AEL&P surprised, disappointed by rate increase denial

Posted: Wednesday, June 23, 2010

Alaska Electric Light & Power officials were surprised, and maybe even shocked, by the Regulatory Commission of Alaska’s denial of its interim rate increase, and skepticism expressed on the Juneau utility’s need for additional money.

“I don’t know how they reached the conclusion that they reached,” said Tim McLeod, president of AEL&P.

The utility, one of the few privately owned utilities in the state, had sought permission from the RCA for increases that would raise bills 18.5 percent on an interim basis, and 22.1 percent permanently.

The commission last week began reviewing the permanent increase, but did not grant any interim increase at all.

“We hadn’t recalled seeing this sort of thing before,” said Scott Willis, AEL&P’s power generation engineer.

“Usually they grant some sort of increase, rather than say ‘no, not at this time,’” he said.

RCA’s action was praised by some Juneau opponents of the rate increase request, who said they agreed with the commissioners who said AEL&P failed to adequately justify the increase.

McLeod said he believes AEL&P will eventually be able to justify the rate increase to the RCA’s satisfaction.

“I think it is just a matter of explaining the situation,” he said.

“They listed two or three concerns that they had” in the order, McLeod said. “I think it is just a matter of clarifying a few things.”

The rate increase is much needed by the utility, McLeod and Willis said.

Had the RCA granted the rate increase at last Thursday’s deadline for a decision, rates were slated to go up with bills going out Friday, the company said. Those bills would have covered the previous 30 days.

The denial of the interim rate increase was surprising, Willis said, but did not shut the door to the possibility of getting an interim increase in the near future.

“The order does say that it appears some interim rate increase is justified,” he said.

Willis said they may need to do more explanation of the financial data they provided the RCA.

“They may not have understood the way utility accounting goes,” Willis said.

It may have appeared to the RCA that AEL&P was making more money than it actually is, but those may be paper profits, he said.

“They didn’t understand that they actually have to look at the cash profits to see that our rates are not adequate,” Willis said.

McLeod said that even a short delay in the rate increase was very important to the company, and they were working to figure out what information the RCA’s financial analysts need.

“I think what it really came down to was they needed some clarification on some things,” McLeod said.

The RCA’s order last week set a public hearing for the commission to seek additional information from AEL&P on July 6. A pre-hearing conference will take place today.

The public can monitor the hearing and pre-hearing conference by teleconference at the Assembly chambers. Today’s hearing is scheduled to begin at 9 a.m. and is scheduled to last half an hour. The July 6 hearing is scheduled to begin at 9 a.m. and could go as long as 5 p.m.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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