Chugach Electric Association, the newly formed monopoly resulting from the merger of the two Anchorage electric utilities, is seeking approval from the Regulatory Commission of Alaska to raise its base rates.
The electric utility has proposed an increase of nearly 6% for the majority of its customers, encompassing areas that includes more than 40% of the state’s population: Anchorage, Girdwood, Whittier, Hope, and Tyonek on the western shore of Cook Inlet.
The rate hike would be implemented in two steps. Starting from Sept. 1 of this year, customers would see a 3.6% increase, followed by the remaining 2.3% increase in September 2024.
This move may disappoint voters who voted for the purchase of Municipal Light & Power by Chugach in 2018, and who were promised stable power bills after the merger on Oct. 30, 2020.
Chugach Electric, which paid $1 billion for ML&P, has cited several cost drivers, including inflation, supply chain disruptions, declining electricity sales, and increased investment by consumers in energy-saving devices, as reasons for the rate increase. It has also said this rate increase is just a normal result of the merger.
For an average monthly bill of $100, this would result in an additional cost of about $6. Chugach Electric last raised its base rates in May 2020, when it implemented a 1.1% increase, blaming the Covid pandemic for the need for revenue.
The new proposal, just 36 months from the last increase, comes as a blow to customers who were led to believe that the merger would bring about efficiencies that would keep costs stable.
The increase in power bills by 6% adds to the also quickly rising price of rentals in Anchorage. As of June 2023, the average rent for a 1-bedroom apartment in Anchorageis $1,350, 35% increase over the previous year. Rent.com says a 2-bedroom apartment in Anchorage averages over $1,900, a 54% increase over the year before.
The decision to increase rates will trigger a 30-day comment period, providing an opportunity for the public to voice their opinions to the Regulatory Commission of Alaska.