Alaska Power Company asks to raise electricity rates by 25%


September 14, 2023

APC's diesel power plant in Haines. The plant is used when hydropower from Skagway is insufficient. Lex Treinen photo.

Haines customers could face an up to 25% jump in their electricity bills if the state approves Alaska Power Company's bid to increase energy rates, and local officials say there was inadequate public notice about the proposal ahead of a Sept. 15 public comment deadline.

"This would impact every residential homeowner, and that is a big concern of mine," said borough manager Annette Kreitzer.

APC, a subsidiary of Alaska Power & Telephone, says inflation and the rising costs of fuel, property taxes and labor over the last few years have caused a revenue deficit of more than $3.6 million. It's asking the Regulatory Commission of Alaska to let it raise rates at an interim level by 15% on Oct. 1 as the RCA decides whether to approve a permanent 24.68% increase. The RCA could take more than a year to decide the permanent rate increase, and APC could reimburse customers if the RCA approves less than a 15% increase.

APC provides electricity to Haines, Skagway, and several other Interior and Southeast Alaska communities through its subsidiary Alaska Power Company. Most of Haines' energy comes from a hydropower plant in Skagway but the borough occasionally uses energy generated at the local diesel plant. Diesel prices surged around the world last year after Russia invaded Ukraine. They've since subsided, but remain well above historic averages. According to Darren Belisle, the operations manager for Alaska Power Company in Skagway, year-round the communities get about 80% of their power from hydro. Belisle said many other costs on things like transformers, poles, and wires had gone up substantially over the past few years.

"It's like any other business -- you go to the grocery store and you can see costs have gone up," he said.

Few people seemed aware of the proposed increase early this week. As of Monday afternoon, the RCA website showed no comments submitted through its online portal. By Wednesday, after an initial version of this story was published online, sixteen comments had been submitted, mostly from residents of Haines.

Craig city manager Brian Templin said the assembly would consider a comment at its Thursday meeting. John Rusyniak, from the Tok Chamber of Commerce, said he wasn't aware of the proposed change until contacted by CVN on Monday.

Kreitzer said she received notice of the rate hike by mail in late August, but was out of the office on vacation.

She said she started to read through the documentation on the RCA website on Friday and realized the magnitude of the increase.

"This looked like these one-page nondescript documents. When I opened it...I was just like, 'Oh my gosh,'" she said.

According to Steven Jones, a spokesperson for the RCA, the rate changes were published on the agency's website on Aug. 16, as well as in the Juneau Empire and in the Peninsula Clarion. Neither Juneau nor the Kenai Peninsula get power from AP&T, and the newspapers are not widely distributed in the area. The CVN became aware of the proposal after Kreitzer forwarded the notice.

Jones said the newspapers for advertising public notices are chosen based on market saturation. He said larger newspapers are generally used since they are more cost effective at reaching larger audiences, and advertising costs are paid for by utilities.

During the last proposed rate increase, APC did publish a notice in the CVN. When asked whether he was concerned advertising in the Clarion and Empire wouldn't reach local ratepayers, Jones said he was just relying on the commission's usual practices.

"I'm not the decision maker in terms of what newspapers get chosen," he said.

Rusyniak said the lack of communication was frustrating.

"They posted on the RCA website. That's not a common place for people to look," he said. "That's kinda not very good, is it?"

Kreitzer echoed that concern. She said she emailed the RCA on Monday asking for an extension of at least 20 days from the RCA and that she would be talking with other Southeast communities who are served by AP&T to see if they have concerns. The 25% increase would cost the borough about $66,000 per year, according to preliminary estimates, though more than half would be covered by increased property tax revenue. Kreitzer said the 25% increase was sizable, and said she felt the communication about the increase with the borough was inadequate. It seems odd that they're saying property tax would be the source of funds.

"It's just an overwhelming amount of material," she said. "People should be aware that this is out there."

APC's revenue requirement study is nearly 100 pages, and there are other lengthy testimonies by top AP&T officials posted on the RCA website detailing complicated financial dynamics of the company.

At an assembly meeting on Tuesday, Kreitzer said her understanding was that extending the comment period would be challenging, though not impossible. She advised members of the public who are concerned about the rate increase to ask the RCA to suspend the filing instead to give affected communities the chance to analyze the effects.

Rate increases happen regularly for public utilities that are under the RCA's purview, though the 25% increase is larger than most. Anchorage recently proposed increasing its rates by 6%. Ketchikan hiked its rates by 1.5% in February, Juneau proposed a 4.5% increase last year that would go into effect this October, and Wrangell hiked its rates by 7% last year.

Jones said that in his 15 years at the RCA, he'd seen rate increases more than 25%.

This is an updated story of one published on September 11.

"It really depends on how long it's been since the utility has done a rate review and revenue study," he said. "They're like 'Okay, we gotta catch up with the economy,' so to speak."

Last year, Aniak, in Southwest Alaska faced a quadrupling of its energy prices before the state stepped in.

APC's last proposed rate increase in 2014 was riddled with allegations of lack of public involvement, according to news reports at the time. The proposed rate increase of 18% was whittled down 11% before it reached the RCA.

AP&T did not make top officials available for comment after repeated requests, other than forwarding a release noticing the rate change.

The public can submit comments until 5 p.m. on Friday, Sept. 15 on the RCA website.


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