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HomeMy WebLinkAboutEffects of Rising Utility Cost on Household Budgets 2000-2006EFFECTS OF RISING UTILITY COSTS ON HOUSEHOLD BUDGETS, 2000-2006 By Ben Saylor and Sharman Haley Institute of Social and Economic Research University of Alaska Anchorage 3211 Providence Drive Anchorage, Alaska 99508 Funded by Alaska Office of USDA Rural Development in Palmer And University of Alaska Foundation MARCH 2007 EXECUTIVE SUMMARY: EFFECTS OF RISING UTILITY Costs ON HOUSEHOLD BUDGETS ouseholds in remote rural places face utility costs 50% higher now than in 2000. In Anchorage those costs are up 35% and in other large or road-system communities about 39%, as Figure 1 shows. The share of household income going to utilities is also up. Utility costs in urban and rural areas are now anywhere from about 3% to 10% of income for the typical household. Those are median figures for all households. Utilities take a much bigger share of income among low-income households. Utility costs now amount to more than a third of income among low-income households in remote places. These are among the findings of an ISER analysis of how ris- ing energy prices have increased utility costs for Alaska house- holds since 2000. By “utility costs” we mean costs for heat, electricity, and water and sewer systems. We divided Alaska communities into three regions, based on their size and loca- tion. A map on the back page shows the areas in each region. The 2000 costs we use are annual out-of-pocket costs Alas- ka households reported in the spring 2000 U.S. census. The spring 2006 figures are ISER estimates for the same house- holds, based on increases in energy prices since the census. Utility costs were higher to start with and have increased more in remote places because they rely mostly on diesel for heating houses and generating power. Anchorage and a few other places have access to natural gas. (See map, page 2.) Both diesel and natural gas prices are up sharply, but diesel is still more expen- sive. Households paid on average four times more for diesel than for gas in 2005, measured by energy content (Figure 2) Incomes in remote areas are also lower, which exacerbates the effect of higher utility costs. So it’s not surprising that Alaskans in remote places use less household energy—roughly half as much per person as places with natural gas (Figure 3). The inside pages show more about energy and utility costs. But to put utility costs in perspective, remember they're only a part of total housing costs—and total housing costs are sig- nificantly higher in urban Alaska (see back page). Also, higher energy prices directly affect transportation costs and indirectly affect many other costs. We only report effects on utility costs. And “income” here includes only cash. Public programs that help households pay medical, housing, or other costs also effec- tively add to household incomes. So do the wild fish and game many Alaskans harvest. But the value of such non-cash contri- butions doesn’t show up in traditional income measures. Figure 1. Utility Costs for Alaska Households, Spring 2000 and Spring 2006 Median Household Median Percent of Spending* Household Income 2.0% Bb1% Bi3.0% Hiox Bic.ox | Spring 2000 costs are out-of-pocket costs for previous year, reported by Alaska households in the 2000 U.S. census. Spring 2006 costs are ISER estimates for previous year, based on changes in energy prices from 1989 through 2005 Based on 1999 cash incomes Alaska houscholds reported in 2000 U.S. census and estimated 2005 household cash incomes, adjusted for Permanent Fund Dividends not reported in the census B® 2000 2006 $1,810 —— +35% Anchorage | Other large or road-syster communities HB 203: ae) Sources: See list of sources on page 4 Figure 2. Comparing Costs of Natural Gas and Diesel Fuel, 2005 (In Equivalent Energy Content: Million BTUs*) Natural gas $5.72 Diesel for home heating ee eee 40 *British thermal units, a standard measure of energy content Source: [SER calculations with data from Alaska Housing Finance Corporation and Regulatory Commission of Alaska Figure 3. Estimated Annual Energy Consumption for Household Uses, Per Person (Energy from All Sources, Converted to Barrels of Oil) 21 18 cE 4 : 4 Alaska Places with Places Other natural gas with PCE* areas *The state Power Cost Equalization program subsidizes part of electricity costs in rural communities that generate electricity mainly with diesel Source: Steve Colt, ISER, revised September 2006. Figure 4+. How Do Alaskans Heat Their Houses? Share of Households Using Various Energy Sources) Places with Access to Natural Gas Other large or Anchorage road-system communities Electricity 3% Other* Oey Ya) Diesel