Why Isn't the Rate Decreasing More?

Fuel prices have stabilized since the significant increases that drove the June F&PP adjustment. However, unplanned generation outages during June through August required GVEA to use more higher-cost diesel generation and less lower-cost coal generation than projected.

Those additional costs are reflected in the September F&PP rate and are the primary reason the rate is not decreasing by as much as it increased in June.

#1 Unplanned Generation Outages Increased Costs

Two significant unplanned outages affected GVEA's generation mix this summer:

• Healy Unit 1: A 12-day unplanned outage.
• North Pole Combined Cycle Plant: A 28-day unplanned outage due to a steamer repair.

While those units were unavailable, GVEA had to rely more heavily on diesel-fired generation to maintain reliable electric service. Because diesel generation is more expensive than coal generation, GVEA's actual fuel costs were higher than projected.

#2 Energy Sales Were Slightly Higher Than Expected

Energy sales from June through August were slightly higher than projected. Higher sales help spread costs across more kilowatt-hours and were factored into the quarterly F&PP calculation.

What's Expected for September Through November?

GVEA develops each quarterly F&PP rate using the best available projections for fuel prices, purchased power and the expected availability of its generating units.

For September through November, fuel prices are projected to remain near current levels. GVEA is also planning two significant maintenance outages:

• Healy Unit 2 is projected to be offline for approximately 27 days for its planned fall outage.
• North Pole GT-1 is projected to be offline for approximately 40 days for a planned major overhaul.

Planned maintenance is necessary to keep GVEA's generating units reliable and is scheduled in advance so its expected impact can be incorporated into generation and fuel-cost projections.