Pelican avoids hefty increase in utility rates

11.2 percent hike far less than original Kake Tribal proposals up to 60 percent

Posted: Sunday, July 23, 2006

Last year, residents of Pelican balked at a Kake Tribal Corp. utility bid to raise their electric rates by more than 60 percent.

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At the same time, Kake Tribal proposed a 69 percent reduction in electric rates for then-defunct Pelican Seafoods Inc.

"Why should we be subsidizing them?" asked Cheryl Young, a 27-year resident of Pelican.

Kake Tribal Corp., based in Kake, owns Pelican Seafoods.

The utility rate hike/reduction didn't sit well with the state of Alaska either.

The Regulatory Commission of Alaska ordered a suspension of Kake Tribal's proposed tariff revision last May and the state attorney general intervened.

"We looked at their stuff. We said, 'We've got a lot of problems,'" said Daniel Patrick O'Tierney, chief assistant attorney general for the Department of Law's regulatory affairs and public advocacy division.

"To offer an affiliate (Pelican Seafoods) a sweeter deal, you have to cost-justify it ... . In our view they couldn't do it," O'Tierney explained.

The Kake Tribal rate case was finally resolved this summer, the same month that Pelican Seafoods reopened after a two-year hiatus.

Residents won't get hit by a 55 to 60 percent electric rate increase, after all.

Kake Tribal will only be able to charge an additional 11.2 percent on Pelican's electric bills. The rate increase will be applied across the board to all customers, including the seafood plant.

"It's a small step in the right direction," said Martha Hewlett, manager of the Kake Tribal utility, which is also known as the Pelican Utility District.

Hewlett said everyone in town will get a 1 cent per kilowatt hour increase on their utility bill.

She said the utility will make enough revenue to consistently run and pay its employees, under the new rate.

"I feel good about it," said Pelican Mayor Patricia Phillips.

Kake Tribal Corp. officials did not return phone calls by press time.

Previously, Kake Tribal attempted to justify the special rate for Pelican Seafoods to the state, saying the plant could not afford its utility bills, according to case filings.

Kake Tribal further claimed it wouldn't be able to "economically provide electricity in the future without continuing its sales" to Pelican Seafoods, according to the filings.

The rate case was settled June 7 when the regulatory commission accepted an agreement between Kake Tribal and the state attorney general.

The tariff filing is still subject to final commission approval, said Grace Salazar, chief of the commission's consumer protection and information division.

The announcement was put on the state's Web site July 12, but many in Pelican did not know about it until contacted by a reporter last week.

"I think we were effective in our comments to the commission," Phillips said.

"You want the lowest possible rate for consumers, but at a level that the utility can remain healthy," O'Tierney explained.

The problem for Kake Tribal: The utility is "not in good shape," O'Tierney said.

One of the many stipulations of the rate case settlement is that Kake Tribal may not claim any dividends or transfer cash, assets or utility service to its affiliates without receiving compensation at the approved tariff rate.

Kake Tribal also must establish proper account keeping and a capital improvement plan, according to the settlement.

The Kake Tribal utility was acquired by the Kake village corporation in 2002. Prior to that, it was an unregulated Alaska Native utility.

• Elizabeth Bluemink can be reached at elizabeth.bluemink@juneauempire.com.



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