After promising voters no rate increase after sale of ML&P, Chugach Electric starts rate hike process; comment period ends soon

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It’s a Covid thing. Evidently Covid hit Chugach Electric hard, the utility said. Other utilities? Not so much.

Chugach Electric filed a rate decoupling request on Dec. 9, along with a request of 4.1% increase to energy and demand rates for the North and South District customers.

The decoupling request is intended to separate Chugach’s retail and wholesale customers. 

Four days later, the Regulatory Commission of Alaska issued a Notice of Utility Tariff Filings for a rate increase, as requested by Chugach Electric. Comments from the public are due no later than Jan. 7.

The public comment period lands during the busy holiday season, when many may not be paying attention to public notices.

View the rate changes at this Regulatory Commission of Alaska link here.

The RCA notice states the Covid-19 pandemic as the reason for this rate increase request. To date, Chugach is the only Railbelt electric utility asking for rate increases due to Covid-19.

Not discussed in the notice is the $1 billion purchase of Municipal Light & Power by Chugach Electric as an underlying issue in this rate request. There is also no mention in the notice of the ballot language that specifically promised Anchorage voters “No Increase in Base Rates” as a result of the sale.

Sixty-five percent of Anchorage voters approved the measure, called Proposition 10, in April of 2018. Former Mayor Ethan Berkowitz closed the sale in 2020, and the rate increase request comes just one year later.

In the terms of the sale in 2020, the Municipality was to set aside $36 million to protect customers in of ML&P from rate increases that would come due to the sale for the first three years.

The promise from former Mayor Ethan Berkowitz was that the combined utility would create a downward pressure on price increases, and that $15 million from the sale would be used to fund an addiction treatment facility, which was a promise Berkowitz made to Providence Alaska Medical Center leaders in exchange for their support. Providence is a major user of electricity in Anchorage.

On Aug. 24, 2020, Berkowitz was quoted by his public relations department saying, “This is a time to reflect on the journey we’ve been on and to express appreciation and gratitude to those who made it possible. I want to thank the ML&P employees who’ve gone above and beyond to provide service with competitive, safe and reliable energy. Thank you to the teams that worked incredibly hard for such a long period of time to sew up the details of this complex deal. I also want to thank the ratepayers and voters of Anchorage who had the vision and persistence to implement the kind of change that will benefit our community for generations. Finally, I want to thank our partners at Chugach for staying the course and for the stewardship that they will provide to a great utility and the customers it serves.”

“After more than two years of working on this important transaction, we are very pleased to see the end is in sight,” said Chugach CEO Lee Thibert said in the same press release. “At a time when many are facing financial challenges brought by the COVID-19 pandemic, having one Anchorage electric utility will help bring lower long-term energy costs for our community.  We appreciate the commitment and hard work of all the employees who have been working to bring these two utilities together, and we look forward to welcoming ML&P employees and customers into the Chugach family.”

Thibert has announced he will retire in April of 2022, after having spent over 30 years with the utility.

Chugach’s filing is part of a much broader series of issues as outlined in a July 1 Chugach filing, known as RCA Docket U-21-059.  

Chugach is also requesting a waiver from the supporting information requirements for the rate changes and cost of service methods.  

Comments on this Chugach Electric rate increase request must be filed with the RCA no later than Jan. 7, 2022 and must reference TA392-121 and/or TA514-8. 

27 COMMENTS

  1. Remember Mark Begich’s role in this at election time. Didn’t he make a lot of money off this deal. They are breaking the one promise that helped the most to get this passed. Call this Berkie’s Legacy.

  2. No. If the RCA wants to prove they’re an independent agency, then they’ll not allow this. Words and promises to the utility members. If they waited until the first day after the third year of no rate increase, I’d accept that. This is total Bovine Excrement.

