Providing coverage of Alaska and northern Canada's oil and gas industry
July 2017

Vol. 22, No. 29 Week of July 16, 2017

MEA files its all-service rate case

Asks approval for 2.75 percent rate increase following transition to generation of its own power from Eklutna Generation Station

Alan Bailey

Petroleum News

In a move that signals its transition to a full-service electric utility that generates its own power, Matanuska Electric Association has filed a rate case with the Regulatory Commission of Alaska. The utility has requested RCA approval for a 2.75 percent overall increase to base rates, with the impact of this change on individual customers depending on the manner in which costs are apportioned between different customer classes. The proposed rate relates to MEA’s electricity production, transmission and distribution costs - the cost of the natural gas fuel used for power generation is passed directly to consumers, pro-rata the amount of electricity that they use.

For a typical MEA member the rate increase would amount to a less than 1 percent change in the monthly electricity bill, MEA says.

The MEA rate filing includes a public comment period and the utility has asked for RCA approval in 45 days. However, if the commission opts to open a formal docket to review the filing, MEA will continue using its current electricity rates rather than requesting an interim and refundable rate, MEA says.

Transition to full service

In the past MEA has obtained its power from Chugach Electric Association, with MEA acting as a transmission and distribution company, shipping the power to MEA’s customers. But in 2015 MEA completed the commissioning of its new Eklutna Generation Station, thus becoming a full-service utility able to supply its own electricity. Under the terms of an agreement with the RCA, MEA has used data from 2016, the first full calendar year of operation for the utility’s new power station, to establish the parameters for rate-setting under the new full-service business model. The new rate case reflects the results of analyzing that 2016 data.

“Over the last year, MEA collected detailed cost data necessary to understand with specificity the rate impact of moving to self-generation,” said MEA CEO and General Manager Tony Izzo in a June 30 media release. “Today’s filing seeking only a small rate adjustment reflects the careful planning of the (MEA) board and management for transition to self-generation and the conscientious execution of that transition plan by all MEA employees.”

MEA says that, in addition to the use of the new power station, the utility’s proposed rate takes into account reliability improvements made since the last rate was approved, including advanced electricity metering, improved right-of-way clearing, additional transmission assets and other infrastructure upgrades.

Reciprocating engines

Unlike the turbine-based, gas-fueled power generation facilities elsewhere on the Alaska Railbelt transmission grid, the Eklutna Generation Station uses 10 powerful reciprocating engines to drive its generation. In addition to being modern, high efficiency units, the use of multiple engines and the reciprocating engine technology enables rapid adjustments to the power output from the station while maintaining overall generating efficiency. Thus, the power station is particularly suitable for managing varying electricity demand and, for example, counterbalancing the variations in power output from a renewable electricity source such as a wind farm. MEA has agreed to join a new power pool arrangement with Chugach Electric Association and Municipal Light & Power, with the Eklutna Generating Station becoming one of the generating stations delivering power into the pool.

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