3-20-18 LAST CHANCE BEFORE VOTING: A Logical Review Of Anchorage’s Utility Ballot Initiative, and An Alaska LNG Scheme Update

Our Analysis Of Proposition 10 From Last Week

Proposition 10 allows the MOA to sell its Municipal Light & Electric (ML&P) utility to Chugach Electric Coop (CEA).

https://clyp.it/fhbf5swd

Ray Kreig on Mike Porcaro’s 3-23-18 KENI Radio Show re: author’s view of ML&P sale. https://clyp.it/fhbf5swd

We support an HONEST and TRANSPARENT sale of ML&P but we oppose the corrupted process leading to Proposition 10.  We will vote “No” until the MOA employs a transparent, valid, robust, national competitive bidding process (i.e. RFP or RFB) and until a super majority of both MOA voters and CEA ratepayers (and ML&P ratepayers) know exactly how the transaction will affect them.  Here’s why:

  • Anchorage’s Charter (i.e. our local “constitution”), wisely requires a 3/5, or 60% “yes” vote to sell the utility. Those voting “yes” ON THIS BALLOT PROPOSITION are making it easier for the politicians to sell this asset by only requiring a majority “YES”  vote.  If it’s such a good deal, why wouldn’t 60% of us vote “YES” to sell and why wouldn’t 60% of CEA ratepayers vote “YES” to merge or sell?  No one has given us an HONEST and logical reason for eliminating the protection given by supermajority votes!  SCROLL DOWN FOR COMPLETE COMMENTARY ON BALLOT PROPOSITION 10...OR, REVIEW OUR COMMENTARY ON THIS AND ALL OTHER ANCHORAGE BALLOT PROPOSITIONS!

One Reader’s Reaction To Our Commentary:

Thank you for asking Dave,

Chugach Electric Deal:  it smacks  of inside trading and deal making.

IBEW apparently agreed no one would be terminated and there would be no layoffs when  the buyout goes through.   Tell me how the rates decrease if the largest expense is employees including their benefits.

How can the Muni go against the charter to have open and competitive bidding yet only  consider Chugach as a buyer.  I believe there were 5 other suitors and all were dismissed.

The payout is over time. having this much money  at the discretion of the Assembly will grow our entitlement programs and, I fear,  in many cases enable bad behavior and bad choices.

Paying Mark Begich $14K a month to consult on the deal is probably due to his deal making that cost the tax payers $400 million when he was mayor.

Not to forget the assessment on our home was up 5% from the previous year before it was contested  and we are in a down economy.

My taxes will go down per our mayor, I have trouble seeing the evidence.  When the government is insatiable in their want of public funds, taxes go up not down.   Same road to destruction as we have seen before.   Anchorage  is not the honorable safe place I moved my family  to in 1982.

-R


In our analysis (Scroll down) and in today’s reader comments some of the Anchorage Chamber of Commerce’s interest in Ballot Proposition 10 and most of the advocate support rationale are addressed. -dh


Anchorage Economic Development Corporation Position On Proposition 10


Another Reader’s Reaction To Our Commentary:

Dave, I love the way Chugach management explains that the purpose is to avoid duplication then quickly add that nobody will be laid off. They will keep all of the employees of both organizations on the payroll.  -t


ML & P Sale: One Expert’s Opinion

At the request of some of our members, we are publishing an opinion piece on the proposed sale of ML&P to Chugach Electric. The Alaska Policy Forum does not endorse legislation, propositions, or candidates. This research study is the work of an independent expert in electric utilities, and not the…

MARCH 16TH, 2018 | RECENT NEWS | READ MORE

The ML&P Buyout by Chugach Electric Will Shock Anchorage Wallets

In the upcoming Anchorage election, voters are being asked to vote on the proposed buyout (Proposition 10) of the Anchorage Municipal Light & Power (ML&P) by Chugach Electric. What prompted this buy-out proposal and will consumers benefit from it? First, some background. ML&P serves the urban…

MARCH 15TH, 2018 | ACCOUNTABILITYCOLLECTIVE BARGAINING AGREEMENTSRECENT NEWS | READ MORE


 

Must Read Alaska: 

‘Trust us’ is not enough on ML&P sale


The Alaska/Communist China LNG Update

Here we have an LNG project that is intuitively non competitive because its cost through the Arctic has to bear the burden of an 800 mile, buried, refrigerated pipeline.

