Cost of Power Adjustment
Also Known As COPA
Electric bills for most regulated utilities, including AEL&P, include a separate line for something called a “Cost of Power Adjustment (COPA).” The COPA accounts for costs or credits not already included in rates.
Since the Lake Dorothy hydro project came online in 2009, the COPA in Juneau has most often been a negative number, reducing customer bills. That is because, in years with normal rain and snow, AEL&P sells excess electricity to interruptible customers, and we pass that money to firm customers through the COPA.
In times with extended periods of below-average rain and snow, we stop making sales to interruptible customers in order to preserve sufficient hydro supply to firm customers. The result is a COPA charge that increases bills, rather than the COPA credit that we normally experience. This is what happened as a result of the drought from late 2018 through 2019.
The two-year drought significantly impacted our reservoirs, and we are beginning to recover. Heavy rains this November helped, but we still have a way to go. We recently reconnected dual fuel heating customers and will reconnect Greens Creek when conditions allow.
It’s important to know that our COPA is calculated quarterly, so changes to the COPA lag behind what is happening with the interruptible customers. Once interruptible sales resume, it will take some time before those revenues begin to flow through to customer bills.
Here is greater detail about how the COPA is calculated and what it includes.
- The cost of diesel fuel used to generate power. Even though our power is normally provided by hydropower, we periodically have fuel costs for diesel necessary to perform maintenance on our system without interrupting service to customers, or for fuel consumed during unplanned outages. In rare circumstances, it will also include the cost of supplemental diesel if we don’t have sufficient hydro, or if we are cut off from our hydro sources – for example, during an avalanche.
- Credits for interruptible revenues. Interruptible customers are customers who had existing sources of fuel-burning heat or generation, and then they installed electric heat or generation which allowed them to purchase surplus electric energy when it is available. Revenues from dual fuel customers and Princess Cruise Lines pass through the COPA as a credit. If we don’t have surplus energy available, then these customers rely on their pre-existing sources of heat or generation, and there is no credit to the COPA during those periods.
- Charge or credit related to sales to Greens Creek. In periods with normal precipitation, Greens Creek contributes toward the cost of our system and reduces the amount that firm customers pay each month. In times of below-average precipitation, sales to Greens Creek are reduced or interrupted completely for periods of time – these conditions result in a charge to the COPA.
During periods when the credits to the COPA exceed the charges to the COPA, the overall result is a credit to your bill. When the charges to the COPA exceed the credits, then the overall result is an additional charge to your bill.
From 2014 through 2018, our COPA was a negative amount (credit) and reduced the amount our customers paid. The COPA was a credit because the revenue from interruptible sales was greater than the cost of diesel consumed, plus we received greater than expected revenues from Greens Creek.
However, the drought that Southeast Alaska recently experienced meant that we couldn’t sell energy to Greens Creek and other interruptible customers during the fourth quarter of 2018 and during much of 2019. But the costs required to provide energy to our community (fixed costs) did not change. Without that subsidy from interruptible customers, the remaining firm customers have had to pay the full share of costs.