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Proposed ML&P sale makes sense for Anchorage

  • Author: Anchorage Daily News editorial board
    | Opinion
  • Updated: January 13, 2018
  • Published January 13, 2018

The George M. Sullivan Plant 2a expansion project is visible along the Glenn Highway on Wednesday, March 22, 2017, in Muldoon. (Erik Hill / ADN archive)

With a price tag of $1 billion and a reach into tens of thousands of Anchorage homes and businesses, there's a relatively grand scale in the city's proposed sale of Municipal Light & Power to Chugach Electric Inc. Yes, it's "a big deal," as Anchorage Mayor Ethan Berkowitz said.

But the proposed sale is primarily an example of good nuts-and-bolts local government.

If the sale works as promised, it just makes sense — and it takes some of the politics out of power, for utilities have a long history of being ideological and political battlegrounds.

The purpose of the sale is simple: Consolidate services and streamline operations to spare ratepayers the increases forced by duplication and inefficiencies. Save money for the Municipality of Anchorage, which can get out of the electric utility business and ease the load on taxpayers in the process. Scale the utility's size to the size of the population. Use the utility's power plants to meet fluctuating demand most efficiently. Find a way to lower rates.

The terms of the sale are attractive. Chugach appears to have the wherewithal to finance the purchase and plans to consolidate administration and services. Layoffs won't happen, and that means the local economy, already struggling with Alaska's high unemployment rate and the most recent announcement of Sears and Sam's Club closures, won't take another hit. Instead, Chugach will let the normal rate of attrition take labor costs down. That's a softer landing that still keeps the prospect of lower rates for consumers without a wave of job losses.

A thorough vetting should catch any wayward ravens in the grid — and the main question that ratepayers and taxpayers will want answered is: How will this work?

En route to answers, the Assembly has to consider the basic terms of the proposed sale and agree to put the issue before the voters in the April muni election. If voters approve, then the municipality and Chugach would draw up a detailed sale plan, and that would go to the Regulatory Commission of Alaska, which would have up to six months to say yes or no. In that time frame, the public would have its chance to weigh in. Already there's interest; the commission recently posted a note on its website to explain that it can't take comments on the sale now because there is no actual sale before the commission.

Some provisions won't be known until after voters give their approval of general terms, so the utility and city officials should tell us as much as they can — before we vote — about how the an agreement will serve the stated purpose.

Rate shock drove this proposal. Both individual and business ratepayers in downtown, Midtown and East Anchorage, ML&P's service areas, felt the brunt of double-digit interim rate hikes in early 2017. A business working group on utilities found that rates had almost doubled over four years. They sought relief, and pending a detailed look at the sale agreement, the city's decision to sell ML&P should provide it.

Citizens appealed; the city responded. This is the way government is supposed to work.

The deal also underscores the point that providing electric power as a public service shouldn't be any more political than sewer lines and snow removal. We know politics and ideology will find a place to land in matters that reach every household, but it's good to know that sense can rule the day without flags or labels.

What most of us want from our utilities is dependable service at reasonable rates, no matter whose politics are ascendant. We want our lights on and our laptops charging without 20 percent rate hikes no matter what part of town we live in.

The proposed sale of ML&P to Chugach looks like it can get us there. Let's have more information.

BOTTOM LINE: Sale of ML&P looks like a good move on good terms.

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