By BOB MAIER
That did not take long: 253 days after closing the sale for the purchase of Municipal Light and Power by Chugach Electric Association, Chugach has filed with the Regulatory Commission of Alaska for a … well … I am just not sure what they have filed for.
In Chugach’s July 1, 2021 submittal with the RCA – (Docket U-21-059) – Chugach requested to reopen the stipulated purchase and sales agreement with ML&P.
Chugach’s reason was not for a rate increase but for assistance to help them address a deficiency in their ‘margin performance’.
The only two reasons given were “(1) an economic downturn in the local economy caused, in part, by the Covid 19 pandemic and (2) customer efforts to manage energy usage more efficiently” with ‘the primary impact being seen in the North District (former ML&P service area territory)’.
During the pandemic those darn old ML&P ratepayers have not been using their toasters and washing machines as much as the ratepayers in Chugach Electric’s South District, which is the historic Chugach territory.
On July 30, the RCA denied Chugach Electric’s request to reopen the ML&P purchase and sales agreement and instead opened a separate Docket – (U-21-059) – to address Chugach’s projected 2021 margin shortfall.
Anchorage Ordinance 2018-1(S) placed Proposition 10 on the April 3, 2018 Municipal ballot, which presented the sale of ML&P to voters. Prop 10 passed by a 65% to 35% margin.
Included in the Prop 10 Ballot language was the provision “No Increase in Base Rates. Base rates for existing ML&P and Chugach Electric ratepayers would not increase as a result of the transaction.”
So let us take a look at a few excerpts from the final 152-page RCA decision concerning the sale of ML&P to Chugach Electric dated May 28, 2020 which is attached. (Dockets U-19-020, U-19-021 and U-18-102).
Page 2 – “The transaction as conceived by ML&P and Chugach was not straightforward.”
Page 10 – “Chugach will have only 13% equity after closing the transaction”
Page 41 – “One basic premise of the transaction is that base rates for ML&P and Chugach ratepayers will not increase as a direct result of Chugach’s acquisition of most ML&P assets. For the reasons discussed below we cannot, and do not, accept that premise as limiting our rate setting authority or obligations under law.”
Page 44 – “We note that this transaction was approved by the MOA Assembly and voters based in part on a public representation by Chugach that base rates for ML&P and Chugach ratepayers would not increase as a result of Chugach’s acquisition of most ML&P assets. That public representation is not expressly included in any of the documents that we have been asked to approve …”
Page 48 – “We inform Chugach, the MOA, and ML&P, that closing this transaction under the terms and conditions we require in this order is an express waiver of any claims for remedies under the language of Ballot Measure 10 or any municipal ordinances if Chugach’s base rates are increased by us as a result of the costs incurred buy Chugach to acquire most of ML&P’s assets.”
Page 106 – “To be clear, we declare under our authority in AS 42.05.141(a)(3) that any covenant by Chugach to comply with the rate provisions of Ordinance No. 2018-1(S) or Proposition 10 quoted above is an unreasonable practice that is void and unenforceable.”
What we see here is the RCA deeming itself a higher authority over ballot language and a vote of the people.
With their hands tied by State statute, the RCA should have sent the sale of ML&P back to Chugach, the Municipality and the Anchorage Assembly with instructions to fix the ballot language and hold another vote of the people. For reasons only the commissioners know they decided to approve the sale instead.
Clearly many were aware that due to Chugach’s fiscal situation, Chugach would inevitably need rate increases in order to purchase ML&P. By utilizing Covid as an excuse is Chugach utilizing the adage ‘never let a crisis go to waste’?
Which all brings us back to Chugach’s July 1 filing, where it claimed Covid and energy efficiencies are responsible for their ‘margin performance’. Clearly this is not the whole story.
Is Chugach Electric being honest with all of us? Are they not aware of their 13% equity rating since closing on the sale of ML&P as documented by the RCA? Again, this was discussed numerous times during the 14-month process which, by the way, was pre-Covid.
Where does this leave the Chugach Electric ratepayers? As members of a ‘membership owned cooperative,’ perhaps everyone should ask a few questions. A good place to start would be for the member owners to ask both Chugach and the RCA, in the spirit of fiscal transparency, for the release of an itemized listing of all vendors and costs incurred by Chugach concerning the purchase of ML&P. This should include a copy of former Anchorage Mayor Mark Begich’s contract concerning the sale of ML&P to Chugach Electric. He was the one who brokered the deal, after all.
Since the start in 2017 of this advertised $1,000,000,000.00 sale of ML&P, the truth about this whole mess is beginning to emerge. I encourage all to review the attached 152-page RCA decision allowing the sale of ML&P to Chugach Electric for further perspective on Chugach’s current request.
The Regulatory Commission’s Mission Statement mandates that they are to assure viable utility and pipeline service is provided at just and reasonable rates to consumers in Alaska. For the RCA to have approved the sale of ML&P to an entity that will result in a 13% equity rating is neither just or reasonable.
We should be asking if the RCA is assuring just and reasonable rates because of their actions and decisions in Dockets U-19-020, U-19-021 and U-18-102.
These Dockets, dealing with the sale of ML&P, were decided by a three Commissioner seating rather than the full body. Why the decision to approve the sale was made, only those three know. Chugach’s current request is being held before all five currently seated Commissioners.
With the final RCA decision on this due no later than July 29, 2022 this will certainly be an interesting Docket to follow.
Bob Maier is an Anchorage utility ratepayer.