Juneau residents will see a 3.86 percent increase in their electric bills starting Nov. 23.
The Regulatory Commission of Alaska, which governs utility rates, made the announcement Monday. The increase is a temporary one while the commission investigates a request by Alaska Electric Light and Power to raise rates by 8.1 percent.
The investigation is expected to take until December 2017. At that time, the commission could approve the full request, it could approve a smaller rate increase, or it could declare the 3.86 percent increase too high and mandate a refund for AEL&P customers.
“This is normal; this is expected of every utility,” said AEL&P Vice President Debbie Driscoll.
Plans for the rate increase were announced earlier this year, and the commission’s announcement is not unexpected. Analyzing whether a rate increase is fair requires detailed investigation, and under state statute, commission staff have 450 days to investigate.
According to documents filed by AEL&P in support of the increase, the company is “under-recovering its revenue requirement” by $5.7 million per year.
Driscoll said by phone that “we basically have a revenue deficiency based on the $50 million in capital investments we’ve made over the past six years.”
Those investments include new transmission and line upgrades, pole replacements and substation upgrades. They also include a new backup diesel power plant on Industrial Boulevard. That plant will be commissioned by midmonth.
“Most companies just adjust their rates year after year after year, and we don’t do that,” Driscoll said.
The rate increase is the first in six years and the first since AEL&P was purchased by Washington-based Avista.
Under the proposed rate increase, Greens Creek Mine will pay a steep increase, generating $2.9 million per year. The rest of the amount will be raised by an 8.1 percent “across-the-board increase to energy, demand, and customer charges.”
If approved in full, that 8.1 percent increase would raise AEL&P’s “return on equity” or profit by $1.1 million per year.
Driscoll said AEL&P has traditionally reinvested the vast majority of its profits into the company. She was not able to speculate about whether Avista will do the same.
To follow the commission on the issue, visit rca.alaska.gov and search for matter number U-16-086.
• Contact reporter James Brooks at 523-2258 or james.k.brooks@juneauempire.com.
