Legislature helps city with power refinance approval

Posted: Thursday, April 10, 2008

Juneau may get a chance to save some money on its power bills, with legislative approval of a bill that would assist with refinancing of the Snettisham Hydroelectric project.

Alaska Electric Light & Power pays the cost of paying off $82 million in bonds used to purchase Snettisham from a federal energy authority and upgrade it, but the bonds were issued by the Alaska Industrial Development and Export Authority.

Those costs are then passed through to Juneau power users, who will reap the benefits of refinancing, said members of the Juneau legislative delegation.

The bill was supported by the Juneau utility because it would save its customers money, AEL&P President Tim McLeod said.

"It's good news to AEL&P only that we pass on a lower cost to our customers," he said.

Sen. Kim Elton, D-Juneau, introduced Senate Bill 255, giving the authority new powers to refinance the bonds, which he said would likely come with cost savings.

"Recent trends in the financial markets suggest the debt can be refunded at significantly lower interest rates than the current debt," Elton said.

The bill passed the Senate unanimously in February and the House of Representatives on Tuesday, though that action won't be official until a final vote expected today.

Rep. Beth Kerttula, D-Juneau, described the bill as "something that actually helps citizens."

Snettisham provides about 80 percent of Juneau's power, according to AEL&P. It was completed in 1973 by the federal Alaska Power Authority and sold to the state industrial authority in 1998, McLeod said.

Current law allows refinancing, but needs explicit legislative approval to include in the refinancing the cost of paying off the old bonds early and the fees that are part of the new bond issuance.

McLeod said AEL&P will be watching bond markets for a good time to refinance, but expects it to happen early in the year.

"This bill would give us a little more flexibility, and it is more likely to happen under this condition than it would have been previously," McLeod said.

Juneau's electric rate payers will pocket the savings, which Elton estimated could be $400,000 per year.

• Contact reporter Pat Forgey at 586-4816 or e-mail patrick.forgey@juneauempire.com.

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