Nome power bills face a bigger fuel surcharge as utility board presses for overdue audits

Nome's fuel surcharge on power bills is likely to jump from 18 cents to close to 40 cents a kilowatt-hour after the largest fuel bond the utility has had, its manager told the Nome Joint Utility System board Thursday.

"So it's going to about double the kWh cost," board member Carl Knodel said. The manager agreed, noting the utility's tariff, or base rate, is close to 20 cents. He said the final surcharge will be calculated for the board's next meeting.

The utility took in 2,011,808 gallons of fuel this fall. The bond is $8.6 million, the manager said, and the total bill from supplier Crowley will be closer to $9 million. The utility has already paid $1.3 million from cash reserves.

Knodel asked how much less the oil would have cost if the utility had bought in July. The manager said it always buys in September and had locked in its price under a three-year contract, with only a tug fuel adjustment changing.

The state's Power Cost Equalization program, which lowers power bills for rural residential customers, will also pay more per kilowatt-hour once the new numbers are filed, the manager said.

The surcharge passes fuel costs through separately from the base rate. At an Oct. 13 Nome Common Council meeting, the manager said he believed the utility last raised its rates in 2005, and that the surcharge was set up when fuel cost 85 cents a gallon. On Thursday he said the utility needs a rate study in 2027, likely leading to a formula that recognizes part of inflation, like the one the Port of Nome uses.

The sharper exchange Thursday was over the utility's books.

As of September, the utility hadn't finished an audit since 2021, and the manager said then that the delay was probably raising the interest rate on its annual fuel loan.

"I know for a fact that when you don't pay your bills, any money you want costs more," Knodel said Thursday.

Another board member said the budget still shows all zeros, making it hard to weigh requests for new equipment. He also said the state threatened this summer to cut off the utility's Power Cost Equalization money because filings weren't turned in. The manager said the state held the utility's reimbursement for 10 days. "That was my fault," he said.

The manager said he has been sick and is "calling for help." A consultant will work remotely with staff on the budget and help with the audits in December, probably around the week of Dec. 10, he said.

"You're killing yourself. Just hire somebody," Knodel said. "I mean, it has become an embarrassment."

Board Chair Dave Barron credited staff with progress. "We're not saying you guys are bad people or you're doing things wrong, but if you need help, you got to ask for help," he said.