Multiple groups hope to sway regulators as Chugach Electric seeks 6% rate increase

A throng of parties have joined an electric rate case filed that could influence power costs for years in Anchorage and much of Alaska.

The five-member Regulatory Commission of Alaska earlier this month allowed a dozen entities to intervene in the effort by Chugach Electric Association to raise rates by 5.8%, or close to $7 for a bill of about $120 a month. The large number of intervenors prompted a dissent from one commissioner, who argued it will delay a decision.

The case is complicated and will have varying effects on different groups, in part because Chugach Electric must combine separate rate classes from its original region with the north Anchorage area it acquired with the purchase of Municipal Light & Power in 2020.

A driving force for some of the groups are concerns about the future of power generation along the Alaska Railbelt, between Homer and Fairbanks, as the natural gas that primarily fuels electric production is running short.

“This is an incredibly important rate case because the Cook Inlet region faces a natural gas crisis and the relatively inexpensive gas we enjoyed for decades is going away,” said Chris Rose, executive director of the Renewable Energy Alaska Project.

[Earlier coverage: As Cook Inlet gas shortage looms, Alaska’s biggest utilities assess their options — and none are cheap]

The renewable energy group is intervening in the case, a first for the group. It wants to promote the creation of a rate structure that reduces demand for the natural gas from Cook Inlet. That will provide more time to develop renewable energy before 2027, when gas is expected to begin running short, leading to costly imports of liquefied natural gas, Rose said.

“Ensuring that the largest utility in the state designs its rates to conserve that natural gas is critical,” he said. “It will increase the amount of time we have to use the local gas and give us more time to backfill with renewable energy that is cheaper than natural gas but takes a little bit of time to permit and build.”

Also intervening for the first time in a Chugach Electric rate case are the American Association of Retired Persons Alaska, as well as Ethan Schutt, chair of the Alaska Permanent Fund Corp. board of trustees who said he’s joining as an Anchorage residential ratepayer with experience in finance and energy development.

Utilities along the Railbelt have also joined the case, along with large ratepayers such as the University of Alaska Anchorage, expressing concern about its ability to afford the proposed rates.

Chugach Electric filed for the rate increase in June, saying a typical rate case could last 15 months for the commission to reach a final decision.

A portion of the rate increase went into effect in September. The utility expects the remainder to go into effect in September 2024. The commission could accept different rates, which could lead to refunds if they’re smaller than Chugach anticipated.

Chugach Electric has not opposed any of the requests for intervention. The utility declined a request for an interview.

“Now that the case is underway and there are intervenors, our only comments will be in filings or at hearings,” Julie Hasquet, a Chugach Electric spokeswoman, said in an email.

The utility said in a September newsletter that the base rates of Municipal Light & Power legacy customers haven’t been adjusted since 2017, while the base rates of Chugach Electric’s original customers haven’t been adjusted since 2020.

“As a comparison, inflation in Southcentral Alaska has risen by 18% since 2017 and 14% since 2020,” the statement said. “Without the realized savings from the acquisition of ML&P, the projected increase would be in double digits.”

One member of the regulatory commission didn’t support the adding so many intervenors, as first reported by the Northern Journal.

Robert Doyle, appointed by Gov. Mike Dunleavy in 2022, wrote in dissent that “the magnitude of the parties” will cause delays, burden the commission’s resources, and be detrimental to the record.

He took particular aim at Schutt and the renewable energy group.

“In addition, at least two petitions have stated purposes that will broaden the issues and delay the proceedings and therefore should have been denied (Schutt and REAP),” he wrote, naming the parties in parentheses.

Schutt, a former executive for Cook Inlet Region Inc., worked on oil and gas issues and led development of the Fire Island wind farm that sells power to Chugach Electric. He said he’s concerned that Chugach Electric’s practices are costing ratepayers, among other issues.

Schutt asserts that expenses associated with the utility’s Beluga Power Plant in Tyonek, which he says is unused, are leading to higher expenses for ratepayers, according to one part of his filing.

Shutting down the Beluga Power Plant alone could save millions of dollars, which would significantly reduce the rate increase the electric utility needs, he said in an interview.

“Let’s be fair to micro-businesses, people living on fixed incomes, the working poor, and others that can’t afford to have their electric bill go up,” he said.

Other intervening parties include the Golden Valley Electric Association in Fairbanks and Homer Electric Association. They expressed concerns that they’ll have to pay Chugach higher rates associated with power transmission, according to the regulatory commission’s decision to allow intervenors. The power company in Seward is concerned about higher costs related to buying wholesale power from Chugach.

The University of Alaska Anchorage was allowed to intervene after saying it operates a variety of properties that will be impacted by higher rates.

“UAA states that as a public institution with a budget that is subject to annual appropriations it does not have budget flexibility to accommodate the large rate increase that Chugach proposes,” the commission said in its order. “UAA states that it will be subject to a higher cost increase than most other customers, causing a detrimental impact to the public institution.”

JL Properties, which owns much of the city’s commercial office space as well as multi-family housing, is a large ratepayer that has intervened out of concern that the proposed rates will impact its array of properties.

“JL Properties states that it has an interest in determining if any of Chugach’s stated economic benefits from acquiring ML&P have been or will be realized,” the commission’s order said.

The AARP has intervened in rate cases outside Alaska, but not in Alaska until now, said Marge Stoneking, advocacy director for the group.

She said the group is concerned that the Chugach Electric rate increases will disproportionately affect residential ratepayers, particularly people who are on fixed and low incomes and use relatively little electricity, such as some of the group’s 30,000 Anchorage-area members.

The group also wants to be involved because the rate will set a precedent that could affect other rate increases that will likely occur as natural gas is imported, she said.

“We thought this is potentially precedent setting for fair rates for residential customers because of the situation with the contracted natural gas projected to run out in the near years and therefore leading potentially to additional rate increases,” Stoneking said. “So we wanted to make sure that residential customers were fairly treated compared to other customer classes as a precedent going forward and knowing that there would be intervenors on behalf of the other customer classes.”

Chugach Electric and the intervening parties in the case have most recently argued about a schedule for the case that next year will include more testimony and a hearing perhaps in early summer.