  3. I voted “hell NO” and here’s why.

    The IBEW owns Chugach and the former ML&P. They own/owned Begich, Berkowitz and a majority of other Anchorage politicians. They owned the Chugach Board then and they own them now. The board votes as they are told.
    Before when Chugach and ML&P were separate the labor contracts expired at different times. Therefore if there was a walkout or strike, with the intertie the utility not involved could keep the grid up and running. Now they have total control. In the coming years you will see an effort to consolidate all the rail belt utilities under the scam auspices of “more efficient, save money” and the same scenario will play out. Promise one thing do another.
    Your first clue was the guarantee that no one in either utility would be laid off. How does that make sense?. It is duplicitous and very costly. In a private sector merger the opportunity to save would result in many less employees and lower costs.
    When have you ever seen a monopoly serve the interests of customers?
    Let your Assemblyperson and the Regulatory Commission of Alaska know how you feel about this huge scam and keep an eye out on the back page of ADN.

  4. If the average-everyday rate payer leaves voicemail for Chugach board members, none will return calls. The two that I managed to catch off-guard (it appears they accidentally answered their cell phones thinking somebody “important” to them was calling), behaved as though they are responsible to nobody. Telephone calls from ratepayers appear to be the worst thing that can happen to them on any given day. They really don’t give a damn. I am certain that the electric rates will go up and up and up each time these board members can manage it. Promises of rate consistency following the MLP sale mean nothing to them.

    Ain’t that so … Sam Cason? You behaved like an absolute jerk and were completely disrespectful of me during our telephone conversation.

    • Apparently the CEA Board immediately following the filing awarded management promotions bonuses and raises. Hmm…

  5. This is the problem with voters approving things, like sale of ML&P, the purchase of the Hawker Building, and the alcohol tax based on lies, then having no recourse when elected officials screw them after the fact.

  6. You didn’t believe that line about no rate hikes, did you?
    They’ve been planning this since the stupid deal was sealed.
    You wanted Ethan so badly you elected him twice. Don’t go getting squeamish now, Anchorage.

  7. Is anyone surprised in this rate increase? If it is too good to be true, then it probably is.

    Proposition 10 text: “Any change in the use of the proceeds may be made only with approval of the majority of qualified voters voting on the question.

    Retention of Employees. Chugach Electric would commit to not lay off any ML&P or Chugach Electric employees as a result of the transaction, and would succeed to all rights and obligations of the collective bargaining agreement covering ML&P employees.

    No Increase in Base Rates. Base rates for existing ML&P and Chugach Electric ratepayers would not increase as a result of the transaction.”

    Key words: “As A Result Of The Transaction”. All other market forces, whims of the Chugach board members, COVID, climate change, etc base rate hikes are all fair game/justification to the RCA due to this text.

    This interpretation could also be used to layoff employees due to other reasons besides the “result of this transaction”. Those layoffs will never happen.

  8. The ML&P rates are based on 12 month average usage. When you have a pandemic and the Assembly shuts down the economy, the average usage goes down.

    18 months ago, 6 months before the sale, this revenue shortfall was totally predictable. Somebody at Chugach was completely asleep at the wheel.

    The bottom line is the rate increase is not due to Covid or the purchase of ML&P. This rate increase is because somebody at Chugach, and the Board, were clueless about something that was obvious a year ago!

    WHERE IS THE ACCOUNTABILITY?

  9. Then there is the little matter about that billion bucks that was supposedly going to the Muni. Not a peep about that money from any of the people who brokered the deal. Makes one wonder whose pockets it ended up in, as it certainly did nothing to help with property taxes. Yes I understand that a large share was deferred or if memory serves in lieu of taxes, but still we the residents didn’t seem to get anything out of the deal.

  10. The good ship “Chugach Electric” rudder is manned 24/7 by IBEW – a circumstance that has existed for many years ! ! How can any Chugach subscriber expect anything else to happen …. while Chugach decisions continue to benefit ONLY the Union itself? This situation exists because the Chugach member/owners let it happen by their disinteresd votes …. or by not voting at all. This is fact! I spent three terms as a Chugach Electric Director so my advice is the Chugach members must either wake up and show both interest AND action … or – alternatively – give the IBEW your open checkbook every month year after year..

