Updated May 7, 2018
AEL&P and its parent company, Avista Corp, are in the process of being acquired by the second largest utility company in Canada, Hydro One.
Thankfully, after much public pressure, the City & Borough of Juneau intervened in the process and negotiated an agreement with Hydro One. The resulting deal is not fantastic but it’s much better than what we previously had. Rather than vague, verbal assurances, it places specific protections in writing, making them enforceable into the future. Now we are waiting for the RCA (Regulatory Commission of Alaska) to approve the agreement.
Hydro One’s acquisition of Avista & AEL&P has to be approved by regulators in 5 states. The staff of Oregon’s Public Utility Commission recommended rejecting the sale because it’s risky and bad for consumers, but the final decision remains to be seen. Meanwhile, Washington had numerous strong interveners hammering out benefits for both consumers and the environment. In Alaska, CBJ was the only party there on the public’s behalf.
If you’ve been following this story already, you know that Hydro One has a long track record of rate hikes, poor maintenance & customer service, and excessive CEO pay.
The most recent news is that Hydro One CEO Mayo Schmidt got a $1.7 million raise last year. In 2017, he made more than $6 million, up from $4.5 million in 2016. According to the Toronto Sun, his base pay works out to $20,808 a week (before incentives and shares).
But Mayo Schmidt might be out of a job come June 8th. Candidates from multiple parties have made campaign promises to restructure Hydro One and reduce these exorbitant salaries. The June 8 election could potentially change the entire landscape of this issue.
In the mean time, Avista’s CEO, Scott Morris, stands to make $15 million from this sale. He has a golden parachute severance package that he did not acknowledge when asked at the Juneau town hall meeting.
Do we, as Juneau residents, want to be paying for that? Is that the kind of stability we want for our electric grid and our local economy?
Thank you to all the Juneau residents who have taken the time to read our alerts, submit comments, and show up in person on this issue! Your presence has made all the difference!
If you’d like to thank the CBJ for intervening, send them a quick email at: boroughassembly@juneau.org.
Updated November 14, 2017
ALE&P is being sold again, this time to a Canadian company called Hydro One. Hydro One is owned 49% by the Canadian government. They are buying all of Avista, which currently owns AEL&P. So we will have multiple layers of ownership far removed from life in Juneau. Last week the Regulatory Commission of Alaska (RCA) rejected the AEL&P / Hydro One application, but they will refile it soon.
It’s up to us to make sure our community values are upheld. We need affordable rates, transparent decision making that appropriately serves local needs, and support for the 2011 Climate Plan as well as the forthcoming Energy Strategy.
The RCA guarantees the utility an 11-13% rate of return on all investment, so the utility has an incentive to build more than we need. If the utility invests that money, they can legitimately request a rate increase. The RCA process cannot protect our community values without public participation.
And, lest we forget, the push for natural gas has been paused, but it has not been forgotten…
CBJ is considering the idea of purchasing AEL&P. This is a big decision with many factors to consider. One factor is the up-front cost. In times of tight budgets, that is a major concern. But just like buying a house, the cost of the transaction can be included in the financing, lowering that up-front barrier. Hydro One wants to keep AEL&P because it is a very profitable company. Rather than sending that money to Ontario, we think it is important to consider how that money might be kept in our local economy.
Please stay tuned as the issue develops. For more background on the matter, here is a recent story from KTOO.
Updated October 3, 2017
AEL&P was privately owned by a Juneau resident until a few years ago, when it was bought out by Avista Corporation. Now it’s being bought out again–this time by a foreign company called Hydro One.
That is, unless CBJ decides to purchase AEL&P to run it as a municipal utility. This is common practice around the country and even in Alaska. When you have a business that is a natural monopoly, and that monopoly affects all the residents and the entire economy (as well as your carbon footprint), it makes sense to put the public interest before shareholder profits.
Hydro One, the Canadian company that is buying all of Avista, and with it AEL&P (through many layers of subsidiaries) has a very poor track record on rate hikes and customer complaints. AEL&P is very profitable and they have moved aggressively within the Regulatory Commission of Alaska to fast-track the sale.
Here is an article about it in the Juneau Empire as well as an op-ed about the potential impacts on Juneau.
If you would like to submit a comment to the RCA, go to: https://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx and click on Matter U-17-085. Or call (907) 276-6222 for assistance. The deadline for comments is 5 p.m. on Oct. 12, 2017.
Who’s looking out for Alaskans?
Do you know how to navigate the system that regulates our utility? Chances are you don’t. But who does? There are actually very few people who know how the system works – and that means there are very few people watching or holding them accountable.
Renewable Juneau is pulling together resources to make sure that in the future, our voices are well represented in the regulatory process that oversees this natural monopoly.
Background:
It’s not just the Corbus family anymore. In 2014, AEL&P was bought out by a utility company from down south called Avista. Avista is legally obligated to do what is good for its shareholders – and not necessarily what is good for Juneau.
Avista also owns a subsidiary named Salix that was supposed to bring natural gas to Fairbanks, until they realized it was not economically viable at this time. That is the same conclusion they reached when they tried to bring natural gas to Juneau.
We’ve found that it pays to pay attention so instead of getting too comfortable, we’re taking the opportunity to learn more about the regulatory process.
Update: 2/24/17
AEL&P/Avista has announced that they are not going to pursue natural gas in Juneau at this time!
This is a big win for Juneau. Building natural gas infrastructure would have set us back decades at this crucial moment when we don’t have decades to lose. With the Trump administration doing everything in its power to undermine protections for the environment and human health, these local wins are crucial.
AEL&P/Avista cited economic viability as the reason why they chose not to move forward. “Economics” sound like a lucky break that was out of our control. But it’s important to note that they needed subsidies in order to make this project viable. They needed the public – that’s us – to pay for the project in the form of tax breaks and assistance. And that was where we came in. Conversations with legislators & assembly members, and people participating in the regulatory process kept this project from being approved as a matter of course. AEL&P/Avista weren’t expecting tough questions and they didn’t have answers.
But before we get too excited, AEL&P has made it clear that they will pursue natural gas again if the conditions become favorable. So keep your ear to the ground!
Research from Harvard, Cornell, and Stanford has confirmed that natural gas is just as bad for the climate as oil & gas. That’s because it releases far more methane than previously thought, and methane is 80 times worse for the climate than carbon dioxide. That’s why one industry magazine went so far as to call natural gas “stranded assets.”
Natural gas is not a bridge fuel – it’s a gangplank.
Enter Avista. Avista Utilities bought AEL&P in 2014. They own hydropower, coal, and natural gas facilities in the Lower 48. Now they want to bring natural gas to Alaska. For Juneau-ites, this would mean a 10-year long infrastructure project that would tear up our roads and never reach 22% of us.
Avista has asked for enormous subsidies to help homeowners convert to natural gas. They need these subsidies, on top of the profits they would make from selling the gas, and the 12.9% return on investment that they will get for building the infrastructure, in order to make it pencil out economically.
All of which would be paid by Juneau residents.
For more information on the recent research into methane’s climate impacts, this article provides a good overview.