fuel coal, wood, and solar energy Source: 2000 U.S. census Remote rural communities All other Any {uel type not specified. Sources of heat include natural gas, propane, electricity, diesel fuel Barrow has access to natural gas from local wells Natural gas Wood ANALYSIS REGIONS AND DATA SOURCES Our baseline data are from the 2000 federal census, and we defined utilities the way the U.S. Census Bureau does: electric- ity, heating fuels, and water and sewer systems. But analysts don’t all agree about what should be considered as “utilities.” Our analysis regions are based on five Alaska regions the U.S. Census Bureau uses for reporting detailed household in- formation—Public Use Microdata Areas, which group com- munities based on size and proximity to road systems. For this summary, we combined the five into three: (1) Anchorage; (2) other large or road-system communities; and (3) remote com- munities. A map on the back page shows the regions. We report median household utility costs—that is, the mid- point figure, with half of households spending more and half spending less. We report those medians for all households and for the wealthiest and the poorest households. Our data on en- ergy prices come from a number of sources, cited in the figures and listed on the back page. We used figures from the 2000 U.S. census and the 2005 American Community Survey to estimate changes in house- hold income. SOURCES OF ENERGY Natural gas and diesel are the two big sources of energy Alas- kans use. For heating, households use gas or diesel directly. Electricity is mostly generated either with gas or diesel, de- pending on which is available. (For some towns, mostly in southeast Alaska, hydropower generates electricity.) Water and sewer utilities also get the power they need from gas or diesel. Natural gas from Cook Inlet fields is available in Anchorage and some (but not all) places on the Kenai Peninsula to the south and the Mat-Su Borough to the north. Some Fairbanks households use liquified natural gas (LNG), which is trucked in, and Barrow has access to gas from local wells. Other Alaska communities rely mainly on diesel. Figure 4 shows how households heat their houses. Only in Anchor- age do most heat with gas. In remote places about 80% of households use diesel, as do more than half the larger or road-system communities. The majority of Alaskans—about 85%—live in Anchorage and other large or road-system communities and 15% in re- mote places (Figure 5). N Figure 5. Where Do Alaskans Live? Remote rural places Other large or road-system communities Anchorage 2005 Alaska population: 663,661 Source: Alaska Department of Labor Figure 6. Increase in Natural Gas Prices For Anchorage Households, 2000-2006 2000 2006 $.324 $.61 Increase Price per 88% 100 cubic feet Sources: Regulatory Commission of Alaska and Enstar Natural Gas Figure 7. Increase in Prices of Diesel for Home Heating, Per Gallon, Fall 2000 - Winter 2005 Anchorage 57% Other large or road-system communities 70% Remote rural communities 83% Source: Population-weighted averages, hased on Alaska Housing Finance Corporation surveys. Figure 8. Range of Diesel Prices for Home Heating, Per Gallon, Winter 2005 l \ 1 1 Lowest Anchorage Remote Highest $1.20 Median Median $5.40 $2.38 $3.30 Source: Alaska Housing Finance Corporation RisinG ENerGy Costs Natural gas prices in Anchorage and diesel prices in remote places increased roughly the same percentage in recent years. Anchorage households paid nearly twice as much for natural gas in early 2006 as in 2000 (Figure 6). Diesel prices increased 83% in remote areas from fall 2000 through winter 2005 (Fig- ure 7). Data on September 2006 diesel prices, collected by the Alaska Division of Community Advocacy in a number of remote places, showed continuing increases in diesel prices. And diesel prices have gone up more in remote places than in places closer to roads, because prices customers pay include the additional costs of transporting fuel and maintaining com- munity storage tanks. Fuel prices also vary a lot among remote places. In winter 2005, prices varied from a low of $1.80 per gallon among North Slope communities to $5.40 in Hughes, in the Interior (Figure 8). The average price in remote places was $3.30. North Slope villages are among the state's most remote com- munities, but they pay lower prices because the borough government subsidizes residential fuel costs. In other places considered “remote,” some are much more remote than others —so the costs of getting fuel to them are higher. Also, the price households pay varies by when the fuel was purchased and how long the community supply bought at a Figure 9. Increase in Electricity Prices, Rural Communities and Anchorage