RCA gave Enstar a pass, gave public no say in rate hike

Laurie Hummel
OPINION: House candidate Laurie Hummel argues that the Regulatory Commission of Alaska added insult to injury in keeping public out of Enstar rate hike. Pictured: An overflow crowd at the last week's after-the-fact hearing on the RCA decision. Marc Lester

On July 1 Enstar ratepayers across Southcentral Alaska saw their rates shoot up by over 48 percent. But what is almost as troubling as the rate hike itself is the manner in which the Regulatory Commission of Alaska rubber-stamped Enstar’s requested increase without even giving ratepayers a chance to comment.

I attended Wednesday’s public meeting of the Regulatory Commission of Alaska regarding this matter. During the public testimony period, many customers described their frustration at Enstar, and rightly so. The elephant in the room, mostly unspoken, was the role of the RCA in this mess. Clearly reform is needed to restore confidence in Alaska’s utility regulations.

As I go door to door speaking with my neighbors in Muldoon, I hear from many people just how much this rate increase will hurt their families and businesses. Since nearly every business and family in the Anchorage area uses Enstar’s gas, this will have a serious impact on our economy.

Public utilities are given a privileged position, where antitrust laws prohibit regular businesses from establishing monopolies. Utilities are given a government sanctioned monopoly in exchange for government regulation of their prices. The Regulatory Commission of Alaska is tasked with regulating Alaska’s utilities, and while their cases often revolve around technical details of utility operations, their bottom line mission is straightforward. When a utility proposes a rate, the RCA must decide whether it is “just and reasonable.”

When Enstar filed their request to raise their rates, the first decision the RCA had to make was how to handle the case. In most recent cases where utilities have requested significant rate increases, the commission has opened a full adjudicatory investigation where the utility must present sworn testimony to justify their request. The consumers are represented in these proceedings by the Department of Law’s Regulatory Affairs and Public Advocacy office, which can cross-examine the utility’s witnesses and call witnesses of their own.

Given the highly technical details of utility operations that must be reviewed, these hearings can involve several days of testimony with reams of supporting documents provided under oath. But in this case the RCA simply approved Enstar’s 48 percent rate hike based on a single unsworn letter from Enstar with attached spreadsheets. The commission’s staff report does not say whether they even checked the math in Enstar’s filing.

It is particularly concerning that the RCA did not require Enstar to notify ratepayers, even though this public notice is required for the RCA to be able to accept public comments. With the RCA opting not to open a full adjudicatory proceeding, Enstar is the only recognized party that could appeal this decision.Ratepayers were denied their right to comment before the RCA ruled, and now they can’t appeal the decision afterward.

Given the harsh effect this large rate hike could have on our families, businesses, and economy, the burden of proof should have been on Enstar to show their request was reasonable. Even if Enstar produces financial records showing the rate increase to be justified, the RCA should still have considered ways to mitigate the steepness of the increase, like possibly staggering the increase across a longer period of time.

If my neighbors elect me to the state House, I will introduce legislation to restore confidence in the Regulatory Commission of Alaska. My legislation would require the RCA to order public notice and conduct a full adjudicatory investigation for any request for a significant rate increase, and would require the RCA to consider ways to mitigate the effects of dramatic rate increases on the consumers. Oil and gas companies demand fiscal certainty. Why can’t Alaskans expect the same treatment on their energy bills?

Alaskan consumers deserve to right to be heard, and the right to be confident that their rates are fair. Unfortunately, in this case the regulators dropped the ball and approved a 48 percent rate hike without demanding proof that it was justified. Alaskans deserve better.

Laurie Hummel is a candidate for the state House from District 15, East Anchorage.

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