An old southern sheriff, watching a gaggle of ne'er-do-wells traipsing down a country road toward us, told me, "Don't need to watch all of 'em. Watch them what don't show their hands."
The proposed $1 billion sale of Anchorage's Municipal Light & Power utility to Chugach Electric strikes me a lot like that; it is moving right at us and there are not many hands showing.
On the surface, the announced deal looks like a good one for the city, but there are a boxcar of questions and not much transparency by the city or Chugach. The whozits and whazits largely remain secret, unexamined by the public or any outside entity.
The city is asking voters April 3 to bless the sale, which must be completed by Dec. 31. If they approve, the deal would have Chugach paying $712 million to cover about $542 million of ML&P debt and $170 million in equity. Over the next three decades, Chugach would ante up a $170 million acquisition payment and $142 million in lieu of taxes. That adds up to slightly more than $1 billion.
Provisions of the proposed sale say ML&P and Chugach workers will not be laid off, nor will the utilities' ratepayers face increased rates "as a result of the transaction," and taxes will not go up. Nothing about the tooth fairy.
That the sale is going on the ballot — along with a city charter change to allow the deal with a simple majority vote — with no real public discussion is unsettling. There has been a public meeting or two — not true hearings, mind you, meetings — but there has been darned little information.
Details were worked out behind closed doors, in secret, during executive sessions by the Assembly and Chugach. Assembly members even have been barred from speaking in detail publicly about the deal.
Mum was the word between the Assembly's resolution in June urging the utilities to talk a deal, until Dec. 21, when Mayor Ethan Berkowitz announced he would seek voters' approval. Nobody even bothered to tell the city's ML&P Commission until the day before Berkowitz's announcement.
The city, after spending $50,000 in taxpayer money in July to have Goldman Sachs analyze the deal, chose to keep the results under wraps until the Anchorage Daily News pried the 23-page analysis loose with a public records request.
The ordinance setting up the sale — for a "competitive" price, not fair market value — presents many questions in and of itself. It says: The city, ML&P and Chugach Electric "engaged in discussions and determined that a merger is not possible, but that a sale of ML&P to Chugach Electric could be feasible …" Anybody know what was said or what the determination was based on?
The ordinance goes on to say: The city "received and reviewed multiple expressions of interest from parties interested in a purchase of ML&P …" Who did the city talk to? What did the parties say? Did the city seek or get any other offers? What were they?
Chugach Electric, in the deal, agrees to pay the $1 billion or so sale price, "subject to adjustment during the due diligence process." Adjustment? Who decides that?
Let's face it, a 23-page analysis of a billion-dollar deal seems less than adequate. There are two very different entities involved here, a government-owned utility and an electrical co-op. They operate by different rules in many areas such as taxes or debt load. The two even have different voting requirements. A Navigant Consulting Inc. analysis in 1997, sought by then-Mayor Mark Begich, detailed the complexity of putting the two together. But that was 20 years ago; this is now.
It seems with all that there would be real public hearings, lots of them, with experts and testimony and questions and answers. And there are questions. How will Chugach pay for it? How will it shoulder $700 million in debt? Can it absorb ML&P? Why will it agree to payments-in-lieu-of-taxes when as a cooperative it does not have to? That is a start.
It is no less than a wonderment we will be voting in two months on a deal darned few really understand. Sure, the Regulatory Commission of Alaska eventually will get a look, but some doubt the agency has the wherewithal or capacity to examine a deal this huge.
People for years have pushed for a merger because it simply makes sense, but such a deal, with its far-reaching consequences, requires transparency. Between now and April 3, the city and both utilities must provide answers — and voters should demand they do so.
We don't need to watch them all. Just the ones that do not show their hands.
Paul Jenkins is editor of the Anchorage Daily planet.com, a division of Porcaro Communications.
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