HEA Candidate Questions: Erin McKittrick

Voting in the board election at Homer Electric Association began on April 4. Ballots must be received by HEA by 5 p.m. May 3 in order to be counted. If HEA holds its Annual Meeting in person, members who did not vote by mail will have an opportunity to vote there. But since the decision on whether or not to hold an in-person meeting has still not been made, HEA is urging its members to vote by mail. HEA members can only vote in the race for their district. For more information on the election, including a map of HEA’s board districts, see https://www.homerelectric.com/my-cooperative/board-of-directors/elections/

Here are the answers to AETP’s question from Erin McKittrick, who is running for re-election in District 3. McKittrick is the current Vice President of the HEA Board, to which she was elected in 2019. She works as a freelance science writer and consultant, and serves on the boards of Ground Truth Alaska and the Alaska Center for Appropriate Technology. Her biography and personal statement can be found on the Homer Electric election site.

Her campaign website is https://www.facebook.com/ErinForHEA

Erin McKittrick, from her HEA candidate profile.

1. Why do you want to be a HEA Board member?

HEA is ours. We own the utility, which means we have the power and the responsibility to ensure it's run well -- for the benefit of our members, workers, community, and the environment.

I'm running for the board because I believe in honest, transparent communication. In my three years on the board, I've made it my mission to talk to the members, posting monthly updates and answering questions.

I'm running for the board because we need to incorporate more low cost renewable energy. Energy is expensive here. HEA needs to be efficient in all its operations, and find cost savings where it can. But to tackle a big piece of the problem, we need to tackle our biggest cost, which is also our biggest vulnerability -- the expensive natural gas that runs our power plants. It supplies 86% of our energy. It's a third of the power bill. And it's only available from a single supplier.

With our new battery and existing generation we're well positioned to take advantage of low cost renewable energy -- which is cheaper than gas. We need to move rapidly towards wind, solar, and hydro to diversify our energy supply, increase our resilience, and hold electric rates down.

Our strategic decisions matter. We need to determine opportunities to pursue, what to prioritize, how to hedge risks, and how to plan for an unknowable future.

Over the long term, our choices determine where our power comes from, how resilient our infrastructure is, how we interact with our members, how we collaborate with other utilities and the state -- and how much our power costs. It's our future, and it's important. Directing our own utility company is a power and a responsibility that most people in the country don't have. We need to do it thoughtfully. HEA isn't a government, but it's just as entwined in peoples' lives.

2. Are there any particular projects or ideas you would champion as an HEA Board member? Are there any you would oppose?

In general, I would champion the introduction of low-cost, low-impact renewable power on our grid. I proposed our current 50% renewable energy by the end of 2025 goal. Wind, solar, and small hydro are the most likely projects to meet this criteria in the short term, but each project needs to be assessed on its own merits.

I would champion beneficial electrification in both transportation (EVs) and heating (heat pumps). In conjunction with the transition to renewable electricity, these technologies can provide environmental benefits and reduce consumer costs (both for the direct consumers, and through higher electric loads putting downward pressure on electricity rates). I hope HEA can facilitate and encourage this transition, starting immediately, and continuing as these technologies become more popular. I have proposed a heat pump rebate pilot program, which is in our 2022 budget, as well as the EV fast charging rate we just implemented that puts EV fast charging on par with residential electric rates.

I would also champion transparency and better member communication, both through specific communication initiatives and through the general company culture.

3. If you are elected, you would serve a three year term, and be eligible to serve up to three terms. What challenges and opportunities do you believe HEA will face in the next 3 years? What about in the nine years?

In the spring of 2024, our current gas contract expires. At the end of 2025, we will either meet or fail to meet our 50% renewable goal. Where our power comes from is our biggest challenge and biggest opportunity. If we do nothing, we'll likely get a bid from Hilcorp, and pay whatever it costs. Pursuing renewable energy provides opportunities to diversify, increase resilience, and decrease costs. But these opportunities won't fall in our lap. Alaska is too small, too uncertain, and too expensive for most private power companies to come to us with offers. To find opportunities, we need to actively look for them, and be willing to risk some amount of money to do so.

Sometime in the next two years, we'll likely do a rate case study, giving us an opportunity to potentially modify our rate structures (see the net metering/System Delivery Charge discussion in #6). The Integrated Resource Planning process at the RRC will also likely be happening (or at least beginning) in the next 3 years, and that plan will determine the future structure of the entire Railbelt.

In the next six years (I've already served three), I hope and expect to see a steep increase in beneficial electrification in both transportation (EVs) and heating (heat pumps). This will be both an opportunity to increase electric load (reducing costs), and a challenge to ensure our rate structures adapt smoothly and fairly to the changing grid.

4. Do you support the passage and implementation of the Renewable Portfolio Standards legislation (HB 301 and SB 179) proposed by Governor Dunleavy? Why or why not? If the bill passes, what would you do as an HEA Board member to help the cooperative prepare to meet the RPS goals?

