Another Big Saturday: Chakachamna Day!

Last Summer the Legislature and Governor acted to give a subsidy to all Alaskans. I commented on it at that time and today we are mobilizing to provide interested East Anchorage citizens with a more detailed option for how the government could more responsibly deal with its surplus funds and better benefit citizens. We’re calling today, “Chakachamna Saturday!”

The idea here is for the government to be more creative and responsible when dealing with public funds. While we could explore a number of options for more effectively investing state funds, here is one example: the proposed Chakachamna Dam.

Today, we’ll be running radio commercials, inviting folks to visit us for free coffee and hot chocolate and a discussion of creative ways to use surplus state funds. I’ll have with me a spread sheet for those who have a deeper level of interest. The spread sheet will outline two Chakachamna scenarios.

Both scenarios rest on these main assumptions: a) Millions of kilowatt hours (KWh) from Chakachamna (1.6); b) average household KWh/month use (700); c) average annual number of KWh/household (8,400); d) Number of homes that could be powered by Chakachamna (190,476); e) Approximate number of homes in the railbelt area (200,000); f) KWh rates based on Chugach Electric Association 2007 Annual Report, assuming 93% of power is currently provided by natural gas powered generation; g) Cost of Chakachamna ($2MM); h) Energy ‘rebate/subsidy’ ($1.2k); i) Federal income tax rate (20%); j) After-tax value of rebate/subsidy ($960); k) Railbelt population (450k); k) Number of years to finance a Chakachamna-type $2MM energy project (3.7); l) After-tax value of rebate/subsidy for 3.7 years ($3.556k); M) Single person household (the subsidy approach would produce relatively more income to households as occupants of that home increased in number).

Scenario #1:

This scenario takes the current KWh rate of $.13 and applies it to the average, single person household use of 700 KWh/month. After using 8400 KWh per home, the average electric bill would be $1,092 which would produce a savings over expected energy bills of $17,472, which is $13,916 more than than the single person would have received after 3.7 years of subsidy receipts. The net benefit to that person over the energy rebate/subsidy would be $13,916.

Scenario #2:

This scenario takes an ‘average’ KWh average rate over 20 years (escalated at 3% annually), or $.18. That rate is applied to the average single person household use of 700 KWh/month. After using 8400 KWh per home, the average electric bill would be $1,507 which would produce a savings over expected energy bills of $30,139 more than the single person would have received after 3.7 years of subsidy receipts. The net benefit to that person over the energy rebate/subsidy would be $26,584.

NOTE:

This is a suggestion to fellow citizens that there are many ways to look at our state’s challenges. This is not proposed as the only way. It is an example of how alternatives should be explored. When one explores these alternatives, one would logically compare the Chakachamna alternative with other potential hydroelectric (i.e. Susitna, tidal, etc.), nuclear, wind and geothermal projects that–when gifted in part to a utility–could result in lower cost of service for ratepayers. One must also consider that, when a state is collecting a multi-billion dollar tax surplus, the tax rate may result in lower corporate investments which decreases Alaska’s economic viability for our children and grandchildren.

What say you? Could you correct a mistake? Do you have other insight? I invite your additions or corrections in the calculations above, your own suggestions for dealing with the ‘Challenge of Surplus’. For example, do you propose saving more or investing more into capital projects like Chakachamna, which could lower Alaskans’ cost of living.

-Dave