Anchorage and Chugach Electric release terms for $1 billion sale of ML&P

The sale of Anchorage's city-owned electric utility, Municipal Light & Power, hit a major milestone Friday when the city of Anchorage and the buyer, Chugach Electric Association, released the outcome of negotiations on the $1 billion deal.

The final agreement comes five months after voters authorized the sale in April. Since then, the city and Chugach Electric have been negotiating the nuances of the deal, said city attorney Rebecca Windt-Pearson. She called it "an enormously complicated transaction."

A draft terms sheet, released Friday, mostly follows the contours of what was proposed to voters in the spring, said Lee Thibert, the chief executive of Chugach Electric Association, a member-owned cooperative.

"From a customer perspective, the deal is still the same," Thibert said.

It brings the city one step closer to a sale that has been talked about for decades.

The final purchase price will come out to $1,009,600,000, according to the terms sheet. Portions of the money will be used to pay down ML&P's debt, replace lost taxes over time and fill the coffers of a city trust fund that can be used for general government.

One change in the financing of the original proposal is that Chugach Electric Association agreed to pay a little more up front in cash — about $768 million total, Thibert siad. He said that was aimed at making the deal more secure for bondholders.

[City, Chugach Electric promote Anchorage utility sale while trying to soothe concerns]

The city will also maintain its ownership stake in the Eklutna Hydroelectric Project, officials said. Chugach will buy power from the plant for the next three and a half decades. That will add up to between $48 million and $75 million, depending on whether Matanuska Electric Association chooses to buy out its stake in the plant.

In that case, if Chugach Electric doesn't make its payments, the city can sell the power to someone else, Thibert said.

The deal still says that no ML&P employees will be laid off, nor will base electricity rates go up as a result of the transaction.

Windt-Pearson told members of the city Assembly on Friday that the deal took so long to negotiate because it's "enormously complicated." But she said the city was happy with the progress, and wanted to make sure the public had time to review it.

Chugach Electric leaders expressed similar sentiments Tuesday.

"We've done our due diligence," Thibert said. "This is still a good deal for ratepayers, a good deal for taxpayers."

The deal is now heading to the Anchorage Assembly for approval. After that, the deal would still need to be cleared by the Regulatory Commission of Alaska, which regulates the state's public utilities.

Find the terms sheet and more information about the deal at PowerAnchorage.com.