The article discusses a proposal by Goat Lake Hydroelectric, a subsidiary of Alaska Power & Telephone (AP&T), to increase electricity rates for customers in Haines and Skagway, Alaska. The reason for the proposed rate hike is primarily to cover the costs incurred from repairing a submarine transmission cable that was damaged in 2019, which totaled over $12 million. Goat Lake Hydroelectric is seeking to generate an additional $618,000 annually to recover these costs, as detailed in their revenue requirement study submitted to state regulators.
Proposed Rate Increases
Interim and Permanent Rate Hikes
The Regulatory Commission of Alaska (RCA) issued a notice on December 23, 2024, regarding Goat Lake’s proposed interim and permanent rate increases. The company has requested an interim rate increase of 40% to take effect on February 3, 2025, and a permanent rate increase of nearly 70% (69.92%). Currently, Goat Lake provides wholesale service to Alaska Power Company at a rate of $0.06301 per kilowatt hour. The proposed interim rate is $0.08820, and the permanent rate is $0.10710. The potential impact of these hikes on residential customers would be significant. For those using 500 kilowatt hours a month, the total bill could increase from $129.33 to $130.30 if the permanent rate increase is approved.
The financial burden of such a steep rate hike is immediately apparent. Though the interim hike of 40% might seem marginal, the nearly 70% permanent increase can strain household budgets. Many residents feel this proposed increase ignores the financial difficulties already exacerbated by inflation and rising living costs. Goat Lake’s demand for additional revenue, totaling some $618,000 annually, is aimed at covering the $12 million expense incurred due to the repair of a damaged submarine cable. The hike aims to ensure the continued operational stability of the utility, emphasizing the company’s necessity rather than an unwarranted demand.
Cost of Power Adjustment (COPA) Rate
Moreover, Goat Lake Hydroelectric is proposing a higher Cost of Power Adjustment (COPA) rate that fluctuates based on fuel costs and purchased power. COPA rates can either be charges or credits, reflecting the dynamic nature of power procurement costs. In his testimony to the RCA, Jeffrey Rice, Executive Vice President and Chief Operating Officer of AP&T, emphasized that the company implemented various cost-cutting measures to mitigate financial strain on its customers. Among these measures are shutting down under-utilized equipment, applying for subsidies through federal and state grants aimed at hydro and renewable electricity sources, and upgrading equipment to reduce manpower needs.
Rice further explained that AP&T is also sharing personnel between facilities to reduce operational costs. Despite these efforts, the necessity to recoup the significant expense from the submarine cable repair remains critical. While the proposed rate adjustment mechanisms such as COPA aim to balance the company’s financial liabilities and operational costs, the variance this introduces may cause fluctuations in customer bills. For residents in Haines and Skagway, the uncertainty surrounding future electric bills could be yet another source of financial stress. The measure’s potentially stabilizing effects are unlikely to be felt evenly across all customers, particularly amid rising fuel costs.
Public Notification and Response
Public Notice and Comment Period
As of the article’s publication, eighteen people from Haines and Skagway had commented on the proposed rate increase. Initially, the public notice from the RCA had a comment deadline of January 6, 2024, but it was later extended to January 24, 2024. However, the original public notice has not been updated to reflect this extension. The failure to properly communicate the extension could lead to confusion among residents wishing to express their concerns. Additionally, the RCA did not publish a public notice about the rate increases in the Haines or Skagway newspapers. Instead, notifications were published in the Juneau Empire and the Kenai Peninsula Clarion—publications that do not cover the service areas affected.
This decision to publish in distant newspapers raises questions about the accessibility and transparency of the notification process. The apparent oversight in ensuring that local residents are adequately informed about critical changes that directly affect them is problematic. The discrepancy becomes even more glaring considering the RCA mailed copies of the public notice to several entities in Haines and Skagway, including post offices, city offices, chambers of commerce, school districts, and tribal councils. However, these measures may not have been sufficient in ensuring all residents are informed, especially those who do not frequent these establishments.
RCA’s Explanation and AP&T’s Efforts
When questioned about this discrepancy, RCA spokesperson Becki Alvi attributed the lapse to issues with the print schedules of the two local papers. She explained that copies of the public notice were mailed to several entities in Haines and Skagway, including the post offices, city offices, chambers of commerce, school districts, and tribal councils. Additionally, AP&T notified customers via bills, emails, the company website, and meetings with borough leaders in both communities. These actions, though proactive, may not completely address the concerns of inadequate communication regarding the rate hike proposal.