Effective Rate for PCE residential customers (Median price per Kwh for first 500 Kwh®) 2000 2006 Increase 17¢ 24¢ 41% Rate for Anchorage Households (Per 1,000 KWh) March 2000 March 2006 Increase $94.79 $121.00 28% “Weighted by number of Power Cost Equalization customers pet community For customers of Chugach Electric Association Sources: Alaska Energy Authority and UA Cooperative Extension Service specific time lasts. Electricity rates have also increased, but not as much. The rate for custom- ers of Anchorage’s largest electric utility was up 28% between March 2000 and March 2006. Many remote communities receive Power Cost Equalization—a state 2000 HH 2006 program that subsidizes electricity costs Anchorage in places that generate electricity mainly with diesel. In those places, rates went Share of 2005 income up 40% between 2000 and 2005, even taking the subsidy into account. Other large or road-system Poor AND WEALTHY HOUSEHOLDS : communities Figure 10 looks at how utility costs and shares of income going to utilities changed since 2000 among the state’s wealthiest and poorest households—the Share of 2005 income 20% of households at the top of the in- aeseclascsa come range and the 20% at the bottom. Share of Alaskans with lower incomes spend less for utilities than wealthier residents, because they live in smaller houses or 2005 income Figure 10. Median Utility Costs for Poorest and Wealthiest Households, 2000 and 2006 (Bottom 20% and Top 20% of Alaska Households) Poorest Households 500i at BB 82.030 — 34% 45% Hs200 2 Boss 2 14.4% [] 2.5% 2400 — RE ss.100 — Source: See list of sources, page + Wealthiest Households {§ s9s80 —5 Be s2.300— 28% +33% Bsio03° EE s300-° 8.1% +54% BE «2s — 4.4% apartments with fewer amenities. In Anchorage and other urban places, many poor house- holds rent and are more likely to heat with electricity. That's an expensive way to heat—but since prices for electricity didn't increase as much as prices of natural gas, utility costs for poor households in urban areas didn’t increase as much as for wealthy households. In remote areas, people with lower incomes are often home- owners who heat with diesel. In those places, poor house- holds saw their annual utility costs increase 62%. Costs for wealthier households statewide were higher to start with and went up more—because Alaskans with more mon- ey generally live in bigger houses that require more heat and electricity. Dollar costs for the wealthier households in urban areas went up 33% to 45% and in remote areas 54%. But even though dollar costs for utilities are higher among wealthy households, utility costs take a much bigger share of the smaller incomes of poor households. That’s especially true in remote places, where incomes are lowest. Utility costs take from 8% to 33% of the income of poor households but about 2% to 4% among wealthy households. TotaL Housine Costs This analysis looks just at changing utility costs, but there are of course other housing costs—mortgages and rent pay- ments being the biggest. Utility costs are higher in remote areas, but total housing costs are higher in urban areas. Most urban homeowners have mortgages, while many homeowners in remote places don't. Land values are higher in larger towns, and houses tend to be bigger and have more amenities. Figure 11 shows that as of 2000, total housing costs were 60% higher in Anchorage than in remote places. We didn’t estimate how total housing costs have changed since 2000, but we know they’ve gone up—since house prices, property taxes, and other costs are also up. It is clear from these charts that the more rural areas have lower income and pay more for utilities and fuels. The remote rural area has the lowest household incomes and highest household utility costs, significantly lower than road connected regions for income and significantly higher than other regions for total cost of utilities. POPULATION AND INCOME Before examining utility costs in detail, we look at the geographic and income distribution of the Alaska population. Table 1 shows that in Anchorage, the highest income quintile contains the largest share of households, while remote rural Alaska has a larger concentration of households in the lower quintiles. There is no clear pattern in the other two regions. Table 1. Alaska Households by Income Quintile and Region Kenai& Mid-Size Remote Quintile Household Income | Anchorage Mat-Su__& Roaded Rural Number of Households $25,670 and below 8,466 12,082 8,044 44,292 $25,671 to $43,910 7,120 11,937 6,724 44,273 $43,911 to$ 64,500 8,611 11,401 5,525 44,294 $64,501 to $93,400 8,189 11,145 5,111 44,268 over $93,400 6,230 11,646 4,695 44,278 Total 38,616 58,211 30,099 221,405) Percent of Households $25,670 and below 16.6% 21.9% 20.8% 26.7% 20.0% $25,671 to $43,910 19.6% 18.4% 20.5% 22.3% 20.0% $43,911 to$ 64,500 19.9% 22.3% 19.6% 18.4% 20.0% $64,501 to $93,400 21.0% 21.2% 19.1% 17.0% 20.0% over $93,400 23.0% 16.1% 20.0% 15.6% 20.