The two utilities powering homes in Anchorage signed an agreement Friday to pursue a possible merger.
Mayor Mark Begich said Friday the private cooperative Chugach Electric Association and the city-owned Municipal Light & Power will explore whether the utilities might be able to charge lower rates if they merge or somehow share operations.
A key part of the discussion is working together on new power generation projects for Anchorage, he said.
The mayor and Chugach chairwoman Elizabeth Vazquez announced some of the basic principles of their agreement at a City Hall news conference today. They then signed the two-page agreement.
Vazquez said her goal for the possible merger was the lowest rates possible for local utility customers.
The discussions will last through November and hopefully end with a plan that the city Assembly can vote on, Begich said. He said an oversight committee, chaired by him and Vazquez, will keep the discussions moving forward and also provide the public an opportunity to weigh in.
"Where this will land, we aren't sure," Begich said
Begich has considered the idea for a while, said Julie Hasquet, the mayor's spokeswoman. Begich sid he approached Chugach Electric board members and ML&P employees to see what they think.
People have informally discussed merging the utilities many times in the past, but nothing ever happened, he said.
He said combining the two might make a more efficient operation.
For example, both utilities are considering building new power plants. Could just one do the trick, saving the utilities and their customers money?
Also, Chugach Electric customers might benefit from lower rates if their utility has ownership in the Beluga gas field, Hasquet said. Municipal Light & Power customers have the lowest rates along the Railbelt because the utility owns part of Beluga.
Municipal Light & Power has about 30,000 customers in Anchorage, mainly north of Tudor Road and west of Boniface Parkway. Chugach Electric serves about 69,000 customers elsewhere in Anchorage and on the Kenai Peninsula.
The possibility of a merger raises questions. For one: Is this a back-door way to get Municipal Light & Power out of its old headquarters and into a new Mountain View shopping center, a move attempted by the utility but voted down by the Anchorage Assembly last month?
"The MLP move and this are completely separate because no one has decided where this entity would exist or if it in fact would exist at all," Hasquet said.
And, a big question: Can a merger happen without a public vote, a requirement before the city could sell ML&P?
"I don't know the answer," she said. "These are all questions that can be explored."
Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.
History of Chugach, ML&P at a glance
CHUGACH ELECTRIC ASSOCIATION:
The utility was incorporated March 1, 1948, with funding from the Rural Electrification Act of 1936. In 1991, Chugach refinanced its debt and left the federal program. With about 69,000 customers, it ranks among the largest of 1,000 electric cooperatives nationally.
MUNICIPAL LIGHT & POWER:
Anchorage residents bought out electrical service from the Alaska Engineering Commission in 1932 for $11,351 and established Anchorage Light and Power Co. To expand services, the utility was sold to the city in 1943. ML&P serves about 30,000 customers.