Moreover, decent marketing via these different channels suggests efforts to mitigate residents’ concerns but falls short of a comprehensive notification process. It is reasonable to criticize the company’s mechanisms for potentially creating ambiguity about comment deadlines and inhibiting a more robust public discourse. The failure to publish notices in readily accessible local newspapers raises questions about the regulatory body’s commitment to transparent and inclusive public engagement. Mandatory public hearing disclosures, effective community outreach, and updates that reflect extensions are vital steps toward addressing these procedural lapses and ensuring all stakeholders have an opportunity to be heard.
Community Opposition
Financial Burden on Residents
The article highlights significant public opposition to the proposed rate increase. Haines Borough Tourism Director Rebecca Hylton argued that a 70% rate increase would impose an unsustainable financial burden on families and individuals. She suggested that the company’s shareholders, who benefit from AP&T’s profits, should bear these costs. Haines School Superintendent Roy Getchell projected that the increase would add $15,000 annually to the district’s energy expenses, emphasizing the already strained financial landscape due to insufficient state funding. Such comments underscore the broad-based fears of financial distress that could impact essential services and disrupt community well-being.
For communities like Haines and Skagway, where communal ties are strong and local economies are often interdependent, the implications of such a hike are profound. Getchell’s concern over the school district highlights a ripple effect—rising operational costs could mean reductions in other critical areas like educational programming or facility maintenance. The broader financial health of these communities comes into question as residents grapple with utility bills that increasingly eat into household budgets. Calls for AP&T to absorb some of the repair costs, by utilizing shareholder dividends, reflect a collective push for more equitable financial stewardship.
Impact on Vulnerable Populations
Skagway resident Kerri Raia opposed the rate hike, describing her current electricity bills as already “atrocious” and expressing concern that the increase could force her family to sell their home and relocate. This fear reflects a broader sentiment among residents that any further financial strain could push them beyond their economic thresholds. Sara Kinjo-Hischer, Tribal Administrator for the Skagway Traditional Council, noted that the combination of the new rates and a previous 14.51% rate hike by AP&T would result in a total rate increase of about 40%. This combination, she warned, would significantly impact residents, many of whom are already struggling with financial hardships due to inflation and the rising costs of goods and services.
Her concerns highlight the multifaceted impact of such financial decisions on both individual households and broader community structures. Vulnerable populations, including low-income families and seniors, face particularly acute challenges. The compounded effect of multiple rate hikes can exacerbate existing inequalities, making it all the more difficult for residents to manage their living expenses. Kinjo-Hischer emphasized the need for broader structural solutions that take into account the inequities these communities face, urging for thoughtful engagement and alternative financial strategies that don’t disproportionately impact those already at the margins of economic security.
Calls for Alternative Solutions
Haines resident Michelle Strohecker also opposed the rate hike, pointing out that it would disproportionately affect low-income families, seniors, and other vulnerable populations. She urged utility companies to prioritize cost-saving measures and alternative revenue strategies before passing costs onto consumers. Strohecker’s call for a focus on systemic cost-efficiency reflects a collective sentiment among affected community members. They advocate for exploring every possible avenue of cost reduction and revenue enhancement that does not unduly impact consumers.
The perspectives shared reflect broader concerns about not only the immediate financial impact but long-term sustainability and community resilience. Community voices underscore the pressing need for transparency, accountability, and inclusive decision-making processes in addressing utility costs. By emphasizing the potential burden on vulnerable segments of the population, residents are calling for a shift in how utility companies plan and implement cost-recovery measures. This approach aims for methods that balance corporate viability with community well-being.
Conclusion
The article discusses a plan by Goat Lake Hydroelectric, a branch of Alaska Power & Telephone (AP&T), to raise electricity rates for customers in Haines and Skagway, Alaska. The proposed rate hike is intended to cover the costs from repairing a damaged submarine transmission cable, which occurred in 2019 and cost over $12 million. To offset these expenses, Goat Lake Hydroelectric aims to generate an additional $618,000 annually, as outlined in their revenue requirement study submitted to state regulators. This proposal highlights the financial challenges utility companies can face when unforeseen damages occur and the subsequent need to adjust their pricing structures to ensure continued service and infrastructure maintenance. If approved, residents in Haines and Skagway may see a noticeable increase in their electricity bills, but will benefit from a more reliable power system in the long run. The decision to repair such costly infrastructure underscores the importance of maintaining essential services and the lengths to which companies must go to sustain them.