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% Average Household Size $25,670 and below 1.9 2.0 1.8 $25,671 to $43,910 2.3 2.4 2.4 $43,911 to$ 64,500 21h 2.9 2.8 $64,501 to $93,400 3.0 3.2 3.0 over $93,400 3.1 3.2 3.1 Total 2.7 2.7 2.6 Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations Note that Table | and most of the other tables in this report are for households and do not include people living in group quarters (military barracks, college dormitories, institutions, etc.). Table 2, however, shows the distribution of people by region and income quintile, and people in group quarters too. Note first that the whole population is no longer evenly distributed across quintiles; this is because low income households tend to have fewer persons (see Table 1). Income quintiles here are still determined at the household level: each person is in the quintile of his or her household. Table 2. Alaska Population by Income Quintile and Region Nears ee eee rseaene Ke 8 lid-Size Remote Quintile Household Income | Anchorage _ Mat-Su__& Roaded Rural Number of Persons $25,670 and below 29,985 16,455 21,872 17,678 $25,671 to $43,910 42,808 18,024 28,765 22,062 $43,911 to$ 64,500 50,310 24,965 32,576 18,711 $64,501 to $93,400 60,291 26,333 33,226 19,408 over $93,400 68,536 19,830 36,833 18,228 Group quarters 7,133 2,343 4,776 5,039 Total 259,063 107,950 158,048 101,126 Percent of Persons $25,670 and below 11.6% 15.2% 13.8% 17.5% 13.7%! $25,671 to $43,910 16.5% 16.7% 18.2% 21.8% 17.8% $43,911 to$ 64,500 19.4% 23.1% 20.6% 18.5% 20.2% $64,501 to $93,400 23.3% 24.4% 21.0% 19.2% 22.2% over $93,400 26.5% 18.4% 23.3% 18.0% 22.9% Group quarters 2.8% 2.2% 3.0% 5.0% 3.1% Total 100.0% 100.0% 100.0% 100.0% 100.0% Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations In Anchorage the distribution is strongly skewed, with a higher percentage in the highest income quintile and a lower percentage in the lowest. The mid-size and roaded census areas, dominated by Fairbanks, Juneau, and Ketchikan, have a similar pattern with more of the population in the highest quintile and less in the lowest. The population of Kenai and Mat-Su tend to the middle income brackets, while in remote rural areas the population is more evenly distributed across the quintiles. That region also has the highest percentage of persons living in group quarters. UTILITY COSTS The four annual utility costs reported in the census are electricity, gas, water and sewer, and “oil, coal, kerosene, wood, etc.” The last category refers to fuel other than gas (natural or LP), and these would primarily be used for heating, so we will call it heating fuel. The following tables show utility costs as a percentage of household income. This percentage is calculated for each household in the sample data that pay anything for a given utility, and the numbers in the table are the averages and medians of this household-by-household percentage. We present medians (the midpoint number, with half of the households above and half below) as well as averages, because the median is in some ways a “fairer” figure, more representative of the middle household and less sensitive to outliers with unusually high or low costs. Fuel oil is the most expensive of the four utility categories. It is used for heat in a large majority of households in mid-size and roaded areas and remote rural census areas. Very few Anchorage households use anything other than gas and electricity for heating, so the share of income spent on fuel oil is very low in Anchorage. As Table 3 shows, in remote rural census areas the cost of heating fuel takes up an especially large share of household income, with the median share almost twice the median in Kenai and Mat-Su and mid- size and roaded areas. Table 3. Cost of Heating Fuel (Liquid or Solid), for Those Who Pay 4 p Kenai & Mid e Remote Quintile Household Income Anchorage Mat-Su _& Roaded Rural Total Cost in Dollars average $365 $901 ‘$1,071 $1,400 $1,152 | | | eae-e7Oiand below | licdian $375 $700 $1,000 __$1.200 average $334 $929 $1,193 $1,447 $1,186 2 $25,671 t0 $43.910 agian $150 $720 $1,000 __—*$1,200_—_—$1,000 average $810 $1,056 $1,221 $1,646 $1,282 3 $43,911 10. $64,500 dian $400 $900 $1,100 —«$1400_—_—$1,100 average $208 $1,008 $1,377 $1,662 $1,272 median $180 $1,000 __—*$1,200~—«$1,500_~_—*$1.200 average $322 $1,113. $1,394 $2,000 median $180 $900 $1,200 _‘$1.800 average median 4 $64,501 to $93,400 5 over $93,400 Cost as a Percentage of Household Income average 2.6% 10.9% 11.0% 14.3% 