AEL&P buyer will spike prices

In 2014, Alaska Electric Light &Power was bought by Avista. Now Avista is in the process of being bought by Hydro One, a Canadian company based in Ontario. Few of us know much about Hydro One or what might be in store for Juneau if the sale goes through. Here’s the result of some quick research.

 

Hydro One has dramatically increased the electric rates in Ontario since 2008. In fact, the rates have increased at a pace significantly faster than in the rest of Canada.

“Electricity prices in Ontario have increased dramatically since 2008 based on a variety of comparative measures. Ontario’s electricity prices have risen by 71 percent from 2008 to 2016, far outpacing electricity price growth in other provinces, income, and inflation. During this period, the average growth in electricity prices across Canada was 34 percent. Ontario’s electricity price change between 2015 and 2016 alone is also substantial: the province experienced a 15 percent increase in one year. This was two-and-a-half times greater than the national average of 6 percent during the same period.” (Fraser Institute Report July 2017. Executive Summary.)

At a meeting with Hydro One’s Canadian customers this month, one local business owner reported that his employees were going without lunch to pay their electric bills, according to Ronald Zajac of the Recorder and Times on Sept. 15, 2017. The Mayor of Edwardsburgh/Cardinal was quoted as saying, “It’s putting businesses out of business; it’s raising all kinds of problems on the residential side of things and we keep hearing about it again and again and again.”

Hydro One has shown that it’s not afraid of raising rates high and often, and Juneau ratepayers would be on the hook to help subsidize Hydro One’s Ontario rates.

According to a slide Hydro One showed to its investors (slide 14), AEL&P has the highest Return on Equity (ROE) at 12.88 percent and the highest equity percentage of all of Avista’s assets, making AEL&P the revenue and profit standout of the Avista portfolio. This means Juneau could be a cash cow for Hydro One. Many in Juneau do not realize how much AEL&P makes. In 2016, AEL&P had revenues over $46 million and had a Net Operating Income of over $15 million dollars. (Avista 2016 Annual Report, page 111) .

Hydro One is a high-profit utility that frequently raises consumers’ rates. This does not bode well for rate stability in Juneau’s future.

If this concerns you, file a comment with the Regulatory Commission of Alaska.

Go to https://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx and click on Matter U-17-085. Or call (907) 276-6222 for assistance. The deadline for comments is 5 p.m. on Oct. 12, 2017.


• Margo Waring is a resident of Juneau.


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