Anchorage-area power companies announce agreement to reduce costs

By January 31, 2017 February 1st, 2017 Alaska's Energy Desk
Chugach Electric in Anchorage is one of three utilities announcing a preliminary agreement to work together to reduce power costs. (Photo by Elizabeth Harball/Alaska's Energy Desk)

Chugach Electric in Anchorage is one of three utilities announcing a preliminary agreement to work together to reduce power costs. (Photo by Elizabeth Harball/Alaska’s Energy Desk)

Three electric utilities serving the Anchorage area — Chugach Electric Association, Municipal Light & Power and Matanuska Electric Association– on Monday announced a preliminary agreement to work together to provide lower-cost power.

Though not finalized, the agreement makes it easier for the electric utilities to buy power from each other when it’s cost effective.

Speaking at a press conference, Matanuska Electric Association CEO Tony Izzo likened it to being able to choose a vehicle based on road conditions:

“If I have to commute up a mountain, I’m going to take the four-wheeler. If I have to run down the clear highway, I’m going to take the most fuel-efficient vehicle,” Izzo said.

The utilities estimate the agreement could jointly save $12 million to $16 million a year in costs. However, they said it’s too early to know how big of an impact this will have on electric bills.

“As the utilities project millions of dollars in annual savings from reduced fuel, and operation and maintenance costs, we believe ratepayers will save money,” Chugach Electric Association spokeswoman Julie Hasquet said in an emailed statement. “We don’t know how much yet, as we have to see how the pool works going forward and what the other associated costs of doing business are at any given time.”

The announcement comes over a year after the Regulatory Commission of Alaska (RCA) wrote a letter to the legislature saying the current Railbelt electric system “does not deliver the maximum benefit possible to ratepayers.”

The agreement announced today begins to address some, but not all, of RCA’s recommendations. For example, the commission said all six electric utilities serving the region stretching from Homer to Fairbanks should coordinate, not just the three utilities in the Anchorage area.

However, at least one other electric power provider in the Railbelt, Golden Valley Electric Association, has been in discussions surrounding the agreement. It is possible for other utilities to join.

Golden Valley “is pleased that the southcentral Alaska utilities were able to reach this agreement and enjoy even more economic dispatching benefits,” GVEA President & CEO, Cory Borgeson, said in a statement. He added, “this is a distinct advantage for GVEA, and we look forward to working with all the Railbelt utilities in 2017.”

RCA Chairman Bob Pickett said more details need to be worked out, but he views today’s announcement as a good first step.

“The utilities have voluntarily come to this agreement amongst themselves and the Commission, I believe, will be very supportive of this effort,” said Pickett.

The RCA needs to approve any final agreement the utilities reach. The utilities don’t expect to submit one to RCA until 2018.

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