On a 2-1 vote, the Regulatory Commission of Alaska last week approved an 11.18 percent electric rate increase for more than 7,000 Alaska Power Company customers, including 1,450 in Haines.
Users should see their rates increase by February, said Rod Crum, chief of the RCA’s consumer protection and information section.
Alaska Power Company, the power subsidiary of Alaska Power and Telephone, filed for an 18 percent across-the-board permanent increase one year ago. The utility said it experienced a $2 million revenue shortfall in 2012, citing rising costs and stagnant demand.
Since APC’s request, the Haines Borough and several other communities have been battling the proposed increase. Dozens of residents from Haines, Skagway, Tok, Allakaket, Bettles, Craig, Slana and other Interior communities testified against the increase at an April hearing, many claiming they couldn’t afford it.
Last month, however, the communities agreed to accept an 11.18 percent increase rather than risk APC being awarded a higher amount by the RCA.
Borough assembly members have refused to reveal why they voted to accept the settlement, claiming confidential information steered their decision.
The 11.18 percent increase isn’t retroactive, and 6 percent of it is already in effect, as the RCA approved an interim rate increase in January, said Patrick Munson, the attorney who represented the borough.
The increase affects two portions of a customer’s power bill: the electric rate and the base customer charge. The 6 percent increase raised the rate per kilowatt hour from 13.06 cents to 13.84 cents. The additional 5.18 percent, to get the increase up to 11.18 percent, increases it again from 13.84 cents to 14.52 cents per kilowatt hour.
It also raises the monthly customer charge from $13.21 to $13.85.
The 6 percent increase added about $8 to the monthly energy bill of a four-person family consuming roughly 1,000 kilowatt hours. The additional increase will raise it roughly another $7 per month.
RCA commissioners Norman Rokeberg and Janis Wilson voted in favor of the settlement. Paul Lisankie dissented. Commissioners T.W. Patch and Robert Pickett didn’t participate.
Former Mayor Stephanie Scott, who closely followed the rate case and opposed the assembly’s acceptance of the settlement without public input, said she didn’t understand how such an important issue could be decided by two commissioners.
“I was totally surprised it was able to be decided by two people. That seems awkward to me and incomplete,” Scott said. Scott said she will be writing to Gov. Bill Walker about the process.
“I still don’t feel like we really had our day in court,” Scott said. “I feel like we have been ill-served in this whole process.”
Though the RCA’s decision can be appealed within 30 days of the settlement, which was accepted by the RCA Dec. 11, Scott said she has grown tired of fighting what appears to be an uphill battle without support.
“I don’t want to be Don Quixote tilting at windmills,” Scott said. “Unless others want to get on the bandwagon, I have (other) stuff to do.”
According to the settlement, APC must file a cost-of-service study within the next year, which will provide the RCA with better numbers for future rate cases involving APC.
“It’s to get better data for the next time for their future proceedings,” said borough attorney Munson. “We have a lot of data on what they have done and their costs, but all of that can be updated further.”
APC also must incorporate its September purchase of Gustavus Electric Co. into its cost-of-service study. The purchase will likely lead APC to revise its rates again next year, Munson said.
“What the commission is going to require them to do is show exactly how much infrastructure they received, how much it costs them to operate, and how all of those costs weigh against the revenue,” Munson said.
Whether that will cause APC to seek another rate increase to pay for the purchase and related expenses is unknown, as it could also increase the customer base and raise revenues for the utility.
“We’re enlarging both pies: the services that are being provided and the customer base that is paying for it,” Munson said.
Former Mayor Scott said she was leery when she learned APC would likely be revising its rate structure again next year. “That makes me a little bit nervous,” Scott said.
Assembly member George Campbell said he has requested manager David Sosa publicly release additional information on the 11.18 percent settlement agreement that previously was available only to assembly members during executive session.
“I hope that our citizens recognize that we did not act under a cloak of secrecy out of a desire to be secret, but we acted under a cloak of secrecy, I guess in effect, because we were in a legal battle in which knowledge of some of the information we had could possibly have harmed the borough had this gone any further,” Campbell said.