This summer has been a time of financial hardship in the Kuskokwim River village of Aniak after electricity prices quadrupled in May, leaving its 500 residents with some of the highest electricity prices in the world.
Households commonly received monthly bills over $1,000. The school and local businesses had bills that were even higher, and they don’t benefit from the state’s power cost subsidy.
At the end of June, more than 30 Aniak residents asked the Regulatory Commission of Alaska to reconsider its approval of their local power company’s rates.
On July 31, the regulatory commission made effective several new rules for Aniak Light & Power Company to help mitigate the extremely high cost of power in the village.
First, the power company cannot disconnect customers who didn’t pay their high bills.
Utility managers originally attributed the jump in prices to an increase in fuel costs, but the commission has determined that the company had also been underestimating fuel costs for some time. To reconcile its accounts, the company charged a deficit — the cost of 85,000 gallons of fuel — and that drove up the power bills all at once. Customers also said Aniak Light & Power had been underestimating its power usage, and that expense had been tacked onto customers’ bills.
The commission has decided to zero out the power company’s financial deficit from this spring: nearly half a million dollars that appeared on its books to account for the missing fuel.
These costs have not gone away. Commission spokesperson Steven Jones said Aniak customers will pay the amount back over time.
“They undercharged, and so they need to recover the cost of the fuel,” Jones said. “And so the increase would be spread out over all of the customers’ rates over a 24-month period, in addition to whatever a customer would normally pay for their fuel.”
For customers, that debt will be a line item on their bill labeled “Balancing Account Surcharge” over the next two years. That way, instead of the dramatic increase, the elevated rate will be spread over time.
Without that deficit, Aniak’s cost of power is about a third of what it was, which will bring it down to about the same rate as countries with the highest electricity prices in the world. A household in Aniak using 750 kilowatts hours of electricity will be charged $834.40 in a month.
While the commission has promised to look into the utility’s management practices, Jones said that investigation won’t be public.
Some people are still questioning why the commission approved such high rates and didn’t give a prior warning. Jones said that the RCA’s priority is to keep the power on.
“It’s difficult in general, you know, if a utility was saying or community saying a utilities not doing what they should and they yank the — they close down the utility, then who’s going to provide the service?” Jones said. “You know, that’s the big, big thing is the utility has to have a rate to operate.”
While community members say they appreciate the new two-year financial plan, some noted that the financial impact hasn’t gone away. The school district, which doesn’t receive the state subsidy, needs to allocate an overwhelming amount of its budget to the school in Aniak. Many elders have been sitting in the dark, and people haven’t fished because they’re worried about the cost of turning on their freezers.
Andrea Gusty, president and CEO of The Kuskokwim Corporation, is working to help. She said that while the changes alleviate the immediate energy crisis, the community is still paying the price.
“We haven’t addressed the problem, we’ve spread the problem out over a longer period of time,” Gusty said. “It’s no longer a wound that is gushing; it’s now trickling, right? But the same amount of blood has been lost.”
People are also still wondering how and why this happened.
“I think it’s important to note, though, that everybody on the river received their fuel from the same set of barges,” Gusty said. “No other utilities had a 400% increase. So something’s going on. And again, I think that (the RCA) has done a very good job of addressing this crisis of their own making fairly quickly. But they’re ignoring the long-term how and why, and how can we prevent this in the future?”
The Kuskokwim Corporation is one of several groups trying to figure that out. It has organized an Aniak Energy Survey to find out more, and has been digging into documents and meeting with community members.
“I think that we’re just at the beginning of this,” Gusty said. “Because I think that Aniak residents, Aniak businesses, the school district, the airlines, you know, everybody that pays for electricity in Aniak, our eyes have been opened. And I think that not only are we trying to fix this long-term, our goal is to make sure this can’t happen again in rural Alaska. Because it’s really been an injustice to the residents of Aniak.”
For now, the changes should help ease, but not remove, the financial burden of high electric bills for Aniak customers.
