RCA denies interim rate hike

Posted: Friday, June 18, 2010

The Regulatory Commission of Alaska denied Alaska Electric Light & Power's request for an immediate interim rate increase and expressed skepticism of both its interim and permanent increases.

The city's privately owned utility sought an interim 18.5 percent and permanent 22.1 percent increase to power bills.

The RCA, however, said it needs more information to be convinced that the increase is needed, noting that the company had made a profit in 2009, and was requesting an increase beyond that.

The commission is still considering the permanent increase, which it has 14 months to decide.

The interim could have gone into effect on bills going out today, charging the higher rates for the last 30 days of power usage.

"Hallelujah!," exclaimed Cheryl Moralez, with the Juneau People's Power Project, a grass-roots organization opposed to the increase.

AEL&P executives were unavailable for comment Thursday evening.

At a city meeting prior to the order, AEL&P's Scott Willis said the staff was "on pins and needles" waiting for the order.

Among the costs AEL&P used to justify the higher rates was the construction of the Lake Dorothy Hydroelectric Project, which added 20 percent to the company's generation capacity.

"We are also unconvinced that it is appropriate to allow recovery of costs of new major plant through interim rates before receiving evidence that the plant was required to provide reasonably reliable utility service," the commission said.

The commission said that AEL&P failed to provide adequate justification for the rate increases it was seeking, but did not rule out the possibility that it could win approval later.

"Further, we are concerned with several elements of AEL&P's filing," the commission's order said.

The company had argued in favor of the increase saying that that its bond covenants, requirements in the money it borrowed to build Lake Dorothy, could not be met without the rate increase.

The RCA's order noted that the company's filings failed to provide evidence of what the covenants required.

The utility also failed to adequately address potential "rate shock" among customers resulting from a 20 percent or higher rate increase, the RCA said

The order acknowledged that some interim rate relief may be warranted, and scheduled a hearing for the company to address that. It also invited the Attorney General's Office to participate in the process to ensure the public interest is well represented.

"I was ecstatic, it made my evening," said Bill Burk, another member of the Juneau People's Power Project.

"Truthfully, I didn't think we had a chance. RCA has a record of going with the utilities, even though they're supposed to be in the best interest of the public," he said.

The RCA set a July 6 hearing for AEL&P to further explain its request. A pre-hearing will be held June 23.

Contact reporter Pat Forgey at 523-2250.

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