It’s government agency promoter, AGDC, has not completed its engineering, environmental, routing, marketing, regulatory nor financing due diligence.

Thus far, the most tangible expression of interest originates from Communist China in the form of non-binding, diplomatic memoranda.

Since hope springs eternal — and for some equates with reality — Alaska’s administration continues to promote the project as if its political life depended upon it in the upcoming, Fall election.  Meanwhile, we continue  to wonder how fellow citizens can condone a $40-60 billion energy scheme, putting their state’s economic future in jeopardy.  After all, the Governor managed to take control of the potential project from the three biggest producers in Alaska who advised that, “now is not the time for this project”.

So now, Alaska is left with a $ multi-billion energy scheme, owned and managed by temporarily elected and appointed politicians and bureaucrats.

We continue to wonder, what could possibly go wrong?  -dh


Alaska LNG Is Finally Clear For Takeoff.  OilPrice.com.  Alaska Gov. Bill Walker remained upbeat, even optimistic over his state’s massive liquefied natural gas LNG export project proposal, Alaska LNG, for years, even as global oil and gas prices tanked, reaching multi-year lows, even as all of its original partners, including ExxonMobil, ConocoPhillips, and …


LNG on hold for another 15 months.  Mat-Su Valley Frontiersman.  “AGDC has been working toward a final investment decision in 2019 on the $43 billion state-led project, which would move Alaska North Slope gas to market, producing up to 20 million tons of LNG per year at a liquefaction plant in Nikiski, on Cook Inlet. Waiting until 2020 for federal approval will likely …


Murkowski: Gasline construction costs will be impacted by tariffs.  Must Read Alaska.  MARCH 1  U.S. Senator Lisa Murkowski. NGP photo by Dave Harbour


Proposition 10 allows the MOA to sell its Municipal Light & Electric (ML&P) utility to Chugach Electric Coop (CEA).  We support an HONEST and TRANSPARENT sale of ML&P but we oppose the corrupted process leading to Proposition 10.  We will vote “No” until the MOA employs a transparent, valid, robust, national competitive bidding process (i.e. RFP or RFB) and until a super majority of both MOA voters and CEA ratepayers (and ML&P ratepayers) know exactly how the transaction will affect them.  Here’s why:

  • Anchorage’s Charter (i.e. our local “constitution”), wisely requires a 3/5, or 60% “yes” vote to sell the utility. Those voting “yes” ON THIS BALLOT PROPOSITION are making it easier for the politicians to sell this asset by only requiring a majority “YES”  vote.  If it’s such a good deal, why wouldn’t 60% of us vote “YES” to sell and why wouldn’t 60% of CEA ratepayers vote “YES” to merge or sell?  No one has given us an HONEST and logical reason for eliminating the protection given by supermajority votes!

