Snow Time Like the Present to Review Your District’s Heating and Electrical Costs

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Part 7 of the series “The Last Frontier facing the New Frontier.”

John Ptacin, Sedor, Wendlandt, Evans & Filippi, LLC

Alaska has had quite a wintry start to 2024. The Interior’s seen temperatures nearing 60 degrees below zero. Parts of Southeast have gotten record-breaking snowfall. And SouthCentral has had a taste of all of it all with cold and snow. Simply put, Alaska’s winter is defying predictions that an El Niño climate pattern would produce a warmer, less-snowy season.

Now that the cold snap has passed, let us all try to remember the fun of it all. For example, did you post a selfie next to a bank sign displaying negative temperatures? With all that “fun” comes consequences. We are about to pay higher than normal heating and electric bills as a result of the deep freeze. Superintendents and business managers are bracing for the economic impact of the cold snap.

So you may be asking:

  • Is there someone making sure our District’s utility bills are fair?
  • Can our District seek redress if we believe we’re paying too much in utility costs?

To answer these questions, its important to note two things about your local gas and electric utility. In most instances, the utility operates as a monopoly—they do not have competitors. In exchange for being a monopoly, utility rates typically get reviewed by a state agency to ensure fairness.  

Determining fairness in utility rate charges is complicated. But we’ve all experienced the results of such regulation—you may just not have known it. Think about the last time you rode in a taxicab (not Uber or Lyft). The taxi company’s rates—like your utility company—are highly regulated because a few taxi companies used to dominate the marketplace and they are required to provide service to all. You probably noticed the meter starts at a base charge, something like $2.50. Then you get charged an additional 50 cents per mile.

Without getting into too much detail, the taxi company’s base charge—the $2.50—is intended to cover overhead and other costs incurred regardless of miles traveled (insurance, training, new cabs). Then, as you drive along the road, the 50 cents per mile accounts for the additional costs to travel that additional mile (gasoline, tires).  The taxi company cannot modify the base charge or per mile charge without the permission of state or local regulators. Consumers can challenge the rates too. For example, if the cab company’s $2.50 base charge assumes the purchase of new taxis every three years—and that doesn’t happen—the consumers are being overcharged for newer and safer taxis the company never bought and the base charge should go down.

The District’s utility costs work the same way. Always keep in mind, your District is a significant utility customer. In some communities, other than the grocery store, you are probably its biggest customer. If your local utility’s rates are based on old data, you might be getting overcharged for projects and costs that no longer exist or never came to fruition in the first place. Districts can seek redress from state agencies if they are not being charged the correct rate or if the prices no longer reflect reality.

Practice Pointers

  • Determine the last time your local utility had its rates adjusted. If its been a while, the charges might be too high. Most of your current rates are published on the Regulatory Commission of Alaska’s website.
  • Make sure your bills reflect the current published rates.
  • Some of your utility costs are not regulated. Fuel oil, for example, is not typically a regulated service. But there are consumer protection laws which protect the Districts from bad practices there too.

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