Last year, Anchorage’s main electric utility, Chugach Electric Association, sought regulatory approval to raise its rates by 5.5%. In response, renewable energy advocates offered an alternative suggestion: Could heavy residential electricity users be charged higher rates per kilowatt to encourage conservation of Alaska’s natural gas, which is in dwindling supply?
Last week, the Regulatory Commission of Alaska ruled on Chugach Electric’s broader request. However, the utility is still reviewing the detailed, 89-page decision to determine its full impact.
For advocates like Chris Rose, executive director of the Renewable Energy Alaska Project (REAP), the takeaway was clear: the commission made only a brief reference to their conservation proposal and, in their view, failed to address a state law requiring that electricity rates promote the conservation of resources used to generate power.
“We don’t see any findings about how that was considered. And we’re in a natural gas crisis,” Rose said, adding that while they are still reviewing the order, it appears that a critical issue was overlooked.
REAP, represented by environmental law firm Earthjustice, participated in the rate case. Rose and his legal team are currently exploring their options, which could include requesting the commission to reconsider its ruling or appealing the decision in court.
The commission, via spokesman Steven Jones, declined to comment, citing the potential for an appeal.
Chugach Electric is also evaluating the commission’s order. “We will communicate with our members once we are clear on what it means for them,” said utility spokeswoman Julie Hasquet.
While the commission has not specified how the ruling will impact the proposed 5.5% rate increase, the order does contain key decisions. One notable outcome is the rejection of Chugach’s request to increase its profit margin, calculated using a financial benchmark called “times interest earned ratio” (TIER). The utility sought to raise its TIER from 1.55 to 1.75, which the commission said would have led to an additional $7.7 million in rate increases. However, the commission concluded that the current TIER of 1.55 was sufficient for Chugach to maintain its financial stability and secure loans at reasonable rates.
The commission also turned down Chugach’s request to charge other utilities for transmitting power across lines it acquired when it purchased Anchorage’s city-owned utility in 2020. The city utility had not charged these fees previously, and the commission ruled there was no evidence that Chugach bought the city’s assets for the benefit of those other utilities, determining they should not bear additional costs under its rate-setting guidelines.
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