AARP formally intervened in the Chugach Electric Rate Case currently before the Regulatory Commission of Alaska to fight for fair treatment of residential customers. AARP is the only party in this case who is fighting specifically on behalf of residential customers. AARP argued that the way Chugach has proposed to allocate costs and design rates favors commercial customers and significantly shifts costs and higher rate increases to residential customers.
Utility bills contribute to overall housing costs, which are already soaring in Anchorage. Utility rates are an essential pocketbook issue for older Alaskans and their families, many of whom struggle to pay their utility bills and other household expenses like food and medicine. We know that the proposed rate increases would most impact those on fixed and/or low incomes.
AARP’s expert witness testified that the cost allocation method proposed by Chugach would treat residential electric customers unfairly, requiring those customers to subsidize the larger commercial customer classes. The Chugach proposed method is both unreasonable and uses less data than AARP’s proposed method, because it only analyzes one hour of the year, the highest demand hour of the year. This is unfair because the utility must plan for all hours of the year. Residential energy use fluctuates seasonally, and the Chugach cost allocation method favors large general commercial customers who use the transmission network more consistently throughout the year.
AARP is instead recommending that the Regulatory Commission of Alaska employ a method that looks at the highest peak energy demand hour out of each of the 12 months. Factoring in 12 data points through the year reflects seasonal energy demand fluctuations and more reasonably and accurately reflects cost causation for all customer classes.
Chugach also proposed to increase the customer charge—the monthly fee customers pay before even turning on the lights - for most residential customers by more than 70%. Seniors tend to live in smaller households and tend to use less electricity, which means that this proposed increase to fixed charges disproportionately impact them.
AARP recommended a lower fixed customer charge with energy usage charges making up the difference. This rate case is a follow-on case to an acquisition by Chugach Electric Association of the Municipal Light and Power, with one of the goals being to unify rates across the legacy districts. Currently North district legacy customers pay $13.62 and South pay $8 in monthly fixed charges. Chugach proposed a unified fixed charge of $13.68 across both legacy service areas. AARP instead recommended $10 as a compromise to unify the customer charges while keeping them low. Low fixed charges treat low-usage customers more fairly and allow customers more control from a cost or conservation standpoint.
AARP will report back on the final outcome of this rate case when it is announced. The Regulatory Commission of Alaska has set a deadline of Sept. 25 for their final decision on the Chugach Rate Case.
Marge Stoneking is the AARP Alaska Advocacy Director.
