State regulators approved a price hike for Anchorage electric consumers less than a year ago, with the exact impacts to members’ bills depending on their area of the city.
Another increase went through in February, boosting bills by an estimated 5%.
Now, bills could rise another 4% in the coming months — a step that utility leaders, in part, are blaming on unusual warmth last winter.
Chugach Electric Association, cooperatively owned by its more than 90,000 Anchorage area members, typically sees higher demand in winter stemming from more lighting, indoor cooking and electric heating.
But this past winter, the seventh-warmest in Anchorage in a century, Chugach recorded a 4% decline in sales, utility executives said at a pair of recent meetings — meaning that the utility didn’t collect all the revenue it expected from its previously approved price hikes. Responding to a January wind storm also cost Chugach some $1 million.
Board members are expected to vote on whether to submit the latest increase to regulators at a meeting later this month.
“The main driver that we’ve seen that’s really pushing on sales, at this point, is weather,” Matt Clarkson, Chugach’s top attorney, said at a board committee meeting last week.
Other trends are contributing to a longer-term sales decline, according to Chugach spokeswoman Julie Hasquet. Anchorage’s population has stagnated, and consumers are increasingly conserving power and using more energy efficient appliances, she said. Inflation has also put pressure on the utility’s budget.
But Chugach has also documented a consistent trend of warming temperatures that appear to be linked to declining demand and thus sales. Since 1953, the number of heating degree days — a measurement of how cold it is — has fallen by 14% in Chugach’s service area, the utility said in follow-up correspondence with regulators.
Chugach maintains a 10-year sales forecast, which is reviewed annually, according to Hasquet. “We are not weather forecasters, but we review historic and long range weather, as well,” she wrote in an email.
One of the considerations driving the potential new increase, said Hasquet, is the need to preserve Chugach’s credit rating — affirmed at an ‘A’ grade by one agency earlier this week.
Keeping that grade, Hasquet said, ensures that the utility can borrow money at favorable rates for anticipated major investments — whether in liquefied natural gas imports infrastructure or large-scale renewable developments.
The warming trend in Anchorage is expected to continue, as the winter season is when temperatures are rising the most in the state, according to Rick Thoman, a specialist at the Alaska Center for Climate Assessment and Policy.
“There’s no reason to think winters will not continue to warm in most of the state, I think, including Southcentral,” Thoman said, referring to the region that includes Anchorage. “The warm end is creeping up — but not nearly as fast as the loss of the really cold weather.”
The warm winter also affected Matanuska Electric Association, the cooperative based in the Mat-Su region north of Anchorage, according to spokeswoman Julie Estey.
The utility recently filed a quarterly adjustment with state regulators to boost its base rates by 3% — an increase Estey said was higher than normal. Conversely, the previous year’s colder winter allowed the cooperative to delay increases that were expected earlier, she added.
In Fairbanks, the local utility, Golden Valley Electric Association, didn’t experience similarly declining sales last winter because of its “larger industrial load,” President Travis Million wrote in an email.
Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.