Just moved up to Anchorage and landed my first utility audit client here - a cold storage facility that processes seafood for shipping down to the Lower 48. Holy cow, the electricity rates here make California look cheap! This place is paying $0.23/kWh for energy and their demand charges are off the charts. Chugach Electric has this crazy fuel adjustment clause that changes monthly based on natural gas prices. The client's electric bill last winter was $89K for a single month. Anyone else work up here or have experience with these Alaska utilities? The regulatory structure is completely different from anything I dealt with down in the continental US.
Anyone ever audited in Alaska? This is wild
Darren, I've never worked Alaska but those rates sound insane! Down here in Tennessee with TVA we're complaining about $0.09/kWh. That fuel adjustment mechanism sounds like it could be a goldmine for audit findings though - any monthly adjustments that volatile are bound to have calculation errors. Are they using actual fuel costs or some kind of smoothed average? The monthly volatility alone probably creates opportunities for reconciliation issues. Document everything - those kinds of swings usually indicate complex rate structures that are prone to billing errors.
Darren, you're making me appreciate Puget Sound Energy's rates even more! We think $0.11/kWh is high up here in Seattle. That fuel adjustment clause sounds similar to what some of the smaller utilities in rural Washington use, but nowhere near that magnitude. The key thing to watch is whether they're applying the adjustment to the correct rate components and billing periods. I've seen utilities accidentally double-apply fuel adjustments or use the wrong month's factor. With those dollar amounts, even a small percentage error could be worth serious money.
Thanks for the insights, guys. The fuel adjustment is based on actual delivered natural gas costs to their generation plants, recalculated monthly with a two-month lag. So January usage gets billed with November fuel costs. I'm already seeing some discrepancies in how they're allocating fuel costs between rate classes. Found about $8K in potential overcharges just in the first quarter I reviewed. The challenge is that everything up here is so expensive that clients almost expect to get hammered on utility costs. They're pleasantly surprised when I find savings rather than expecting it like clients in the Lower 48.