Technical Assistance Lowers Energy Costs for Akutan

Located on a deep, protected bay in southwest Alaska’s Aleutian Islands, Akutan is home to one of the largest fish processing plants in Alaska, located about a quarter-mile down the beach from the Village. Fishing is excellent in the waters around Akutan, and some of the largest halibut in the world have been caught in Akutan Pass on the west side of the island.

The City of Akutan has a public dock that can accommodate most freighters and fishing vessels, as well as the state ferry, which stops in Akutan once a month on its eastbound voyage from Dutch Harbor to Homer and points in between. Access to Akutan is also provided by Grant Aviation, Akutan's land-based airport, located 7 miles away on Akun Island. A helicopter called marine link transports passengers from Akun Island to Akutan.

The electric utility for the village is owned and operated by the City of Akutan. The city has always worked hard to provide reliable power at affordable rates for customers―even if the utility sometimes lost money. A locally built wooden hydropower plant that, along with a diesel generator, powered the community for 25 years until 1991 now lies dormant, but for years it taunted the new highly engineered diesel and hydropower plant that took more than a dozen years to get working right. But working right she is now, and the utility expects to see significant fuel savings this year. A geothermal power project has been in progress for several years, as the resource is promising and nearby. Although making the costs of developing such a large geothermal project pencil out is challenging for such a small community, the Trident Seafoods plant with its resident population of workers keeps the project alive.

In April 2015, the Native Village of Akutan requested technical assistance from the DOE Office of Indian Energy to help the electric utility train a new clerk and catch up on reporting to the Regulatory Commission of Alaska (RCA).

While assisting the utility with its annual report to the RCA as part of the technical assistance the Village requested, I demonstrated to the utility board that because of how the State of Alaska’s Power Cost Equalization (PCE) formula works, increasing residential and community facility customer rates could bring in an additional $15,000 to $16,000 each month from the state without customers incurring increases in their monthly bills. 

PCE funding offsets the higher rates via a line item credit on customer bills, and the utility files a report with the state to be reimbursed for the credit they provided their customers. While counterintuitive, this works because the PCE Program bases the unique subsidy for each of the state’s 206 rural community utilities on three factors: fuel costs, nonfuel costs, and customer rates. With high documented fuel and nonfuel expenses, customer rates can and should be set high enough to meet the utility’s expenses. The PCE subsidy rate increases to offset higher customer rates.

“The City of Akutan has been working extensively in the past several years to ensure our electric utility operations are streamlined and efficient,” said Bobby Jo Kramer, Finance Manager for the City. “Additional funding to support these efforts is more important than ever as we face shortfalls in available resources from state and federal agencies. Our general fund revenues derive from a sales tax on the Bering Sea ground fish industry, and we see fluctuations from year to year. We can now plan our next fiscal year’s budget with confidence, knowing we have the PCE reimbursements flowing in on a monthly basis.”

As part of the Village’s requested technical assistance, utility staff received training and ongoing support to facilitate their compliance with annual PCE reporting requirements so that they can remain on the PCE Program and continue to receive PCE subsidies going forward.