HomeMy WebLinkAboutAEA PCE Overview REFAC 11 12 13Power Cost Equalization Overview
Renewable Energy Fund Advisory Committee Meeting
November 12, 2013
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Alaska Energy Authority
Mission: Reduce the Cost of Energy in Alaska
•Accomplished by:
•Energy Planning and Policy
•Investing in Energy Infrastructure
•Diversifying Alaska’s Energy Portfolio
•Technical Training and Assistance
•Energy Efficiency and Conservation
•Power Cost Equalization
Power Cost Equalization
•Subsidy program for rural electric utilities
•Purpose is to bring rates down to around the same level as in urban
Alaska
•Pays for 95% of utility costs above the average of rates in Anchorage,
Fairbanks, and Juneau
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The Need for PCE
•Rural Alaska electrical rates are often 3 to 5 times higher than in urban Alaska
•Assistance needed in rural Alaska to maintain and operate basic infrastructure
and systems
•PCE created at a time when State funds were used to construct major energy
projects to serve urban areas
•PCE is a way for rural communities to also benefit from those projects
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PCE: Participating Communities
•Approximately 81,000
Alaskans live in the
188 participating
communities
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PCE: Reducing Power Bills
•Residential: credit on first 500 kWh consumed each month (per customer)
•Community facilities: credit on 70 kWh x the community population (for the
entire community)
•Customer’s bill= total cost -the PCE credit
•Utilities are required to notify the customer of the PCE credit and the total cost
of service with every bill
•Utilities are reimbursed on the customer credit
Population numbers updated by Department of Commerce, Community and Economic
Development on July 1, annually
PCE: Effect on Rates
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0.0000
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
1.4000
1.6000
1.8000
2.0000
PCE Level
Effective Rate
PCE and Rates over Time
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Effect of Changing Costs
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Myths and Facts
Q: Does adding renewables make a community ineligible for
PCE?
A: No. PCE eligibility is based on use of at least 75% diesel for
generation in 1984. Once a community is eligible it is always
eligible, even if it switches to primarily renewable generation.
Several communities have.
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Myths and Facts
Q: Will a renewable project bring down residential effective
rates?
A: Probably not. PCE insulates residential ratepayers from
changes in utility costs, and this works in both directions. If
the utility is making the most of the PCE program, residential
rates should already be close to urban rates.
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Myths and Facts
Q: Do ordinary residents benefit from renewable projects?
A: Yes, but not because they lower their rates.
Lower commercial rates lead to lower costs for local businesses,
which helps economic development and lowers prices to consumers.
Displacing diesel reduces air pollution and the risk of environmental
damage from fuel spills.
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