RCA green-lights rate hike

Posted: Sunday, July 18, 2010

Juneau power bills are set to soar following Friday's approval by the Regulatory Commission of Alaska of the full rate increase request sought by Alaska Electric Light & Power.

Bills with the new, higher rates will begin going out Monday, said Gayle Wood, spokeswoman for the Juneau utility.

That means Juneau residents have already been paying the higher rate since June 19.

"We know that no one wants to pay more for electricity," Wood said, "However, this interim rate increase helps to bring our rates more in line with the true cost of providing service to our customers."

AEL&P had been requesting an "interim and refundable" rate increase of 18.5 percent while it awaits an RCA decision on its permanent rate increase demand of 22.1 percent. A final decision won't be made for a year.

"If the RCA later approves permanent rates that are lower than the interim rates, the difference will be repaid to our customers with interest," Wood said.

Residents, small businesses and governments will now be paying an additional 20 percent on energy and demand charges. The base rate remains unchanged, meaning the average bills will go up a little less than the rate increase.

"I'm not surprised, but I'm kind of disappointed," said Bill Burk, with the Juneau People's Power Project, a group opposing the rate increase.

The new increase comes after the RCA had earlier issued an unusual rejection of AEL&P's request for in interim rate increase, saying the company had not adequately justified the increase.

Friday's order said that AEL&P had since provided data supporting the request, but noted that the threshold to win an interim increase was very low.

The RCA noted that all that AEL&P had to show was "that its request is not frivolous or obviously without merit." That means that interim increases are almost invariably granted.

"The longterm rate still has to be challenged," Burk said.

The RCA order indicated that AEL&P may still find it difficult to persuade the commissioners it needs such a large increase.

An increase of the amount AEL&P sought needs "substantially more evidence than AEL&P provided" in its request, the order said.

Many of the commissioners' questions revolved around the Lake Dorothy Hydroelectric Project, which AEL&P cited as one of the reasons for its need for additional revenue.

Commissioners said they were still concerned about the project, and questioned whether it could be considered to have begun commercial operations last August as the company is still struggling to control seepage from the dam and may have been built with inadequate subsurface investigation.

The commissioners had earlier invited the Attorney General's Regulatory Affairs and Public Advocacy staff to intervene in the case to represent Juneau ratepayers. The A.G.'s office did not do so, which commissioners said disappointed them.

"Participation by the Attorney General would have been helpful," the order said.

Assistant Attorney General Daniel O'Tierney did not return calls from the Empire, but Burk said he'd been in contact with the office and he still expected the attorney general to become involved.

"From what we heard, they were waiting to see what the decision was with the interim and refundable rates before getting involved," Burk said.

Wood said AEL&P knew it had more work to do to convince the RCA that the permanent rate increase was necessary.

"We look forward to working with the RCA as the rate case process continues," Wood said.

The RCA's Friday order was signed by all the commissioners but Kate Giard, who did not participate. One commissioner, Paul Lisankie of Juneau, issued a concurring opinion in which he approved of the interim increase but took exception to public comments AEL&P made after the earlier denial in which they said it was a "typical" increase that should have been improved.

"I find the implication that its filing was nothing more than a 'typical' request troubling," Lisankie wrote.

He said AEL&P's own presentation of the complicated Lake Dorothy expansion project showed the situation to be different than what the company said.

Woods Friday seemed to agree when she acknowledged the broad scope of the rate increase request.

"This is one of the most complex rate cases AEL&P has ever filed and we are prepared for a thoughtful and rigorous review," Wood said.

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

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