Chugach Electric makes offer for Municipal Light & Power
Anchorage’s two electric utilities could combine in the near future, as the Municipality of Anchorage considers a bid by Chugach Electric to buy city-owned Municipal Light & Power.
Anchorage Mayor Ethan Berkowitz announced the proposal by Chugach on Thursday, which Berkowitz is asking the Anchorage Assembly to put before voters. Exact terms of the proposal were set to be unveiled at an Assembly work session later Thursday, according to a statement from Berkowitz’s office which described it as a “$1 billion sale.”
“The final determination to recommend a sale to Chugach comes after a long and diligent process led by Mayor Berkowitz to ensure that any decision is in the best interest of all Anchorage residents,” municipal officials wrote.
Berkowitz said Thursday that the sale would protect the city from potential variations in state funding associated with ML&P. The Assembly has until Jan. 23 to determine what issues appear on the April ballot, but Assembly Chair Dick Traini said he didn't think there would be any problem with putting the sale before voters.
The Anchorage Economic Development Corp. had issued a report earlier this year highlighting the potential efficiencies of consolidating the two utilities, which prompted the mayor to consider the possibility. Berkowitz’s decision was based on Chugach presenting a “competitive price” for ML&P, as well as agreeing that customers’ electrical rates wouldn’t rise and employees wouldn’t be laid off due to the sale.
Chugach CEO Lee Thibert said the company believed the proposal was “good news for all of Anchorage” in Berkowitz’s statement.
“With one Anchorage electric utility, it strengthens our position to address the underlying structural changes in our industry brought on by new technologies and distributed generation,” Thibert said. “Additionally, we reduce duplication on many fronts, take advantage of efficiencies, and all ratepayers become part of the Chugach member-owned cooperative.”
According to Thibert, electrical load for both utilities has fallen in recent years. Purchasing ML&P would allow both it and Chugach to operate out of a single office, as well as consolidate various facilities around town.
Selling ML&P, Berkowitz's statement said, would let the municipality pay off $525 million in debt as well as add funds to its trust fund and preserve existing utility contributions under the tax cap.
A number of work sessions and public hearings will be held before the Assembly votes in January on putting the sale before voters. The sale is also subject to regulatory approval, and the soonest it may be completed is January 2019.
Lauren Maxwell contributed information to this story.
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