November 5 – Chugach Electric customers will soon see changes to their electricity rates. Some customers will pay less, others will pay more.
Customers of the Chugach Electric Association should also soon receive a one-time refund on their electric bills after state regulators decided a major case that will unify electricity rates across the Anchorage region, the utility said in a statement Monday.
The reimbursement and rate changes stem from Chugach Electric’s 2020 purchase of Municipal Light & Power, the municipal utility, which created a single service area throughout Anchorage and beyond.
As part of that transaction, the Alaska Regulatory Commission last year required Chugach Electric to submit a base rate adjustment to bring rates into line.
The commission issued an 89-page decision on the rate case on September 25, leading to the utility’s compliance filing late last month addressing the new rates. The refund plan and rate changes are subject to regulatory approval.
A group that intervened in the case has asked the agency to reconsider its decision, citing concerns that Chugach Electric’s rates don’t do enough to save natural gas shortfalls in Cook Inlet.
The rate changes
The final base rates are expected to be implemented on December 1, the utility said. Different customer classes will be impacted differently depending on where they are located and whether they are a residential, small commercial or large commercial customer, the utility said.
In general, Chugach Electric customers who previously worked with Anchorage Municipal Light & Power will see a rate decrease in most cases, the utility said.
[Alaska utilities turn to renewables as costs escalate for fossil fuel electricity generation]
Those residential customers with a $127 bill will see a decrease of about $10.50, a savings of 8.3%, according to the utility’s online calculator.
That is based on a typical residential demand of 525 kilowatt hours per month.
In general, older customers of Chugach Electric, known as the utility’s Southern District, will see an increase in their bills, the utility said.
These customers will see a bill of approximately €128.50 increase by more than €5, which represents an increase of 4.1% according to the calculator.
Before the rate case was filed, the municipal utility’s old rates were higher than Chugach Electric’s old rates, leading to several rate changes.
“Chugach’s submission had proposed a rate reduction plan to the RCA to avoid the disparate impacts on different rate classes, but the RCA rejected that plan,” Chugach Electric said in the statement. Instead, the regulator opted for immediate, uniform rates, the utility said.
The Alaska Regulatory Commission also previously ordered that Chugach Electric’s legacy customers compensate Municipal Light & Power’s legacy customers for the municipal utility’s original investment in the Beluga River Unit, Chugach Electric spokeswoman Julie Hasquet said in an interview Monday. The municipal utility owned a large interest in the Cook Inlet natural gas field before the acquisition.
The utility had asked the regulator in a filing early this year to reconsider payment for the Beluga River Unit to make it more equitable for older Chugach Electric customers, Hasquet said.
The agency denied the request, she said.
The acquisition of the municipal utility saved more than $120 million, resulting in lower rates, Chugach Electric said in the statement.
The Regulatory Commission also accepted new rate structures in its decision, including a pilot time-of-use program that will be designed to encourage the use of electricity at lower rates during times of low overall demand on the system, from 9 p.m. to 9 a.m. utility said.
That is expected to be available early next year, the utility said.
The time-of-use rates can save natural gas by allowing more efficient energy generation, Hasquet said.
“It’s basically for people to do laundry or dishes after 9 p.m.,” Hasquet said.
How the refund works
Chugach Electric expects the refund to appear on bills in January.
The refund will go to all Chugach members, more than 91,000 customers, Hasquet said.
The refund comes as the regulatory commission last year accepted Chugach’s request for an interim, refundable base rate increase of 5.2%. These rates came into effect in September 2023.
But in its decision, the RCA approved a lower permanent final rate of 4.3%.
Chugach Electric will refund the difference, the utility said. Members will see it as a one-time bill credit.
In total, Chugach Electric will refund approximately $3.1 million to its members, the utility said.
[Alaska natural gas crunch is increasing demand for a traditional fuel — coal]
The utility did not immediately provide a refund amount for a typical residential customer on Monday.
The utility said that before last year’s interim rate increase, former Municipal Light & Power customers’ base rates had not been adjusted since 2017. The base rates of Chugach Electric’s original customers had not been adjusted since 2020.
Meanwhile, inflation has driven up costs over the past four years, the utility said. Since the first half of 2020, cumulative inflation for urban Alaska has increased by about 17.5%, the report said.
Group claims gas crisis is being ignored
The Renewable Energy Alaska Project has filed a request for the regulator to reconsider its order in the rate case.
The group had intervened in the rate case in hopes that the utility would adopt a rate structure designed to reduce Cook Inlet’s natural gas demand. The group’s proposal called for lower rates for customers who used less electricity.
As Southcentral Alaska faces a looming shortage of gas from Cook Inlet, the group has said the rate case is a crucial opportunity to set rates that save natural gas.
The group’s filing said the regulator mischaracterized their arguments and failed to take into account applicable law, among other shortcomings.
“Crucially, the Commission is ignoring the looming Cook Inlet gas crisis and its legal duty to promote conservation,” the group said in the filing.