12.1%! median 2.1% 5.7% 6.2% 8.8% 6.7% average 1.0% 2.8% 3.4% 4.2% 3.5% median 0.4% 2.0% 2.9% 3.6% 2.8% 1 $25,670 and below 2 $25,671 to $43,910 average 1.6% 2.0% 2.3% 3.1% 2.4% 3 _ $43,911 to $64,500 regia 0.7% 1.6% 2.0% 2.6% 2.0% average 0.3% 1.3% 1.8% 2.2% 7 $64,501 to $93,400 median 0.2% 1.2% 1.5% 1.8% 1.4% average 0.3% 0.9% 1.1% 1.6% 1.1% median 0.1% 0.8% 1.0% 1.5% 0.9% average 0.7% 3.9% 3.4% 6.0% 4.0% median 0.2% 1.7% 1.8% 3.1% 1.9% 5 over $93,400 Total Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations As Table 4 shows, electric costs average 3.4 percent of household income statewide. Most households, however, paid less than the average cost: the median household share (50% of households below and 50% above) was 1.6% of income. Looking at the geographic distribution, the share is lowest in Anchorage and highest in remote rural Alaska, with the other regions in between. The utility costs in the census are out-of- pocket costs, so these represent what households had to pay after energy assistance programs such as the Power Cost Equalization (PCE) program. Most places receiving PCE assistance are in the remote rural census areas. Table 4. Cost of see re Pi Those Who dal quintile Household MTT nr TT ae Cost in Dollars ps $756 $1,013 $998 $1,190 $600 $800 $730 $1,000 , : $1,316 $25,671 to $43,910 : $1200 average , , $1,492 $43,911 to $64,500 SUETOE $1,200 average! ; k $1,664 $64,501 to $93,400 median i $1,400 average median ' : 1 average $913 $1,150 $1,179 $1,441 $1,096 median $800 $1,000 $1,000 $1,200 $960 Cost as a Percentage of Household Income average’ 7.1% 10.9% 13.9% 11.9% 10.7% median 3.6% 5.6% 5.1% 7.0% 4.9% average’ 2.1% 3.3% 3.0% 3.9% 2.8% median 1.7% 2.8% 2.5% 3.2% 2.3% average’ 16% 2.2% 2.2% 2.8% 2.0%! median 1.3% 1.9% 1.9% 2.4% 1.7% average} i 1.5% 1.6% 2.2% median : 1.4% 1.4% 1.7% average 0.9% 1.0% 1.1% 1.4% median 0.8% 0.9% 1.0% 1.3% H average} 2.2% 3.7% 4.1% 5.2% 3.4% median 1.2% 1.8% 1.7% 2.7% 1.6% Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations $25,670 and below over $93,400 $25,670 and below $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 Looking at the distribution by income quintile, the average share of income paid for electricity was ten times higher for low income households than for high income households. A comparison of the median shares paid is less extreme: about five times greater for the lowest income quintile than for the highest. Unlike electric and fuel costs, gas costs for remote rural census areas are not higher than for other regions (Table 5). This has to do with the fact that a much smaller share of households in remote rural census areas use gas for heat (and most of those using gas are actually using propane — only some North Slope residents have access to natural gas), while a majority of Anchorage households use gas. The share of households using gas for heat in Kenai & Mat-Su and mid-size and roaded areas is in between. This will be examined later in this report. 10 Table 5. Cost of Gas (Among Those Who Pay) ‘ f Kenai 8 Mid Quintile_ Household Income Anchorage Mat-Su_& Roaded Tota PO Cost in Dollars average $749 $718 $361 $698 $26,670 and below negian $600 $540 $200 $400 average $706 $836 $496 $861 median $650 $700 $310 $500 average $770 $755 $557 $669 median $660 $700 $340 $500 average $819 $747 $671 $825 median $800 $700 $400 $500 average $948 $855 $627 $765 $894] median $900 $800 $360 $600 $840 average $825 $780 $545 $761 $782 median $760 $700 $300 $500 $700 Cost as a Percentage of Household Income average 7.5% 6.8% 7.0% 8.1% 7.3% median 3.9% 3.5% 1.7% 3.1% 3.3% average 2.0% 2.4% 1.4% 2.6% median 1.8% 2.0% 0.9% 1.5% average 1.4% 1.4% 1.0% 1.3% median 1.3% 1.3% 0.6% 0.9% average 1.1% 1.0% 0.9% median 1.0% 0.9% 0.6% average: 0.7% 0.7% 0.5% median 0.7% 0.6% 0.2% average 1.8% 2.2% 2.2% median: 1.0% 1.1% 0.7% Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 $25,670 and below $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 Total Of the four utility categories in the census, water and sewer unsurprisingly has the lowest cost, although it is about twice as high as a share of income in remote rural census areas as in Anchorage (Table 6). 11 Table 6. Cost of Water and Sewer, for Those Who Pay Quintile_ Household Income : age Mat-Su__& Roaded Tota Cost in Dollars average $530 $524 $619 $621 median $550 $490 $540 $500 average $555 $526 $641 $632 median $580 $500 $600 $520 average $565 $568 $675 $721 median $580 $500 $600 $600 average $518 $566 $654 $910 median $560 $500 $650 $720 average $525 $628 $661 $966 median $570 $530 $600 $830 average $535 $565 $653 $758 $607 median $570 $500 $600 $600 $580 Cost as a Percentage of Household Income average 5.1% 5.0% 4.8% 6.0% 5.3% median 2.9% 2.8% 3.3% 3.4% 3.1% average! 