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Nushagak Cooperative to raise monthly rates in March

KDLG/Isabelle Ross

The price hike will cover an increase in power consumption and costs, due to the Cooperative’s power plant upgrade in 2018.

 

Nushagak Cooperative has increased prices for its members. Those will start with next month’s bill. Residential base rates will increase by two cents per kilowatt hour.  Service charges will increase by $5.

The price hike will cover an increase in power consumption and costs, due to the Cooperative’s power plant upgrade in 2018. The cooperative evaluated its system in 2017, and found that the plant’s equipment reached the end of its life cycle. There were issues related to switchgear capacity and it was unsafe for workers to operate the equipment.

 

“It became obvious to us to reinvest in our power plant," said Nushagk Cooperative CEO, Bob Himschoot. "If you drive yourself into the position where something catastrophically fails and has to be replaced, the cost of the replacement of that item is double, triple, and sometimes quadruple especially in western Alaska.”

The plant was also failing to provide adequate power to the Woodriver area and at the harbor. After conducting a financial forecast study, the Cooperative found the most cost- effective option was to increase capacity and efficiency, by adding two new engines to the plant.

Himschoot said the five dollar increase to base rates, along with  more efficient equipment, will benefit members over time.

 

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“We’re going to see that efficiency show up in the fuel surcharge," he said. "Instead of being at 14.5 kilowatts per hour we’ll be at 15.5 kilowatts per hour. So depending on the price of fuel, that could be anywhere from four tenths of a cent to eight tenths of a cent.”

Fuel surcharges typically occur twice a year on members’ bills. Himschoot adds that improved efficiency should prevent base rates from increasing again in the future.

 

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“Inflationary aspects hit the cost of everything in this community," he said. "So if you can find ways of creating efficiencies, you can keep that inflationary aspect from driving rates up longer.”

The Cooperative is also working with the Regulatory Commission of Alaska to help with the price increase for residents. Himschoot says reinvestment costs are covered under the Power Cost Equalization Program.

 

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“So as soon as we can get reclassification through the RCA which we’re working on right now," he said. "We should see an adjustment in the PCE that will cover under the first 500 kilowatt hours of the majority if not all of that two cent increase.”

Small and large commercial members will see a one cent increase in usage. This is the second time in ten years the Cooperative has adjusted its pricing model to both service charges and base rates.

Contact the author at tyler@kdlg.org or 907-842-2200

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