  11. What we must understand is when Proposition 18 was proposed in 2018..NONE of this COVID “garbage” wasn’t even in our vocabulary. Much has happened since then and we need to understand things DID WILDLY change. It was proposed as things were going back THEN..***YES, THERE IS A INCREASE.. We ALL PAY for this increase.. IT’S AMAZING HOW EVERTHING HAS CHANGED..

    • Just make Chugach submit the supporting information requirements for rate changes and cost-of-service methods. Then we will see this entire rate increase is due to the merger and nothing else.

      “Chugach requests a waiver from the requirements of 3 AAC 48.275(a) and 3 AAC 48.540, the
      supporting information requirements for rate changes and cost-of-service methods, respectively.

  12. COVID-19 Excuses:
    1) Causes distribution chain disruptions
    2) Causes inflation
    3) Causes liberals to constantly lie to the public (This one is probably true)
    4) Causes Tornados in the mid-west
    5) Causes Global Warming
    6) Causes NFL teams to lose
    7) Causes utility rate increases
    8) Causes mass hysteria in the media

    Did I miss any?

  13. Here’s the job listings from Chugach ‘https://chugachelectric.applicantpro.com/jobs/’ hopefully some who have commented here will apply for some of the open positions.

    • its 9 jobs Lol they need a vice president of regulatory affairs. no one want to deal with the scam of rate increases to pay for the ml&p purchase.

  14. Rate increase? Not surprising really is it. Your Government has over the last two years has blown an epic sum of money ostensibly to combat Covid. We all have seen the effects of inflation whether it is at Costco or your local lumberyard. Look for more of this in the future.

  15. After the 4.1% rate increase request, Chugach Board authorized all Chugach management; promotions, bonuses and pay raises.

    In addition they are hiding the fact that Chugach is paying MEA to provide MEA power. This means Chugach ratepayers are subsidizing MEA ratepayers as a failed theory of Power Pool.

    • Correct me if I am wrong, but MEA built their own plant out in Eklutna, because their contract with Chugach was coming to an end. Chugach was not kind to MEA customers for many years increasing their wholesale prices regularly, as MEA was locked into an extended contract. To my knowledge MEA now does their own power generation. There may be a power sharing agreement to even out power needs and keep the turbines running efficiently.

      • Read the approved Power Pool Agreement forced on CEA by MEA in order for the Acquisition to be approved. Split the savings means CEA ratepayers lose. Was a failed experiment done in the 70s in the New England power pool. Called socialism. RCA should have done their research. Nuf said.

        • Respectfully, I disagree. MEA had concerns regarding a large monopoly with ML&P and Chugach as one entity. A set pooling agreement was mutually agreed to by all parties. CEA was not forced to purchase ML&P. This made sense to someone in the administration and they wanted this deal.
          Power generation is not like flipping a switch. It takes a long time for turbines to spin up and any power pool can alleviate issues when demand spikes. After reading the pertinent parts of power pool agreement it appears that the implementation phase has just concluded (effective date appears to be July 2020 and implementation phase was 18 mos.) and a review is required. So I believe your insinuations that MEA customers are unfairly reaping a benefit seems premature. This is from the agreement:
          “The Parties acknowledge and agree that
          the Pool Savings should be equally shared (“Split-the-Savings Principle”) and that no one Party shall unreasonably benefit to the detriment of the other Party or be subject to operate at a net cost higher than it would have under a standalone scenario per Exhibit E measured daily; provided, the Parties recognize that precise implementation of an exact Split-the-Savings Principle may not be accomplished until after the Implementation Period expires and appropriate documentation and auditing tools have been developed and implemented”
          Maybe this rate increase has more to do with the before mentioned monopoly and the dual administrative structure foisted on CEA as a result of the purchase.

        • I don’t know anything about the New England Power pool in the 70’s but socialism by definition would require the government OWN all power generation, politicians then set arbitrary 5 year goals of required power generation and everyone gets crappy service. To my knowledge each utility retained ownership rights and decision making power, which affords us reactive generation aided by available power pool energy based on actual demand instead of a 5 year set output.

        • My review of the power pool agreement is that the RCA required it as a condition required for Chugach to buy ML&P. Chugach could have said no. Only Chugach Board and management are accountable for the situation they created.

Comments are closed.