a fuel cost amount of $1,233.94,” Martz said.
Now Mike does the same calculation with AVEC’S new rate, which could be around 15 cents per kilowatt-hour.
MARTZ: That comes out to $798.15.
KYUK: So what is that compared to the average bill?
MARTZ: Well if that’s what we were going to pay in fuel with a reduction, then that’s a fairly big savings.
Mike runs the numbers through his calculator to see how much we would save.
MARTZ: Ok, that’s a savings of $436. And that’s significant, I think. Maybe in the larger scale of things it’s not significant, but if we factored a savings of $436 over a year, that’s a total savings of over $5,200.
KYUK: It’s a little less than half, it looks like.
MARTZ: Yeah, it does look like it would be a little less than half.
With the savings from all three of KYUK’s power bills add together, you could pay a big part of a new employee’s salary. Other businesses might use that money differently. A hospital could expand its equipment budget, or maybe a grocery store could finally lower the price of avocados.
The low price of crude oil has hammered the state’s finances, but it has also driven fuel prices down, and this year’s shipping season is taking advantage of that.