  • Chugach Electric’s rules require a supermajority of their members (i.e. including me) to authorize a utility “merger”. At first there was a move to “merge” the two utilities.  But CEA decided to change a word.  “Let’s call it a ‘sale’ of ML&P to us and we won’t need a supermajority vote”, they thought.  So the prudent rule for a supermajority approval was eliminated by changing a word.  Does that sound like an HONEST way to protect the CEA members from making a potentially disastrous acquisition – or just a way for the CEA management and board to have an easier time making the biggest deal of CEA’s lifetime?
  • The ML&P Commission was created to oversee the MOA electric utility and advise the Mayor and Assembly on utility matters that include services, rates, etc. After all, getting a handle on complex issues like power generation, transmission, distribution, budgeting and rate making require tremendous regulatory, technical, economic and legal understanding of a utility.  You’d think that if the MOA’s political leaders wanted to sell the utility, they’d most heavily rely on the Commission.  The highly respected Chairman of the ML&P Commission, Judy Brady (i.e. a former Anchorage Chamber Chairman and state Commissioner of Natural Resources and Executive Director of the Alaska Municipal Bond Bank), at their January 24th meeting tendered her resignation and provided a thoughtful rationale justifying her decision.  She noted that the ML&P Commission had not been even informed of the plan to sell ML&P until a day prior to the public announcement.  Her rational included, in part, concern over the process employed in the ML&P-CEA transaction and its lack of transparency.  Vice Chairman Tim Vig noted his similar concerns.  If the very MOA commission charged with being on top of ML&P issues was ignored what makes you and I think we have the expertise to HONESTLY and competently vote “yes” on this enormous decision?
  • We HONESTLY BELIEVE THAT Sole Source negotiation involving public money and assets — especially for a multi-million or billion dollar deal — violates the public interest. After the MOA and its subsidized Anchorage Economic Development Corporation (AEDC), ML&P and CEA began to study the issue of a merger/sale, several other utilities submitted expressions of interest to the MOA.  But those suitors were turned away so that CEA and the MOA with relaxed constraints on supermajority constituent support could pursue a sole source negotiation.  One must applaud the ML&P Commission’s volunteer leaders for having the intellectual HONESTY to publicly announce their discomfort with the lack of proper process and transparency in this matter: true public servants.
  • Competition could keep the process honest.  The special interests supporting the sale, including the MOA, CEA and AEDC (i.e. not including a supermajority of constituents) have romanced the Anchorage Chamber board and other community organizations into endorsing the sole source ML&P sale. However, no real, HONEST criticism has been involved in the many presentations, town meetings and publications surrounding this vote.  So if the Mayor and Assembly and CEA and AEDC all tell business leaders what a great efficiency will be achieved with the sale…and no one objects…why shouldn’t they have endorsed the sale?  Why?  Because it is beyond the expertise of normal citizens – even business leaders – and only the true competition involved in a highly publicized, complex and competitive bidding process to sell ML&P can provide sufficient transparency to give hundreds of thousands of ratepayers and taxpayers comfort!
  • RCA to the rescue…not! It is not HONEST for special interests advocating this proposition to say or imply that, “after ML&P and CEA negotiate terms of the sale the Regulatory Commission of Alaska (RCA) will make sure consumer interest are protected.”  Yes, after they negotiate some yet to be confirmed terms, CEA and ML&P will likely petition the RCA for an expanded CEA service area and related matters.  The RCA adjudicates petitions for certificates of public convenience and necessity and service areas, rates and quality of service based on the legal record the parties establish.  Certainly that record will contain the enthusiastic support of CEA, ML&P, Unions, MOA, AEDC, community organizations and councils that have been romanced by the special interests.  In short, the RCA is unlikely to have any significant consumer, business, government opposition.  Who of you readers with legal and regulatory expertise would appear at an RCA public hearing to supply reliable, technical, economic testimony dissecting the negotiated sale conditions and present alternative consumer perspectives to the RCA–or recommend the RCA attach conditions to approval of the parties’ petition?  The special interest parties know this.  They know that once CEA has overcome its supermajority rule with a word change and once the MOA has overcome its Charter-required supermajority requirement for the utility sale, they are pretty much ‘home free’ with the RCA.  And note this: After the RCA approves the parties’ petition for an expanded electric monopoly in Southcentral Alaska, CEA will then prepare a “rate case” for their expanded service area that may or may not keep faith with all the promises advocates have made in their speeches.  (Trust me; really?)  Ratepayers won’t even know for sure the true impact on them until the new rates take effect.  By then, it will have been too late – impossible — to object to the April 3, 2018 municipal election, majority vote passage of this ballot proposition.
  • The CEA and MOA FAQ sheets and presentations have tried to neutralize potential arguments. We’ve addressed some of the issues above.  But there are many more that would be more properly vetted were a transparent, competitive, robust bidding/proposal process to be nationally advertised and adopted.  For example, while ML&P ratepayers will no longer be paying off its debt, CEA’s ratepayers will inherit the $524 million debt.  While ML&P and its ratepayers might have had difficulty paying the MOA an annual “dividend”, CEA’s ratepayers will deposit $170 million into the MOA’s trust account.  CEA ratepayers will pay an ADDITIONAL $170 million to the MOA over 30 years — not necessarily destined, as near as we can tell, for the trust account.  CEA is also agreeing to have its ratepayers pass on to MOA another $142 million over some period of time as, “payments in lieu of taxes”.  Looks like any financial challenge the current city officials might have supporting its big budget could  solved quickly should this deal quickly be consummated.   It is facts like this  that a more detailed public discussion, in conjunction with a robust, national, competitive RFP/RFB process that might help current ML&P and CEA ratepayers — and MOA taxpayers — better understand how the transaction is likely to specifically affect them, and in CEA’s case, the “capital accounts” of members.

