The Alaska Power Company diesel plant in Haines. About 80% of Haines and Skagway’s power comes from hydro in Skagway. Lex Treinen photo.

Electricity customers in Haines, Skagway and some Interior Alaska communities will see their electricity rates jump 15% beginning Oct. 1 after the state agency greenlit Alaska Power Company’s proposed interim rate.

The action comes despite about 100 public comments – nearly unanimously opposed to the rate hike – from customers and officials in affected regions. And it sets up the possibility of more public input if Skagway and perhaps Haines are allowed in on discussions by the Regulatory Commission of Alaska about the increase.

Haines Borough manager Annette Kreitzer said the decision fell short of the outright denial of a rate increase she was hoping for.

“It didn’t seem like that was in the cards because of the argument AP&T had made,” she said. “The fact that they’re at least allowing Skagway and others to intervene is a very good outcome.”

The Alaska Public Interest Research Group, an Anchorage-based consumer advocacy organization, blasted the move, saying it was part of a recent pattern of neglect by the agency.

“This is the second case this year of a community being ambushed by an unprecedented spike in their energy costs,” wrote Veri di Suvero, AKPIRG’s director, in an email to CVN, referring to a case last year in Aniak where electric prices shot up 400% without public notice by RCA.

They compared the public reaction to that of a recent smaller increase in the Anchorage area by Chugach Electric, which garnered 87 comments, despite affecting a larger population.

“It’s a pretty stunning number, and a clear message that consumers are interested and demanding a clear course of action: say no to the increase,” di Suvero wrote.

Alaska Power & Telephone, which owns APC did not respond to multiple phone calls and email requests for comment, and Steven Jones, a spokesperson for the RCA, said he couldn’t comment on the reasoning for the RCA’s decision because he wasn’t part of it. The commission is made of five commissioners appointed by the governor and confirmed by the legislature. Jones said the commissioners weren’t available to comment on the decision because of ethics rules.

The decision could delay a decision on a proposed permanent 25% increase to as late as March of 2024, but Jones said action could come before that. The decision, released on the RCA website, set up a rehearing of the issue on Oct. 31 to decide the “reasonableness and propriety of the filing,” though Jones said he wasn’t privy to what exactly would be discussed and what effect the decision would have.

Alaska State Sen. Jesse Kiehl, who represents Haines, Skagway, and Juneau, said the approval of the interim increase suggests to him that RCA staff “probably thinks some rate increase is justified” but had concerns about the amount APC requested.

He said that the data-heavy nature of rate increases sometimes means utilities delay asking for them, resulting in sticker shocks for consumers when they do come. The last time APC asked for an increase was about ten years ago. Still, Kiehl said he had concerns about the size of the increase, which he describe as “atypical.”

The decision said that Alaska Power Company’s proposed increase “presents a number of issues that require further investigation,” including its assertion of a $3.6 million revenue deficiency last year, and its proposal to create a new utility entity in Gustavus. It notes that the interim 15% increase could be reimbursed to customers if the RCA ultimately decides it wasn’t warranted, but it’s not clear if that is a likely scenario, Jones said.

Skagway submitted an official complaint in order to be a party to future conversations, and Kreitzer said she would be asking the Haines assembly if it wants to join.

APC’s original proposal drew outcry after residents noted it hadn’t been advertised in local media. The RCA printed ads in newspapers in Juneau and the Kenai Peninsula, which aren’t served by APC.

Kiehl said he would be talking to current commissioners of the RCA about the way the rate increases were advertised. He also said he had a larger concern about the profit margin of up to 13% the RCA allows in public utilities, which Kiehl said is higher than other states.

“Utilities gotta make a profit – we should not choke that off – but that is more than the average return on the S&P 500 in the last 10 years,” he said.

Di Suvero, with AKPIRG, said the episode is worrying for consumers who think the RCA is looking out for their interests.

“The RCA exists to protect consumers relying on these utilities from unjust and unreasonable rate increases, and now is the time for them to step up and fulfill their duties. In this case, that means denying an astronomical rate increase from a utility putting its profits over its consumers,” they wrote.