By Aaron Selbig

Staff Writer

For Homer Electric Association members struggling to pay utility bills that skyrocketed in January, relief is on the way. In a news release Friday afternoon, HEA announced an overall rate cut of 18.4 percent would take effect April 1.

The decrease, which was expected by HEA officials due to recent corresponding decreases in the prices of crude oil, heating oil and natural gas, should bring utility rates back to pre-Jan. 1 levels, meaning a monthly savings of $24.86 for residential customers who use 630 kilowatt-hours per month.

In December, HEA General Manager Brad Janorschke sought and received a 3.9 cent-per-kWh increase in HEA's Wholesale Power Cost Rate Adjustment from the Regulatory Commission of Alaska, citing increases in the cost of wholesale power they purchase from Chugach Electric Association.

Due to a recent decrease in Chugach's rates for that power, HEA will be able to bring their WPCRA rate down from 7.9 cents per kWh back to about 3.9 cents per kWh - a tenth of a cent lower than it was before Jan. 1.

"We are pleased the WPCRA has been adjusted and will result in lower rates for our members," said Janorschke. "The escalating fuel costs, which resulted in high rates this winter, created a very difficult situation for Homer Electric members. The reduction beginning April 1 will help alleviate some of the rate pressure on our members and hopefully additional reductions in the WPCRA will be seen in the third and fourth quarters of 2009."

The savings for most HEA members will be immediate. According to RCA regulations, rate changes are effective for customers on the billing date, meaning that a bill received on or after April 1 will include the new lower rate, even if the period covered by the bill predates April 1.

Janorschke cautioned that HEA's dependence on buying power from Chugach - they are under contract to do so through 2013 - will likely mean further rate instability in the future.

"The problem with being almost completely dependent on natural gas for power generation is we are vulnerable to drastic fluctuations in the price of the commodity. What we saw with our rates at the end of 2008 and beginning of 2009 was driven by fuel prices. Our goal is to develop alternative generation sources that can be used as a hedge to lessen the impact of changes to natural gas prices," said Janorschke.

Aaron Selbig can be reached at aaronselbig.@homernews.com.