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Business/Economy

Alaska agency approves, in part, the sale of Anchorage’s power company to Chugach Electric

ML&P's plant 2 and 2A power generation facilities are located near the Glenn Highway in northeast Anchorage. Photographed on October 28, 2019. (Marc Lester / ADN)

The Regulatory Commission of Alaska this week announced partial, conditional approval of the near-$1 billion sale of the Municipality of Anchorage’s electric utility to the member-owned cooperative Chugach Electric Association.

On Friday, Anchorage officials said they were were still digesting the 152-page ruling issued Thursday night, which comes with more than 600 pages of supplemental material.

Chugach Electric and Municipal Light & Power must agree to the RCA’s terms for the sale to be finalized.

During a Friday community briefing, Berkowitz said the new conditions required by the RCA require scrutiny by the city and Chugach Electric.

“The conditions complicate what has been a concluded, multi-party negotiation,” Berkowitz said. “We’re going to have to go back and revisit all those nuances and understand what the implications are.”

Anna Henderson, ML&P’s general manager, said the parties were initially planning on a 90-day window between the RCA ruling and official closing of the deal, but they have up to 120 days to finalize.

“I still think we’re within that 120-day window, but again that depends on the parties coming together to discuss the 152-page order and addressing the conditions in it,” Henderson said.

Berkowitz said the deal has been a “monumental” effort, and he hopes the deal still closes.

“We wish the RCA had done something different, but we are where we are and we’re going to see about what it’s going to take to move forward," the mayor said.

The idea of merging Chugach Electric with ML&P has been floated for decades, but after a resolution from the Anchorage Assembly in June 2017 encouraging the idea, the two sides began discussions in earnest.

In October, the utilities, along with various other parties including large ratepayers like Providence Health and Services, came to an agreement on terms of a sale.

“We are still reviewing the order and the conditions imposed by the RCA to determine whether they are acceptable to Chugach,” Chugach Electric CEO Lee Thibert said in a statement. “Assuming they are, we look forward to moving toward closing and a smooth transition for existing Chugach members and the new members from the ML&P system.”

The state attorney general’s regulatory affairs and public advocacy division was the only party that did not agree to the terms. The division advocates for individual ratepayers to make sure the sale doesn’t adversely affect the public.

Henderson she cannot promise rates won’t change in the future but noted that the RCA stated in its ruling that it believes the sale is good for the community.

“The expectation is that, consistent with our original message to the community, is that we don’t expect rates to increase as a result of this transaction for the Anchorage community,” Henderson said.

As part of the October agreement, the city would sell the utility for $999 million, bringing an initial payment of $757.8 million to the city from Chugach Electric. With that money, the city will pay off the more than $500 million in bond debt held by ML&P.

Per that agreement, $36 million from the sale will be used for rate relief for three years for customers in the existing ML&P footprint as they become new Chugach customers.

The city also will use $15 million to start building the Alaska Center for Treatment, a substance abuse prevention facility. The facility will be operated by a third party.

Jason Bockenstedt, Berkowitz’s chief of staff, said Friday that he believes the sale price, the upfront payment and the money for rate relief and a treatment center are part of the RCA’s conditional approval of the sale, but that he and others are still reading through to see what parts the regulator approved and what parts it rejected.

“All of this understanding is subject to change as we continue to read," he said.

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