Rate increase made permanent for ML&P customers

Published: Apr. 2, 2018 at 12:08 PM AKDT
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A recent rate increase on the monthly bills of Anchorage ML&P customers will now be here to stay, after state regulators approved data on a newly built power plant.

An increase has been in effect since 2017 on the energy charge of customers, defined by Municipal Light & Power as the cost per kilowatt used. A decision by the Regulatory Commission of Alaska makes that increase permanent.

Despite this increase on monthly energy bills, ML&P says the new plant has already saved customers money, arguing that the new power plant is much more efficient than the previous infrastructure.

The rate was proposed by ML&P back in December of 2016, to cover the expense of Plant 2A, Anchorage's new power plant.

Customers' bills are down despite the increase in energy charge, ML&P says, because Plant 2A, in the end, saves customers big on their bills due to its sheer efficiency.

Since the end of 2016, an interim rate was approved for 37.3 percent of customers' bills. However, that amount was not permanent, and was subject to change.

Until, that is, state regulators with the Regulatory Commission of Alaska (RCA) approved the cost, setting the permanent rate increase to a marginally higher 37.32 percent. RCA called Plant 2A a "prudent" measure for cutting down on costs.

The general manager of ML&P, Mark Johnston, called Plant 2A the "most efficient in Alaska" and said that it created a "steady decrease in residential and commercial customer bills" during the last year.

This decrease may seem counter intuitive against the 37.32 percent rate increase. The company explains this is due to how customers are billed.

According to the company, the increase to energy charges is offset due to a decrease in what's called "cost of power adjustment," sometimes known by its acronym, COPA.

ML&P said that a customer's overall monthly bill is comprised of several charges, including the customer charge, the energy rate, and the COPA.

While the customer charge increased to pay for Plant 2A, ML&P said the resulting efficiency of the plant drove the COPA down further.

The construction of Plant 2A isn't all about monetary cost, the company said. Johnston told Channel 2 that the plant also has an environmental impact.

In addition to customers' bills, Johnston praised Plant 2A for its environmental benefit, claiming that through its efficiencies, it would cut down on the production of nitrogen oxides.

“The reduction in NOx emission achieved by Plant 2A is like taking 151,000 cars off the road each year,” Johnston said.

"Obviously, we can't take cars off the road, but we can help produce cleaner power than we would have if we continued to use the older technology."

That older tech, Johnston said, was 30 or 40 years behind the curve, and Plant 2A helps modernize the city to energy standards.