As the COVID-19 pandemic slowed down and the war in Ukraine began earlier this year, the price of fuel became extremely volatile. That volatility has generally led to higher fuel prices, which have hit rural electric cooperatives in Alaska particularly hard. Whether it’s filling up at the pump or powering a community, the uncertainty over fuel supply due to the war and international politics are driving the cost of fuel to heights not seen in many years.
Kotzebue Electric Association is currently paying $3.78 per gallon for diesel fuel, which is almost $1.45 per gallon more than last year. The cooperative uses diesel fuel to generate the electricity that is not generated by the co-op’s wind turbines and solar panels.
Commercial members of Kotzebue Electric Association will see these higher costs reflected on their bills through a fuel surcharge of 19 cents per kilowatt-hour (kWh). While Power Cost Equalization (PCE) will cover most of that for residential members, according to Kotzebue Electric General Manager Martin Shroyer, it’s still important for co-op members to understand the economics behind the numbers on their bill.
The cooperative also ordered more diesel fuel than usual this year due to one of its wind turbines being down for a time last winter. The additional fuel prepares the co-op in case something like that happens again. In Alaska, especially in the winter, reliability is king.
The good news is that the PCE program now subsidizes up to 750 kWh of residential electricity use per month, up from the previous limit of 500 kWh. This new limit, signed into law in July, recognizes the higher cost of fuel and the potential for beneficial electrification of certain items.
Kotzebue Electric Association works hard to keep fuel prices as low as possible, while diversifying its generation portfolio to make power from clean sources, such as wind and solar. However, world events can have an impact on fuel costs that are out of the cooperative’s hands. If you have any questions about your bill or how Kotzebue Electric Association generates electricity, please contact the cooperative.