This week, the Regulatory Commission of Alaska approved a permanent rate increase for Alaska Electric Light &Power, the first for the utility since May 2010.
The approval was merely extending the interim rate increase of 3.86 percent that went into effect in November 2016, so Juneau residents’ electric rates will remain the same as they have for the past year.
From November-May general residential rates will continue to be $0.1240 per kilowatt hour, and from June-October those rates will continue to be $0.1020 per kilowatt hour. These are on top of a $9.22 baseline customer fee per month.
AEL&P has invested more than $50 million in infrastructure improvements since 2010, AEL&P Vice President and Director of Consumer Affairs Deb Driscoll said, with $22.5 million of that going to the backup generator currently located in Lemon Creek. This rate increase helps to recover costs from those improvements, which Driscoll said is fairly typical of utilities that request rate increases.
“Utilities don’t go in for a rate increase until they have to, unlike other businesses who can just adjust their rates every year,” Driscoll said. “It’s a long process, it’s a lot of work, it costs money. All of those things, we only go in when there’s an infrastructure upgrade.”
This increase request took 15 months for the RCA to work through, with the Regulatory Affairs and Public Advocacy (RAPA) section of the Department of Law involved in research and negotiation as well.
The initial request was for a permanent rate increase of 8.1 percent starting in December 2017, with a 3.86 percent interim increase going into effect in November 2016 and a 4.24 percent increase going into effect in December 2017. RCA did not approve the full rate increase, choosing only to extend the 3.86 percent increase permanently.
AEL&P’s owner, Avista Corp., is publicly traded, and being able to ensure investors a decent return on their investments in Avista/AEL&P is an important factor in rate increases, Driscoll explained. Both AEL&P and RAPA performed an evaluation of factors such as Juneau’s isolation, the size of the utility and the weather-related risks of the area in order to determine the estimated return on equity for investors down the line.
AEL&P experts felt that an 8.1 percent increase would be necessary given these factors, while RAPA experts felt that 3.86 percent was sufficient, leading to RCA’s ruling this week that the rate increase would remain at 3.86 percent.
• Contact reporter Alex McCarthy at 523-2271 or alex.mccarthy@juneauempire.com.