1.6% 1.6% 1.8% 1.8% median 1.5% 1.6% 1.6% 1.5% average’ 1.1% 1.3% median 1.0% 1.1% average’ 0.7% 0.7% 1.2% median 0.7% 0.7% 0.9% average 0.4% 0.5% 0.8% median 0.4% 0.4% 0.6% average 1.6% 1.5% 24% 1.5% median 0.9% 0.9% 1.2% 0.8% Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations $25,670 and below $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 $25,670 and below $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 Table 7 represents the cost of all four utilities for all households who pay anything for any of the utilities. The numbers are steadily increasing as the geography becomes increasingly “rural” or “remote”, as well as decreasing across the income quintiles. As with the individual utility tables, we can see that households in remote rural Alaska and those in the poorest quintile are the ones with the highest utility costs in proportion to their incomes. The difference between costs for the poorest quintile (the first) and costs for the second quintile is much greater than the difference between other adjacent quintiles: the median of the first quintile is double that of the second, while the average is almost triple. Similarly, the increase from mid-size and roaded areas to remote rural areas is greater than the differences between other areas. Remote rural households pay significantly more for utilities, primarily due to the high cost of heating fuel and electricity whose generation depends on expensive diesel. 12 Table 7. Total Utility Costs (Among Those Who Pay) average median average median average median average median average median average median $25,670 and below $25,671 to $43,910 $43,911 to $64,500 $64,501 to $93,400 over $93,400 Cost as a Percentage of Household Income average 12.0% 19.3% 22.7% 28.9% 19.9% median 6.2% 10.6% 9.5% 18.5% average’ 4.2% 6.2% 5.8% 9.2% median 3.6% 5.6% 5.1% 8.1% average median $25,670 and below $25,671 to $43,910 $43,911 to $64,500 average median average’ 1.8% 1.9% 2.5% 3.5% median 1.7% 1.8% 2.3% 3.3% average 41% 6.9% 7.5% 12.5% median 2.6% 3.4% 3.7% 6.6% 3.2% Sources: U.S. Census Bureau (IPUMS), Alaska Permanent Fund Division, and ISER calculations $64,501 to $93,400 over $93,400 Total Notice that in most cases, the average in these tables are greater than the medians, suggesting that a small proportion of households pay exceptionally high shares of their incomes for these utilities. REMOTENESS AND POVERTY STATUS In the following tables, we break down the analysis by poor vs. non-poor and remote vs. non-remote households. This provides an alternative and more compact view, and on a practical level allows the table columns to be used for both geography and income, freeing the rows to represent categorical data. In the following tables, “Remote Rural” is defined as being within PUMA 400, and “non- remote” as being within any other region. Remote households comprise 13.6% of households statewide and 16.1% of the population. The definition of poverty here is based on the poverty guidelines issued by the U.S. Department of Health and Human Services. To correspond with the other measures in this report, it has been modified to use the household as the unit of analysis rather than the family. It was chosen instead of the poverty thresholds issued by the Census Bureau because there is a different set of guidelines developed for Alaska (and also for Hawaii), while the thresholds are the same for all states. The poverty guidelines are also the basis 13 Alaska Electric Power Statistics (with Alaska Energy Balance) 1960-2001 Prepared by Institute of Social and Economic Research University of Alaska Anchorage Prepared for Alaska Energy Authority Regulatory Commission of Alaska Denali Commission November, 2003 Institute of Social and Economic Research University of Alaska Anchorage “4500 Diplomacy Drive Anchorage, Alaska 99508 Figure 2: Composition of Total Energy Extracted in Alaska in 2001 (Btu's) Gas Used For Coal Extraction ——___ ae 0.4% | 4.0% | Net Oil Extraction | Via 44.7% Re Injected Gas 47.3% ~~ ——~ | | : Oil Used during | Net Gas Extraction | —~ = extraction Se 0.1% Source: ISER Calculations Figure 3: Composition of Energy Used by Petroleum and Natural Gas Processors in Alaska | in 2001 (Btu's) | Total used up during all types of oil and gas - processing | 8% \ Liquid Natural | Other Petroleum \ ie -—o? Products — y 13% Distillate Fuel Ammonia ene me % fo Motor Gasoline / / — Jet Fuel product product ~ — 10% 35% % Source: ISER Calculations 77 Figure 4: Composition of Energy Exports from | Alaska in 2001 (Btu's) Liquid Natural | Gas, Ammonia, | andUrea | | Motor Gasoline 4% | OSC aI Jet Fuel 5% | | | | cian Source: ISER Calculations Figure 5: | | Electricity Generated from Each Fuel | | in