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ESPA officials cite fuel costs and fixed base rate as drivers of high electricity prices
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Summary
At a legislative hearing, ESPA said the retail price of electricity is 36¢/kWh, driven largely by a fuel surcharge (about $0.26 of a $0.30 production cost) while the nonfuel base rate has remained 9.9¢ for over a decade; ESPA said it is investing in more-efficient gensets and considering renewable options.
Senators pressed ESPA about why electricity prices remain elevated. Speaker 2 told the panel the retail price is currently about 36¢ per kilowatt-hour and that of roughly $0.30 to produce a kilowatt-hour, $0.26 is fuel cost.
"The bottom line is our base rate is 9.9¢," Speaker 2 said, adding that the retail price peaked at 54¢/kWh in 2022 when fuel prices were higher and fell to about 36¢ as fuel costs dropped. Speaker 2 argued the utility has not raised its nonfuel base rate in over 10 years despite increasing nonfuel costs such as materials, freight and labor.
ESPA said it has purchased three new generator sets to boost fuel efficiency and has used grants to acquire equipment but noted grants are restricted to their intended purposes; some equipment purchases were loan-financed. The utility warned that federal grant funding may diminish and that ESPA will need to budget for maintaining and operating acquired equipment.
On fuel procurement, ESPA described a bidding arrangement that keeps two suppliers in competition (the low bidder supplies 60% and the runner-up 40% at the lowest bidder’s price) to avoid monopolies. Senators asked whether importing and storing fuel for ESPA would reduce the surcharge; Speaker 2 said the idea could be revisited.
No vote was held; senators asked for further details on fuel contracts and efficiency gains.
