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Home My WebLink About03112024 City Council Laydown - City Manageril Laydown City Manager's Office March 11, 2024—Council Meeting Electric Rates Attached is a breakdown of the typical Seward Electric Services bill showing where increases were made and how they impact the overall price. A 6 cent kilowatt per hour (kw/h) increase was implemented in the last billing cycle. On average, a residential ratepayer will see a $36 monthly increase in their bill based on the average usage of 600 kw/h. This past month was not average due to extreme cold across Southcentral Alaska. Over the course of the past billing cycle, many people saw increases in their kw/h usage on their bill. While an added burden, it is an understandable increase when you look at weather patterns during the billing cycle of Jan. 15 to Feb. 15. For nearly ten days at the end of January/beginning of February, Southcentral Alaska saw extreme lows (and some daily record lows). Cold temperatures impact kw/h usage in the following ways: • People spend more time at home in the cold weather, thus using more energy. • Heating system works harder to keep your home comfortable. Even if you don't change your thermostat setting, it takes longer to heat your home from the outside temperature to a comfortable temperature. • Gas heating systems use electricity to power the fan and distribute the warm air. • During colder temperatures, it takes longer to heat hot water and many people find themselves taking more hot showers, baths, or using more hot water in general, thus increasing their kw/h • Many also utilize space heaters and electric blankets more than usual, which can consume a lot of energy when left on for hours. • For example, a typical space heater operates at 1500 to 1800 watts or 1.5 to 1. kilowatts an hour. If an 1800 watt space heater is going for 8 hours, that would increase your daily usage by 15kw/h There was some concern that our meters were not rated for the temperatures we received, but we confirmed with the manufacturer that our utility meters are rated for a temperature of -40 Fahrenheit. We would also like to clarify that rates for those living inside city limits are the same as those living outside of city limits. Billing differences arise due to the water and sewer attached to the bill for those inside city limits, which is detailed in the attached billing breakdown. Increased rates are being seen across the state and the country. Along the railbelt, the cost to produce energy has gone up and the cost of infrastructure materials has increased significantly (a transformer costs 3 times more than it did 5 years ago). VA Electric Reliability Organization Surcharge Another change in the bill is found with the Electric Reliability Organization (ERO) surcharge. While Seward is not a regulated utility, Alaska Statute 42.05.760 established an Electric Reliability Organization (ERO) called the Railbelt Reliability Commission (RRC). All utilities and large consumers in the lower 48 and Canada fall under a regional ERO and have so for a very long time. Alaska hasn't participated until now because we are not part of an interconnected electric system like Canada and the lower 48. Although Seward is not a regulated utility through the Regulatory Commission of Alaska (RCA), Seward is included as a regulated entity through this statute. The statute apples to Load Serving Entities which include utilities currently regulated by the RCA, large consumers (Seward Electric System is included in this group), and any other entity that is determined to affect the overall Electric System of Alaska. Because the RRC is a relatively new and emerging organization, the regulations and technical standard requirements that entities will need to abide by are in the process of being established. Although the regulations have not been established (which is why we don't tangibly feel like we are regulated), we are required to pay into the system now to pay for its existence - staff, contractors that are developing the standards and will eventually manage the regulation of the load serving entities. When these reliability standards are finished being established (likely in the next year), the Seward Electric System will likely be required to make additional improvements to our system - including equipment and transmission upgrades and investments in security. If you have specific questions or suggestions regarding the rate increase or how it's being implemented, please reach out to me at ksorensenCabcityofseward.net. Your feedback is valuable in shaping decisions that affect us all. If you have specific concerns not related to the rate (i.e. your kw/h usage, starting a service, water or sewage bills etc) please contact the utility desk. Thankyou for your understanding and continued engagement in this important issue. Rr 6. Changes to residential utility rates & explanation of common charges on bill Winter 2024 (January - April 15) Difference from old to new Charge How displayed on bill New rate Old rate rate Seward Utility Charge (per kWh) Seward Utility Charge / kWh 11 $ 0.1451 $ 0.0851 t $ 0.06 Derived from Seward Electric's cost to distribute power purchased from Chugach Electric to customers located from Mile 0 - Mile 25 (Refer to 2024 Cost -of -Service Study for information on Seward's costs to distribute electricity) Cost of Power Adjustment (COPA)* (per kWh) Cost of Power Adjustment 11 Varies Varies Costs charged by Chugach Electric for the production and delivery of power to Seward. Cost is passed directly to customers. * variable System Delivery Charge (flat rate) System Delivery Charge 11 $ 28.75 $ 28.75 $ Applied to any customer that uses less than 150kWh per month. Replaces the Seward Utility charge & COPA. Subject to proration. This is in addition to the customer charge. Customer Charge (flat rate) Customer Charge $ 22.10 $ 22.10 $ - A fix montly amount charged regardless of power use. Purpose is to recover the fixed, customer -related costs incurred by the City of Seward such as meter -reading, billing and customer service. (2024- Cost-of-Service Study, pg 11) Electric Reliability Organization (ERO) Surcharge (per kWh) ERO Surcharge 11 This charge supports the state mandated Railbelt Reliability Council (RRC) which was approved as the Electric Reliability Organization by the Regulatory Commission of Alaska (RCA) in September 2022. The City of Seward is subject to this charge through state statute. RRC's website is akrrc.org $ 0.000741 $ - + $ 0.000741 Water** (flat rate) Water Customer Charge $ 52.00 $ 50.56 + $ 1.44 Sewer** (flat rate) Sewer Customer Charge $ 71.94 $ 69.67 + $ 2.27 **Only charged to customers within city limits (Miles 0 - 3; see map with city boundries shaded). City provides water and sewer services, **The water and sewer rate increases are negating the need for in town residences to dig wells and install based off of the CPI (consumer price index). septic systems. For non-residential customers see tarriff for This is done annually to keep up with explainations of charges inflation. Varies. Varies. Max Max $35 $35 per line per line Sales Tax Taxes item item Inside City limits (Zone 1) Miles 0-3: 7% of billed charges with $500 cap (maxium tax is $35 perline item) Outside City limits (Zones 2 & 31 Miles 4-25: 3% of billed charges with $500 cap (maxium tax is $35 per line item ) 1