One year later, return to the acquisition of ML&P by Chugach

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Through Rachel Morse and Lee Thibert

Updated: 1 hour ago Posted: 1 hour ago

It’s hard to believe it’s been a year since the acquisition of Municipal Light & Power, or ML&P, by Chugach became final. On October 30, 2020, the documents were officially signed, closing an idea that had been discussed in Anchorage for decades.

Combining the infrastructure and workforce of two established and well-managed electric utilities in Alaska’s largest city is no easy feat. It took almost two years of planning and preparation to arrive at what we have internally called “Day 1”, the first day we became a combined public service. We are proud to say that integration has occurred with minimal impact on the community and the members we serve. Overnight, we went from about 69,000 members to nearly 93,000 members. All of this happened, in the midst of the COVID-19 pandemic, without interruption of electrical service.

When we joined the Municipality of Anchorage, or MOA, in the spring of 2018, asking voters to approve the sale of ML&P to Chugach, we made commitments. These included that rates would not increase as a result of the transaction; significant savings would be achieved by combining many functions; and that would be good for the community, as the proceeds from the sale would reduce municipal debt and help pay for municipal services.

As the integration continues, prices and costs are lower than they would have been without the acquisition. We are already seeing savings and know that they will continue to materialize over the next few years as integration efforts are completed. We’ll have final numbers for our first year in Q1 2022, but we know this:

• In January 2021, Chugach’s electricity rates decreased for all classes of customer.

• Payments of $ 712 million were made to the MOA in the first year; of the sale proceeds, $ 229 million went to the Municipal Trust Fund, eligible to pay for city services.

• Approximately $ 21 million in savings were achieved through fuel, labor and the elimination of intergovernmental burdens. We’re saving about $ 1 million per month on fuel alone.

COVID-19 throws a curve ball

What we didn’t know when the ML&P acquisition was finalized for regulatory approval was that 2020 would bring a global pandemic. Anchorage has joined cities around the world to shut down businesses, causing an unprecedented economic downturn.

For several months, we did not collect overdue accounts while local and state emergency orders were in place, and we are working with members to enable them to catch up on their billing. To date, we have enforced approximately $ 3.2 million in federal CARES legislation, assistance from Alaska Housing Finance Corp. and the state heating assistance program to the accounts of eligible members.

Besides our members, the public service itself is also feeling the impacts of the pandemic. Electricity demand from commercial members is down about 8% from the pre-pandemic era. This decline, along with inflation, labor costs and member energy efficiency measures, hit the bottom line. In response, we are managing the costs and have asked the Alaska Regulatory Commission to allow us to change any of the agreements we made when we purchased ML&P by getting a stay on the expense processing while we allow the income. recover. As a non-profit, member-owned co-op, we recognize the economic hardships many of our members face during the pandemic, and we don’t want to add to those hardships by asking for a price increase.

In the meantime, as we continue to face the pandemic and other challenges together, we remain convinced that Anchorage’s decision to combine two utilities remains the correct one. There is still a lot of work to be done as we continue to integrate systems and programs. What we know for sure is that taxpayers are better off with the acquisition with significant savings and more to come in the years to come.

Go forward

The future is full of opportunities. By feeding Anchorage together, we can better meet future challenges and opportunities. Reducing carbon emissions, adapting to new technologies such as electric vehicles and battery storage, and continuing to improve efficiency will make our cooperative and the communities we serve a better place to live. , work and play. Above all, we must fulfill our core mission of providing safe, reliable and affordable energy to our member-owners.

Rachel Morse serves as Chairman of the Board of Directors and Lee thibert is CEO of Chugach Electric Association.

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