FAIRBANKS — The Regulatory Commission of Alaska approved a rate increase for the 90 customers who rely on steam heat in downtown Fairbanks.
The agency set a rate cap of $19.59 per thousand pounds of steam. When it filed for a rate increase in late 2013, the company sought to charge $20.45.
The steam rate had been capped at $10.50 per thousand pounds for decades, but the regulatory agency allowed an interim rate hike while the proposal was under review. The utility offered evidence showing how its costs had risen over time.
Aurora Energy, which is affiliated with the Usibelli Coal Mine and operates the downtown Fairbanks power plant, has with commission approval raised rates three times over the past year on a phased-in basis, first to $12.08, then to $13.50 and later to $15, the current rate.
The ruling allows a 9.5 percent return on equity. The RCA action would set an upper limit of $19.59, meaning that rates would go higher on a schedule that Aurora has yet to determine. Company President Buki Wright said the next billing cycle begins later this month.
"Although we will likely make a rate adjustment then, it will not be for the full amount allowed by the commission. Just as we have done with the increases up to now, there will be gradual adjustments over time through the rest of this year until we get to the cap allowed by this order," Wright said.
The RCA action does not change the hot water heating rates for the 107 accounts served by the utility, also with underground pipes, through a separate service. Hot water heating rates are higher than steam and not subject to the same regulations.