I believe the transition to renewable energy is critical, especially on the Railbelt, where our dependence on an expensive and isolated gas supply from a near-monopoly source leaves us vulnerable. At HEA, we have a near term renewable goal (50% by 2025) that is much more ambitious than all but the final targets of the RPS. Whether or not the RPS passes, as an HEA board member, I will work to ensure we meet our internal goal. In these next few years, the practical approach will involve wind, solar, and small hydro/expansion of existing hydro. Likely it will involve a combination of self-build projects (which have higher risk, but cheaper costs), contracts with IPPs (higher cost, but lower risk, and off the co-op's balance sheet), and state/multi-utility projects (like the proposed Dixon Diversion).

I support the RPS because I believe our goals will be easier to meet if the rest of the Railbelt is working alongside us, and we are all moving in the same direction. Renewable projects take longer to achieve than a board election cycle, and management will be better able to pursue them if they aren't worried that the next year's election will change the co-op's direction completely. Many renewable projects are more economical at a scale beyond what HEA can absorb independently. The final target of the RPS (80%) is much larger than our internal goal. I support this as well, but feel that it probably can only be achieved in an economically efficient manner if the utilities are all working towards that goal together.

5. The proposal for the creation of the Railbelt Reliability Council (RRC) was submitted to the Regulatory Commission of Alaska at the end of March. What potential problems or opportunities will participating in the RRC create for HEA?

Potential Opportunities: Integrated Resource Planning may help the Railbelt transition to renewable energy in a cheaper and more efficient fashion, through the economy of scale that can be achieved through multi-utility projects. Likewise, it creates a mechanism to recover the costs of building new transmission between the utilities, some of which is agreed upon by all stakeholders to be critical.

Potential Problems: The process of standing up the RRC has been plagued by political disagreements and near stalemates that nearly prevented it from even starting. If this culture continues into the operation of the organization, it could lead to protracted battles that slow progress rather than accelerate it, potentially limiting the abilities of the individual members to initiate good projects. Additionally, the organization has significant operational costs that will be paid on Railbelt electrical bills.

In general, I see a parallel to the opportunities and problems presented by Federalism. In arenas where states operate independently, they can often make dramatic shifts, for better or for worse, providing examples for other states to follow or avoid. In areas dominated by the federal government, bigger things can happen, but often don't, because political disagreement stymies most action. I hope HEA can help push this organization to realize the positive end of its potential.

6. Does HEA have a fair and equitable system for buying power from members who generate it themselves (such as those with home solar systems)? If not, how could it be improved?

An owner of a home solar system receives retail rate "net metering" credit for each KWh fed into the grid, up to the point where their net grid power purchase for the month is 0KWh. At that point, they receive the wholesale SFPPR rate of around 8 cents/KWh, which is about a third of retail rate. If grid power purchases are less than 150KWh total in any month, the homeowner pays a "System Delivery Charge" of up to $24.

I think that the system could be improved by allowing net metering customers to net meter annually instead of monthly (which would require an exemption from RCA regulations, or a change to those regulations). It could also be improved by simplifying the System Delivery Charge -- making it a lower fixed fee which applies to all customers.

Whether the current system is fair is a much more complicated question.

First, it's important to consider whether the rate structure is fair more generally. At HEA, and at most electric utilities, the majority of costs are recovered through a per-KWh rate. This is clearly appropriate for variable costs such as fuel and purchased power (the Cost of Power Adjustment on a bill). However, these variable costs are a third of the bill. The other 2/3 of the costs are "fixed." Things like power line maintenance, salaries, power plant operation costs, etc... don't really change based on how much power is consumed.

Recovering fixed costs in a per-KWh rate means that high-use households subsidize low-use households, whether or not they have solar power. A per-KWh rate structure also encourages energy conservation. Fairness and energy conservation are both important, so what's the best balance?

It's also important for a consumer to understand their bill. There's a balance between fairness and simplicity. For instance, households in more rural locations cost more to serve, per KWh, than households in city centers. But we have a single residential rate that doesn't vary by location, for simplicity.

Our board policy for rate design includes all of these things. It began by saying that the costs should be distributed equitably, and that the finances should work out to meet HEA's needs. I proposed, and the board voted to add, that the rates should be "understandable" and "promote energy conservation." Later, we added that the rates should also consider inflation.

Is the System Delivery Charge (SDC) specifically unfair? It certainly violates the "understandable" provision -- net metering customers often believe they're being charged twice for power, and summer home owners think they might as well leave things on because they're paying for it anyway (though zero use does actually cost less than 150KWh). To the extent people use power they wouldn't have otherwise to meet the 150KWh minimum, it also discourages conservation.

The main way our rate structure is unfair to net metering customers is the different impact it has on customers using the same amount of power.

For example, imagine a summer home using a total of 200KWh in a year, over two months. Their bill would be $545 for the year. Now imagine a full time resident with an average seasonal use pattern, and solar panels that nearly zero out their use -- giving them the same net annual total of 200KWh purchased from the grid. Their annual bill would be $791 -- nearly $250 more for the exact same amount of power.

Eliminating the SDC would exacerbate this effect, advantaging summer homes more than net metering customers. Annualizing net metering (not currently allowed by the RCA) while keeping the SDC would better align incentives between net metering customers and low use customers/summer homes.

Reducing the SDC and applying it to all customers (with a concomitant rate reduction), would increase simplicity and in some ways increase fairness, but would result in shifting some costs from low-use households to high-use households. I do not know to what extent high use households tend to be larger homes owned by high-income members vs. poorly insulated homes with inefficient appliances owned by low-income members.