Costs to fall for some Chugach Electric customers, rise for others after regulators decide rate case

Chugach Electric customers will soon see changes to their electric rates. Some customers will pay less, and others will pay more.

Also, Chugach Electric Association customers should soon receive a one-time refund on their electric bills, after state regulators decided a major case that will unify electric rates across the Anchorage region, the utility said in a statement on Monday.

The refund, and the rate changes, stem from Chugach Electric’s 2020 purchase of Municipal Light & Power, the municipal utility, which created one service area across Anchorage and beyond.

As part of that transaction, the Regulatory Commission of Alaska required that Chugach Electric file a base-rate adjustment last year to align rates.

The commission issued an 89-page decision on the rate case on Sept. 25, leading to the utility’s compliance filing late last month addressing the new rates. The refund plan and rate changes are subject to approval from the regulatory agency.

One group that intervened in the case has asked the agency to reconsider its decision, amid concerns that Chugach Electric’s rates don’t do enough to conserve the natural gas that’s running short in Cook Inlet.

The rate changes

The final base rates are expected to be implemented on Dec. 1, the utility said. Different customer classes will see different impacts, depending on where they’re located, and if they are a residential customer, small-commercial customer or large-commercial customer, the utility said.

Generally, Chugach Electric customers who were previously with Anchorage Municipal Light & Power will see a rate decrease in most cases, the utility said.

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Those residential customers with a bill of $127 will see a decrease of about $10.50, an 8.3% savings, according to the utility’s online calculator.

That’s based on typical residential demand of 525 kilowatt hours monthly.

Generally, legacy customers of Chugach Electric, known as the utility’s south district, will see an increase to their bills, the utility said.

Those customers will see a bill of about $128.50 increase by more than $5, rising 4.1%, according to the calculator.

Before the rate case was filed, the municipal utility’s legacy rates were higher than Chugach Electric’s legacy rates, leading to the differing rate changes.

“Chugach’s filing had proposed a rate mitigation plan to the RCA to avoid the unequal effects on different rate classes, but the RCA rejected that plan,” Chugach Electric said in the statement. Instead, the regulatory agency opted for immediate, unified rates, the utility said.

The Regulatory Commission of Alaska has also previously ordered that Chugach Electric legacy customers compensate Municipal Light & Power legacy customers for the municipal utility’s original investment in the Beluga River Unit, said Chugach Electric spokeswoman Julie Hasquet in an interview on Monday. The municipal utility owned a large stake in the natural gas field in Cook Inlet before the acquisition.

The utility had asked the regulatory agency in a filing early this year to reconsider the payment for the Beluga River Unit to make it more equitable for Chugach Electric legacy customers, Hasquet said.

The agency denied the request, she said.

The acquisition of the municipal utility has saved over $120 million, leading to overall lower rates, Chugach Electric said in the statement.

The regulatory commission also accepted new rate structures in its decision, including a time-of-use pilot program that will be designed to incentivize electric use at lower rates during times of low overall demand on the system, from 9 p.m. to 9 a.m., the utility said.

That’s expected to be available in early 2026, the utility said.

Time-of-use rates could save natural gas by allowing more efficient power generation, Hasquet said.

“It’s basically designed to get people to do some laundry or wash dishes after 9 p.m.,” Hasquet said.

How the refund works

Chugach Electric expects the refund to appear on bills in January.

The refund will go to all Chugach members, more than 91,000 customers, Hasquet said.

The refund comes about because last year, the regulatory commission had accepted Chugach’s request for an interim, refundable base rate increase of 5.2%. Those rates went into effect in September 2023.

But in its decision, the RCA approved a lower permanent final rate of 4.3%.

Chugach Electric will refund the difference, the utility said. Members will see it as a one-time bill credit.

In total, Chugach Electric will refund about $3.1 million to its members, the utility said.

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The utility on Monday did not immediately provide a refund amount for a typical residential customer.

The utility said that before the interim rate increase last year, the base rates of former Municipal Light & Power customers had not been adjusted since 2017. The base rates of Chugach Electric’s original customers had not been adjusted since 2020.

Meanwhile, inflation has added to costs over the last four years, the utility said. Since the first half of 2020, cumulative inflation for urban Alaska rose about 17.5%, it said.

Group asserts gas crisis ignored

The Renewable Energy Alaska Project has filed a request that the regulatory agency reconsider its order in the rate case.

The group had intervened in the rate case in hope that the utility would establish a rate structure designed to reduce demand for natural gas from Cook Inlet. The group’s proposal called for lower rates for customers who consumed less electricity.

With Southcentral Alaska facing a looming shortage of gas from Cook Inlet, the group has said the rate case is a critical opportunity to establish rates that conserve natural gas.

The group’s filing said the regulatory agency mischaracterized their arguments and failed to consider applicable law, among other deficiencies.

“Crucially, the Commission ignores the looming Cook Inlet gas crisis and its statutory duty to promote conservation,” the group said in the filing.

Correction: An earlier version of this article incorrectly said the time-of-use pilot program would be available early next year. It is expected to be available in early 2026.