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AARP questions Greens Creek deal

AEL&P making customers foot bill for project, group says

Posted: Tuesday, July 18, 2006

A deal by Alaska Electric Power and Light to extend electricity to the Greens Creek Mine on Admiralty Island is facing opposition from the nation's largest advocacy group for people 50 and older.

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AARP has filed with the Alaska Regulatory Commission to reconsider its order giving a go-ahead to the deal and last week filed an appeal in Juneau Superior Court.

AARP alleges Juneau customers are subsidizing the mine by footing a $400,000 bill for the project this summer, according to a news release from AARP spokeswoman Ann Secrest in Anchorage. Calls to Secrest's office were not returned Monday.

Tim McLeod, general manager for AEL&P in Juneau, said Monday he didn't want to comment on the litigation until he was sure of its status with the regulatory commission and the court. But he said he stands behind the agreement.

"We're very, very proud of this," he said. "It's going to be a great project."

When the utility sought to raise rates by an average of $5 - or 5.26 percent - per Juneau home last summer, its officials said revenues from the Greens Creek power sale actually would help it keep overall rates down. Without the sale, the request would have been for an 8 percent increase, they said.

When the plan to connect Greens Creek Mine with 9.5 miles of underwater cable was announced in July 2005, officials from the utilities and the mine said the 15-year agreement would make it possible for Greens Creek to purchase hydroelectric power. The mine has been powered by diesel generators.

In a filing with the commission in May by Virginia Rusch, an attorney for AARP in Alaska, the organization charges that the agreement is discriminatory because it provides a special rate for the mine.

"Because AEL&P predicts that it will supply all or most of the free power to (the mine) under the special contract in the months of July and August 2006, it is critical to address this issue promptly," Rusch wrote. "AEL&P customers whose rates should be decreased by the offset of that (mine) revenue will subsidize the construction costs of the facility that serves only (the mine)."

The document estimates that cost of the power would total more than $400,000 under the utility's rate structure.

The commission denied AARP's original motion for reconsideration on July 11.

"Since the early days of utility rate regulation, one of the fundamental roles of the regulation agency has been to assure that rates are just and reasonable and non-discriminatory," Rusch wrote.

In addition to supplying power to Greens Creek Mine, the agreement over the next few years aims to tie Juneau and the community of Hoonah on the same power grid. Hoonah is served by the Inside Passage Electric Cooperative. Such connections between communities were promoted last year by the Southeast Conference, an organization of area political and business leaders.

• Tony Carroll can be reached at tony.carroll@juneauempire.com.



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