2019 FALL HOME IMPROVEMENT - Page 7
HEA manager addresses fluctuating energy rates By Brian Mazurek Peninsula Clarion
At this week’s joint Kenai/Soldotna Chamber of Commerce Luncheon, Homer Electric Association’s General Manager Brad Janorschke addressed fluctuating energy rates that HEA members have experienced from one quarter to the next. About two-thirds of everyone’s electric bill covers the association’s “fixed costs” — expenses such as insurance and salaries for employees that remain constant regardless of how much energy is used. The amount of energy sold by HEA has decreased steadily over the past decade, from around 530,000 Megawatt hours (MWh) in 2007 to about 450,000 in 2018. Janorschke cited the shutdown of the Agrium nitrogen fertilizer facility and the liquefied natural gas plant, both in Nikiski, as major factors in the significant drop in energy consumption. Less consumption overall means that individual rates go up in order to continue covering HEA’s fixed costs, Janorschke explained. Janorschke said that rates change on a quarterly basis, and for the past two quarters rates have gone down for members, partly due to lower natural gas prices and the reliance on hydroelectric energy. However, as winter approaches and people are using more power to heat their homes, electric bills will likely increase, Janorschke said. With the exception of the last two months, Janorschke said that about 90% of HEA’s power supply comes from liquefied natural gas. Gas prices for HEA through their contract with Furie Operating Alaska have increased slowly but steadily since 2016, going from $6.50 to $7.25 per 1000 cubic feet (Mcf.) Furie recently filed for bankruptcy in Alaska, and
as a result HEA was able to negotiate a lower price for the remainder of their contract, leading to lower rates for HEA members over the last two quarters. HEA recently secured a contract with Hilcorp Alaska to supply LNG for the next five years, with the price starting at $7.50 per Mcf and set to increase by no more than 20 cents over the duration of the contract. Looking to the future, HEA is focusing on increasing its fuel efficiency and relying less on natural gas as its primary fuel source. Future projects include expanding production at the Bradley Lake hydroelectric facility by diverting part of Battle Creek into Bradley Lake by the end of next summer, as
well as construction of a new hydroelectric facility at Grant Lake, for which HEA just recently acquired the license through the Federal Energy Regulatory Commission. Janorschke said that HEA hopes to have the Grant Lake project online within the next five years. HEA is also looking at capturing the methane gas produced at the landfill south of Soldotna. Janorschke said that this a “very viable” option, and the association is currently working with the borough to determine what kind of equipment would be needed to make that project a reality, how ownership of the plant would be divided, and what federal or state dollars would be available for financial assistance.
Homer Electric Association General Manager Brad Janorschke gives an update to the joint Kenai and Soldotna Chambers of Commerce at the Soldotna Regional Sports Complex on Wednesday. (Photo by Brian Mazurek/Peninsula Clarion)
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