Alaska Electric Light and Power proposes steep rate cut

Alaska Electric Light and Power Company’s Lemon Creek operations center in Juneau is seen July 19, 2017. (Michael Penn | Juneau Empire file)

Alaska Electric Light and Power Company’s Lemon Creek operations center in Juneau is seen July 19, 2017. (Michael Penn | Juneau Empire file)

Alaska Electric Light and Power is proposing cheaper electricity for Juneau.

On Friday, the capital city’s electric company filed a formal request with the Regulatory Commission of Alaska, asking it for permission to lower rates by 6.73 percent starting Aug. 1. If the request is approved, customers could also receive partial refunds for bills paid between Jan. 1 and Aug. 1.

“We have positive news for our customers,” said Debbie Driscoll, vice president and director of consumer affairs for AEL&P, by phone Friday. “AEL&P has filed a request with our regulatory commission to lower our rates by 6.73 percent and also issue credits or refunds to our customers.”

The request is a result of the federal tax cut passed last year by Congress, an investigation by the Alaska attorney general’s office, Alaska’s utility regulatory structure, and actions by AEL&P.

Last year’s tax cut reduced the maximum effective corporate income tax rate from 35 percent to 21 percent on Jan. 1. On Feb. 12, the consumer protection unit in the attorney general’s office urged the regulatory commission to examine the impact that the tax cut had on the operations of the state’s utilities. Most privately owned utilities in Alaska operate under orders from the commission that limit how much profit they can earn. These regulations were implemented by lawmakers because most utilities have monopolies on essential services in their area.

“Rates are determined by the cost to provide service. When there’s an increase, it impacts rates; when there’s a decrease, it impacts rates,” Driscoll said.

The commission followed the attorney general’s request and began an investigation. In the meantime, AEL&P pledged to set aside extra money that it believed it earned because of the tax cut.

“We planned for it,” Driscoll said.

On June 5, the RCA issued an order to AEL&P, asking it to explain why it should be allowed to keep the extra money. A hearing was scheduled for June 19 on the matter. AEL&P answered that letter with Friday’s request for a rate decrease and asked that the hearing be canceled.

The RCA has 30 days to respond.

The Juneau electric company’s proposed decrease means AEL&P would transfer $2.4 million in profit back to its customers. That’s less than what the RCA suggested as an appropriate refund, but in Friday’s request, AEL&P said the RCA miscalculated because it failed to account for the fact that Juneau’s electric power demand is seasonal. (The RCA had suggested a refund of $3.9 million.)

Friday’s request has the approval of the attorney general’s office, which co-signed it.

If finalized as proposed, the rate cut would more than erase the rate hike approved last year by the RCA. That increase, of 3.86 percent, was to pay for $50 million in capital improvements made since 2010, the last time AEL&P raised rates.

• Contact reporter James Brooks at or 523-2258.

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