RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Rural Alaska Electric Utility Management: Using PCE data to Improve Customer Rates SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Neil McMahon Energy Planning Program Manager BIA Provider’s Conference November 29, 2018 REDUCING THE COST OF ENERGY IN ALASKA

AEA’s mission is to reduce the cost of energy in Alaska SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS AEA’s mission is to reduce the cost of energy in Alaska AEA is charged with a mammoth task: to help Alaska communities develop, finance, operate and maintain energy infrastructure for improved safety, reliability and affordability of consumer energy (so called to differentiated electricity and heat from the state’s extractive energy sector) Our mission is to reduce the cost of energy in Alaska. Our work includes programs and initiatives that identify and implement energy solutions that meet the discrete needs of Alaska’s many communities. We are the state of Alaska’s energy policy and planning lead, and we are a funding conduit for both state and federal dollars. We provide soup to nuts technical assistance, helping communities and utilities select, design, construct, pay for, and operate projects over the long term for maximum economic life of energy infrastructure. AEA is an energy solutions center for Alaska, working every day with the people and communities around the state making up this “living laboratory” to overcome challenges and capitalize on opportunities.

PCE Utility Monthly Report AEA requires the submittal of the Utility Monthly Report for PCE reimbursement PCE data is useful for managing a utility PCE effective rate Line loss Generation efficiency

PCE Utility Monthly Report PCE Effective Rate Why PCE cares: AEA reimburses eligible kWhs the difference between the residential rate and the effective rate Why the utility should care: A high effective rate is a sign of an unjustified residential rate Calculated by RCA. Based on either reported, allowable expenses or rate, whichever is lower. Why: PCE subsidizes customers. Does not necessarily and directly effect utility’s finances—indicates if reporting and/or setting rates properly. Can be reasons why not—old fuel debts or other actual costs.

PCE Utility Monthly Report PCE Effective Rate Seal City Electric Coop $0.2012 $0.4032 $0.1532 $0.3625 Potential actions to take: Identify and report all eligible expenses to the RCA in the annual report Evaluate utility expenses to determine if they are necessary and benefiting customers Adjust customer rates Reduce line loss Increase generation efficiency Calculated by RCA. Based on either reported, allowable expenses or rate, whichever is lower. Why: PCE subsidizes customers. Does not necessarily and directly effect utility’s finances—indicates if reporting and/or setting rates properly. Can be reasons why not—old fuel debts or other actual costs.

PCE Utility Monthly Report Line loss The difference between the kWh generated and kWh sold to customers Why PCE cares about it: The reimbursement rate is decreased if line loss is greater than 12% Why utility should care: Increases costs to customers Reduced PCE reimbursement Can be a sign of not billing customers due to Misreading meters Incorrect meters Customers stealing power Can be a sign of power being lost Transformers, grounding, etc. Excess diesel being consumed Not measured Standard from EIA—achievable by many rural Alaska communities Why: $10s to $100ks of dollars of excess fuel or lost revenue Potential danger if physical losses

PCE Utility Monthly Report Line loss Potential actions to take: Check that all customers (including streetlights) are being recorded Check customer ledger for accuracy of meter readings and recordings Check accuracy of customer meters Use pre-paid customer meters Check accuracy of main bus meter Have a distribution system assessment to find inefficiencies and/or ask for assistance from Circuit Rider

PCE Utility Monthly Report Generation efficiency The kWh of electricity produced per gallon of diesel Why PCE cares: The reimbursement rate is decreased if the generation efficiency is below RCA standards Why the utility should care: Increases costs to customers Fuel is generally largest utility expense Can be a sign that engines need to be overhauled Why: Proxy for maintenance. Need to have good meters Decrease sign that need to have overhaul

Financial and Operational Metrics Generation efficiency Potential actions to take: 1. Make sure numbers are correct: Check fuel meter and main bus meter 2. Maintain infrastructure Enroll in AEA’s utility operator training Ensure fuel quality (water, etc.) Perform proper maintenance on the engine Do overhauls on regular basis Communicate between operators and managers so that needed maintenance can be scheduled and paid for Schedule a Circuit Rider trip and/or call 3. Upgrade infrastructure: AEA can assist with selecting new infrastructure Electronic engine governors Upgrade and properly size engines Use automated switchgear Why: Proxy for maintenance. Need to have good meters Decrease sign that need to have overhaul Perryville, 2017

For assistance, please contact: Utility management Neil McMahon nmcmahon@akenergyauthority.org 907-771-3981 Technical assistance Alan Fetters afetters@akenergyauthority.org 907-771-3063

RELIABLE, & AFFORDABLE ENERGY SOLUTIONS SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS ALASKA ENERGY AUTHORITY 813 West Northern Lights Blvd. Anchorage, Alaska 99503 Phone: (907) 771-3000    Fax: (907) 771-3044 Toll Free 888-300-8534