In Homer, Alaska, Decision on Deregulation Will Be Divulged in December

by | Nov 15, 2016

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Homer (Alaska) Electric Association’s 22,892 members are voting this month about whether their cooperative’s pricing practices will continue to be overseen by the Regulatory Commission of Alaska (RCA), the state agency that regulates public utilities.

The rural electric utility sent out ballots in October – giving customers 30 days to decide on deregulation – and will announce the results in December.

If HEA withdraws from RCA oversight, its elected nine-member board will be able to make metering, billing, and budgetary decisions without the approval of the RCA, appointed by the governor to oversee utility practices statewide. Fifteen percent of HEA’s membership must participate for the election to be official, according to a report in the Peninsula Clarion.

The utility’s board ascribes several potential benefits to local control – among them:

  • Assurance that locally elected leaders are driving decision-making of our utility;
  • Reduced operational and administrative costs for members; and
  • A decrease in bureaucracy, allowing HEA to take advantage of more innovative, cost-saving   opportunities.

Homer Electric Association General Manager Brad Janorschke has said regulatory expenses cost HEA about $340,000 a year, which is distributed among members as a charge equal to about $4.55 annually for the average utility customer, according to the local news outlet.

Alaska statute allows RCA-regulated utilities and cooperatives to withdraw from its oversight with a majority vote of their members or subscribers. According to the September 2016 issue of the Kilowatt Courier, published by the utility as a customer newsletter, 56 percent of Alaska’s 129 electrical utilities are unregulated by the

According to the Regulatory Commission’s website, there have been 75 deregulation elections held by electrical, communications, and sanitation companies and cooperatives since 1975 – 47 of them successful. Utilities that earn less than $500,000 per year are automatically exempt from RCA regulation, the newspaper said.

Janorschke cited the Kodiak Electric Association (KEA) as an example in which deregulation helped a utility achieve a goal – renewable energy construction. KEA’s members voted to deregulate in December 2004, after two unsuccessful attempts in 1991 and 1994,  the Peninsula Clarion reported.. Following deregulation, KEA has created a 100 percent renewable power grid, and Janorschke told the news outlet that Kodiak’s manager had recently told him deregulation was — in Janorschke’s words — the “most important strategic milestone” in achieving that goal in a timely manner.

HEA’s deregulation would make it both the largest cooperative to deregulate in Alaska, as well as the only deregulated utility in the Railbelt. Janorschke told the newspaper that two other Railbelt utilities, which he declined to name, also might considering deregulating, if the results of HEA’s election are favorable.

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