4 Comments

  1. Ray Kreig March 21, 2018 at 6:01 pm - Reply

    Dave, Your statement above, “RCA to the rescue…not!” is very important insight from your experience as a former RCA commissioner. I urge all that are concerned about their electric costs to pay close attention to Dave’s points.

    • wpnorthern March 22, 2018 at 3:41 am - Reply

      AEDC, funded by Anchorage’s Assembly and Mayor, tries to give comfort to citizens voting to trash the supermajority vote requirement and sell ML&P to CEA.

      “Trust us”, they seem to say, “and don’t worry; we’ve got your back.”

      In their March 7, 2018 board position, President Bill Popp and Chairwoman Raquel Edelen say, in part:

      “If Proposition 10 is approved by Anchorage voters, AEDC will be closely following the development of the final agreement that will ultimately be presented through 3 public processes for final approval. The 3 processes will require approval by:

      -The Anchorage Assembly (Note: Why would they vote against their own finally negotiated agreement?)

      -The Chugach Electric Association Board of Directors. (Note: Why would they vote against their own negotiated agreement?)

      -The Regulatory Commission of Alaska. (Note:If the above two parties support any finally negotiated agreement between themselves and AEDC supports and is supported by the Anchorage Assembly and Mayor what party will appear before the Commission to oppose or even question the agreement — except with softball or amateur consumer questions? The CEA board represents all its members. The Assembly represents its citizens. The only other visible institution in this matter is AEDC and their mission and proclivity is not to represent electric consumers. The organization “markets Anchorage”.

      There are many problems with this proposed sale: lack of meaningful competition; lack of robust consumer representation before the CEA board and Assembly; lack of transparency in the process; reliance on RCA whose legal record will be dominated by the above parties; pre negotiated terms that leave little room for honest negotiation; and much more as we describe in this post.

      Thank you for your comment. I hope voters critically analyze this matter but fear that the campaign to enrich the city coffers and special interests at the expense of ratepayers has been so well planned, so well concealed and so well executed that there is precious little time remaining for well intended voters to adequately study this complex matter before election day has come and gone.

      Thank you for your own contribution and for registering an opinion here.

      -dh

  2. John K. Norman May 1, 2018 at 1:52 pm - Reply

    Dave,

    You perform a significant public service with courage and insight by offering your commentary concerning CEA’s proposed acquisition of ML&P.
    This proposed transaction is NOT in the public interest.

    Thank you,

    John K. Norman

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About the Author:

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission.He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School.Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations.Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska.Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power.He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress.Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.