WHAT THE RCA APPROVED IS NOT WHAT WE VOTED ON
By BOB MAIER
“The transaction as conceived by ML&P and Chugach was not straightforward.”
So states the Regulatory Commission of Alaska’s – 152-page decision released May 28 concerning the sale of Municipal Light and Power to Chugach Electric.
There are myriad issues addressed in the order, including Beluga River natural gas, creation of a tight power pool with Matanuska Electric, economic regulation of the Anchorage Water and Wastewater Utility, the Eklutna Power Project, creation of a new Municipal Utility Municipal Hydro Power, the portion of the billion dollar purchase price known as the acquisition premium, the promise of “No Increase of Base Rates,” the environmental remediation of the ML&P campus, the dividend restriction placed upon ML&P, the “Payment in Lieu of Taxes,” and the Municipal Utility Services Assessment.
The issue I will focus on is the solemn promise of “No Increase on Base Rates,” along with the up-coming rate increases as mandated by the RCA decision.
Prior to the April 03, 2018 Anchorage Municipal election, Chugach and ML&P were involved in an extensive advertising and educational campaign leading up to the vote on Proposition 10, which is the sale of ML&P to Chugach Electric.
Despite the ballot language and all of the public assurances, when Chugach filed their application with the RCA on April 1, 2019, Section IV titled “Approvals Requested” informs the RCA that the transaction cannot be completed unless the RCA authorizes in advance Chugach’s recovery of all costs of the transaction through future rates.
The RCA, recognizing the promise made in Proposition 10 and the full retreat from that promise made one year later in Chugach’s application, has taken the issue even further. On pages 106 and 107 of the decision the RCA states the following.
“No Increase in Base Rates. Base rates for existing ML&P and Chugach Electric ratepayers would not increase as a result of the transaction.” Proposition 10 includes the following 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.”
For the reasons discussed above, these prohibitions of base rate increases as a result of the transaction are inconsistent with our obligations and Chugach’s obligations under AS 42.05.
We are specifically mandated by AS 42.05.431(a) to ensure that Chugach’s rates are sufficient to meet its debt covenants.
We cannot allow Chugach to be subject to legal claims under Section 6.21(b) for specific performance of the requirements of Ordinance No. 2018-1(S) or Proposition 10, when such performance may put Chugach’s financial health at risk.
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.
The case has been made, indeed mandated, by the RCA that base rates must rise despite all of the promises and ballot language that no such thing would occur. These higher rates will be uniform from downtown Anchorage to Hope.
Ratepayers now need to be presented modeling showing what the average $100 per month electric bill will look like if this $1,000,000,000 sale is completed.
Chugach ratepayers need to be informed of the environmental liability risk they will be assuming by taking on the ML&P properties.
Issues not discussed in the RCA decision, such as the expansion of the CIRI Fire Island Wind Farm and the amount of the surcharge current ML&P ratepayers will be charged, must also be presented.
I began this piece with a list of the issues addressed in the RCA’s decision but have only discussed the solemn promise to not increase base rates. Each other issue carries with it an impact on the ratepayers and the taxpayers.
What the RCA approved is not what we voted on.
An explanation needs to be forthcoming from our elected officials as to just what is going on here.
And then another vote needs to be held on the current terms of the sale of ML&P to Chugach Electric. The voters need to take another look.
Bob Maier is an Anchorage utility ratepayer who has provided testimony to both the RCA and the Anchorage Assembly on the sale of ML&P.
Need to ask chugach where is actual $$ dollars coming from? I hear chugach is not the buyer they are using MLP funds to buy the utility.
Berkowitz and his bum allies are at it again. Lots of secrets and illegal maneuvers. Hope the citizenry knows how to get in there and state opposition.
Wait until the utility has to clean up the environmental mess over at the Beluga Power Plant! Who pays for that?
Feds. Who usually cleans up super fund sites?
The Feds have no money. The American taxpayer picks up the bill.
Chugach Electric will be taking on additional debt of a billion dollars. How will they service that debt without a rate increase?
What Bob calls the promise of “No Increase of Base Rates,” may mean just that. The price of a kilowatt-hour of electricity probably won’t increase.
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But… rate payers’ll need fine telescopes to see how high their fees, assessments, regulatory costs go.
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Should be fun to see what creative words our brand-new La Familia de la Electricidad use on electric bills to stiff customers for the Lineman’s Beer Fund or whatever else IBEW want…
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Won’t be fun for customers to realize they can’t do anything about it except go off the grid…
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The Regulatory Commission of Alaska’s gonna ride to ratepayers’ rescue and annoy the IBEW?
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Don’t get us wrong, Bob, we appreciate your effort. But absent evidence La Familia de la Electricidad violated federal law, one can hardly expect relief from Alaska’s activist-corrupted court system or a state commission seemingly unwilling, unable to fix the problem at the risk of annoying IBEW
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…which means we’ll probably end up having to watch tv by candlelight… oh well.
The problem at ML&P is that the employee contracts put in place by the city were never affordable or is line with any private enterprise. The only way the city could afford to pay for such exorbitant contracts was to raise the rates on AWWU ratepayers in order to play some stupid word game so that AWWU could write a check to ML&P every month. The lies told to allow Chugach Electric, the other Utility run for the benefit of IBEW instead of the benefit of the ratepayer, were numerous and easily debunked. The fact is, it is cheaper to run a diesel generator to supply power to a house, if you use waste heat recovery, than it is to buy electricity from the utility and gas from Enstar.
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