Alaska in 2001 (Btu's) | | | 1 Electricity from Se Coal 4% Electricity from Hydroelectric 27% Electricity from Electricity from Petroleum wf, ———._ Natural Gas Products 59% | 10% | Source: ISER Calculations 78 E. Regional Consumption Some of the energy consumption in Alaska can be attributed to particular regions of the state: Coal: Most consumption of coal occurs in the railbelt, either near the Usebelli Coal Mine near Healy or at military bases and university campus either in or near Fairbanks. Natural Gas: Most final consumption of natural gas by consumers occurs in or near Anchorage. Substantial amounts of natural gas are also used for oil and gas extraction in Cook Inlet and the North Slope. Petroleum Products: Much of the petroleum products refined in North Pole and Nikiski are transported to other parts of the state by barge or by road. We investigated the Department of Revenue “Motor Fuel Reports” and the US Army Corps of Engineers Waterborne Commerce Reports in order to estimate regional consumption of petroleum products. Neither of these reports.provided sufficient information to estimate regional consumption of petroleum products in Alaska. Electricity: As discussed in detail in other chapters of this report, we estimated the regional generation and consumption of energy based on reports from individual utilities. Housing Characteristics: One of the primary determinants of residential consumption of energy is housing characteristics. Houses use various fuels for space and water heating and variations in housing characteristics across the state would partially explain regional variations in energy use. As listed in Table 4, housing units use a variety of fuels for heating. Notably, the railbelt uses mostly natural gas for heating while housing units in other regions use heating oil or electricity (often generated from diesel fuel in rural Alaska). Larger homes require more energy for space heating. One indicator of the size of homes is the number of rooms. Table 5 summarizes the average number of rooms in houses in different regions of the state. On average, the homes with the most number of rooms are in the Railbelt. Because of climatic variations across the state, there are substantial differences in the amounts of heat required to heat homes. Table 6 summarizes the number of heating degree-days for select places in Alaska to give some indication of the variation in space heating requirements in different regions of the state. 86 Ul Table 4: Percent of Housing Units within Each Region Using Each Type of Fuel 1 room| rooms rooms | rooms | rooms rooms |rooms rooms | rooms |Rooms Railbelt 5.8% 8.6% 11.3% 17.3% 18.2% 13.9% 10.4% 7.3% 7.3% 5.0 Southeast 6.3% 8.7% 14.0% 18.3% 19.1% 14.1% 9.4% 4.9% 5.2% 4.8 Rest of Statel_ 12.2% 13.3% 17.2% 19.7% 18.6% 10.1% 4.7% 2.2% 21% 39 State 6.7% 9.3% 12.4% 17.7% 18.4% 13.4% 9.5% 6.3% 63% 49 Source: US Census of Population 2000 Bottled Fuel oil, tank or LP kerosene,| Coal or Solar No fuel Utility gas} gas (Electricity etc coke Wood energy |Other fuel| used Region heating | heating | heating | heating | heating | heating | heating |' heating | heating | Railbelt 58.8%) 2.1% 10.4% 23.6% 0.6% 2.9% 0.0% 1.0% 0.6% ‘Southeast 0.9% 3.5% 16.2% 72.0%) 0.0% 5.7% 0.0% 1.4% 0.3% Rest of State! 5.1%! 1.5% 3.8% 80.8% 0.1% 7.2% 0.0% 1.2%) 0.4% State 45.9% 2.2% 10.2% 35.8% 0.5% 3.7% 0.0% 1.1% 0.5% Source: US Census of Population 2000 (The railbelt is defined as Anchorage, Fairbanks, Mat-Su, Denali, and Kenai Boroughs as well as the Southeast Fairbanks and Valdez-Cordova Census Areas Table 5: Percent of Housing Units within each Region with Number of Rooms 9or 2 3 4 5 6 7 8 more | Mean 87 Mike Harper : giani, Eric - Eagle River, AK [Eric.Marchegiani@ak.usda.gov] ont: nday, February 01, 2010 3:53 PM Ds Mike Harper Ce: Peter Crimp; Steve Haagenson; Marchegiani, Eric - Eagle River, AK Subject: Another question from Adam -- Energy make Up.. [Adon Mike: be | think the pie charts that | remember are the ones that Peter is suggesting. nas seal The other places that | can think of where there might be something like what is being suggested i possibly in an older “Energy Plan” that the AEA may have completed but it would be several years ago(early 1990s before the Charlie Bussell/ Ramona Barnes hiccup)... which may not be applicable today.. The other avenue might be in one of the Older Power Statistics Reports that included the PCE Statistics... The older reports provided a broader spectrum of Statistics on the entire State along with including the statistics for PCE.. over time the rest of the state was left out and it was sort of assumed that Ak Power Association would take care of that aspect and the AEA only concentrated on the PCE side.. There