The State of Alaska’s Power Cost Equalization (PCE) Program is intended to “equalize” the cost of power for rural Alaskans through rate balancing that takes into account both the amount of funding spent on large energy infrastructure projects that benefit the urban “Railbelt” and Juneau electric utility customers and the procurement costs incurred by the 184 isolated diesel microgrid utilities scattered across rural Alaska.

Importing fossil fuels by barge or airplane under challenging weather conditions adds to the already high cost of operating an electric utility for small isolated loads with no economies of scale. The peak load in some communities never surpasses 50 kilowatt-hours (kWh), and the utility may serve a customer base of fewer than 20 accounts.  It is difficult to provide reliable—let alone affordable—energy under such conditions.   

Having a well-designed, -constructed, -maintained and -operated diesel plant is a large part of the solution: In addition to helping control costs, it’s the cornerstone for adding any renewable energy into the power generation mix. And having a utility manager who understands the PCE formula and knows how to maximize the benefit to customers is equally critical in the fight for affordable power and a sustainable utility in rural communities. 

The Regulatory Commission of Alaska sets PCE rates based on the information submitted in a required annual report. The commission calculates a unique rate for each utility by analyzing fuel costs, non-fuel costs, and to some extent customer rates. Utilities are penalized for excessive line loss and poor fuel efficiency through a reduction in the PCE rate.  As the Community Relations Manager for Marsh Creek, my job is to teach utility managers to document all allowable expenses, recommend a customer rate that covers all expenses, and calculate and understand the implications of excessive line loss and poor fuel efficiency (monitoring line loss and fuel efficiency can alert power plant operators to critical maintenance or repair issues).  

Last year, for example, I had the opportunity to assist Akiak Power Utilities in overcoming the challenges it faced in fulfilling the reporting requirements for PCE assistance. The Akiak IRA Council applied through the DOE Office of Indian Energy to receive on-site technical assistance, which was provided by Marsh Creek. As a result, the utility was able to maximize its PCE rate, which for Native villages like Akiak, can save residential and community facility customers 50% or more on their cost for power while enabling the utility to maintain the revenue required to sustain its operations.

“Your assistance saved our office in terms of airfares for staff to travel into Anchorage, living expenses, and hotel costs. This is the most cost-effective technical assistance provided to us and improved our efforts to provide electricity services to our customers and allow us to be in compliance in receiving PCE funding to help our customers here in our community.”

—Letter from Akiak Mayor Debra Jackson to the DOE Office of Indian Energy Alaska Program Manager Givey Kochanowski, December 17, 2014

Learn more about technical assistance available through the DOE Office of Indian Energy. Learn more about the Alaska Strategic Technical Assistance Response Team (START) Program.