use to be a section in there that looked at the entire State of Ak i.e. all the other utilities and | think there might have been a Pie Chart or something that illustrated the different types of generation in that section.... Again it would be a number of years ago... may be in the early 1990s again.. don't recall any projections as to what the “make up” might be in the future but there may have been something.. Sorry | could not be of more help.. PS: | think there are many good reasons to reinitiate the Power Statistics Report (With a complete data collection from all utilities — not just the PCE ones) on an Annual Basis... not sure how one would budget it but | think Ak Power Association might even be open to it also... they did fund a part of it previously... It just would state the most recent statistics for all the utility Generation through out the state and would be a one stop location for that data. Without good data it is hard to make decisions.. Right now any time one wishes to develop some conclusion about generation or energy ... it requires going to each utility and requesting their most recent data.. USDA — RUS publishes all of our data on an Annual basis for the Borrowers that are active but ... unfortunately we are extremely late.. | just received the 2008 report in the mail... | don’t expect to see the 2009 data until probably this time next year... EAM From: fromaideaemailserver@gci.net [mailto:fromaideaemailserver@gci.net] On Behalf Of Mike Harper Sent: Monday, February 01, 2010 2:54 PM To: Steve Haagenson; Marchegiani, Eric - Eagle River, AK ‘c: Peter Crimp subject: RE: another question from Adam oe ~ tam afraid it does not, but | will ask Peter to dig through his memory banks , Eric Yould, Meera Kohler, Brent Petri, Eric Marchegiani are others . om: Steve Haagenson Sent: Monday, February 01, 2010 2:33 PM To: Mike Harper Subject: FW: another question from Adam Does this ring a bell with you. Steve From: Adam Berg [mailto:Adam_Berg@legis.state.ak.us] Sent: Wednesday, January 27, 2010 3:17 PM To: Steve Haagenson Subject: another question from Adam Hi Steve — | remember a slide from somewhere, someplace, some time — that showed the trends in electrical production, by — source, from around the state. It was a color coded graph that showed what percentage of power was supplied by various sources. | believe there were two or three different graphs — one showing the percentages from years ago, one showing current sources of power production, and possibly one showing what we are trending toward. Does that ring a bell with you? | thought it may have come from an AEA graph but | just can’t remember where | saw it for sure. yanks for any help, Adam PMGONG LawiBy Wank. carota 2aueo i aay UUMoUpUUL Alaska Energy Wiki powered by the Alaska @enteasfar Enéimeysardli&ower .ugy i vuie Create account or Sign in Search this site ‘| Search Technologies & Resources EETG Project Reporting Links Contact Welcome to the Alaska Energy Wiki About the Alaska Energy Wiki How to join this site? Site members Page tags alternative_fuels biomass case_ study challanges_ coal coalbed_methane cost delivery diesel eetg efficiency funding geothermal heat_pump hydro hydrokinetic manufacturer natural_gas oil policy project_information railbelt references small-scale_nuclear solar Storage wave_power wind Add a new page cl new page http://energy-alaska.wikidot.com/historical-trends Historical Trends in Energy Consumption Using data on the consumption of energy from the U.S. Energy Information Administration (EIA), we can track the amount of energy used in Alaska since statehood. These estimates of consumption from the EIA also include energy used during oil and gas extraction processes, and jet fuel from international air travel. The graph below shows the gross consumption of energy in Alaska from 1960 through 2006. Oil and gas production began in Cook Inlet during the late 1960s, and by the early 1980s natural gas was the predominant source of energy used in Alaska. When oil and gas production began on the North Slope in the late 1970s, natural gas consumption by industrial users increased dramatically because it was used to power North Slope operations. All other fuels, including diesel, motor gasoline, jet fuel, and coal, have contributed relatively stable shares of total energy consumption per capita in the state. Gross Consumption of Energy in Alaska (million Btu per capita) Cincustis! Use of 1,400 Tn nn nn nn nn nt Natweal Ges | | | 0 ne ee Bomer | a, Pe & | NY \/ v GNaturet Gas uses oy | © ee ae ees | « he | s adder Peraine — | Proves | a row z BUcttete “ue! | c 2 = Bator Gazoine Chart created by ISER based on data from the United Stated Energy Information Administration 2/2/2010