An Electric Grid for Us
By A Juneau Socialist
Most of Alaska’s electric utilities are either cooperative or municipally owned. It makes sense in a landscape as vast, isolated, and rugged as Alaska.
But Juneau is unique. AEL&P is one of only two privately owned electric utilities in the state. Our grid is fueled by fish-friendly, high alpine “lake tap” hydropower that was funded by the federal government decades ago. Between the low cost of power and the high rate of return allowed by Alaska regulations, AEL&P is an unusually profitable utility. Each year, $8 million is extracted from Juneau by its parent company down south, Avista Corp.
Last year, Avista and AEL&P announced they are in the process of being acquired by the second largest utility company in Canada - Hydro One.
Unfortunately, Hydro One has a long track record of rate hikes, poor maintenance, bad customer service, and excessive CEO pay.
In 2017, CEO Mayo Schmidt made more than $6.2 million, up from $4.5 million the year before. Must be nice to get a $1.7 million raise. His base pay alone (before incentives and shares) works out to $20,808 a week, according to the Toronto Sun.
That’s Lots of Money, But for Whom?
Mayo Schmidt isn’t likely to stick around after this deal is done. He serves at the pleasure of Canadian politics and right now the winds are not in his favor. No matter how many times they tell us that Hydro One is a privately owned company, the fact is that the province of Ontario is Hydro One’s largest shareholder and, according to the bylaws, always will be. Parties on both sides of the aisle in Canada have made campaign promises to restructure Hydro One because of the mess and outrage back home. Mr. Schmidt could be gone by June 8th.
Meanwhile, 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?
AEL&P is not an ordinary business. It’s a monopoly. It’s paid for by every household and every business in Juneau. Yes, it’s a “regulated monopoly,” as proponents of the sale will argue. But remember how AEL&P is one of only two privately owned electric utilities in the state? That means our regulatory statutes were written for small, locally controlled utilities. Not international corporate mergers. So when Hydro One and Avista say they couldn’t possibly raise rates because they’re a regulated utility, know that they have a whole team of corporate lawyers gaming the system, while the state of Alaska doesn’t so much as require an integrated resource plan. There is no public participation in decision making for the future of our community. Integrated Resource Plans are standard practice in most jurisdictions, but we had to grovel for just a little bit of transparency. They will graciously start telling us what they plan to do in 2020. Eyeroll.
Hydro One’s acquisition of Avista 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 Oregon’s final decision remains to be seen. Meanwhile, Washington had numerous strong interveners negotiating all kinds of conditions to benefit consumers and the environment alike.
Not in Alaska!
We had just one reluctant intervener - the City & Borough of Juneau.
Thankfully, after much public pressure, they did intervene. The agreement negotiated by Kirk Gibson on the City’s behalf is much better than what we previously had, and does not preclude further action down the line.
The City & Borough of Juneau is already involved in the hospital, the airport, water & sewer - more utilities than most communities. In fact, it’s odd that we aren’t involved in the electric utility. And while local ownership has its own challenges and pitfalls, if you’re curious about the benefits of privatization, go swing by the dump. Juneau recently sold the landfill and garbage collection. Take a big, deep whiff – just don’t stand next to the flares where they’re off-gassing methane into the atmosphere 24/7.
At this point, even local business tycoons are starting to think maybe we’re being treated like a colony. Maybe we should just keep that $8 million here and spend it on our own projects?
Alaska is in a financial crisis. Juneau has lost 500 jobs and 800 residents.
Instead of extracting wealth from our community, AEL&P could be providing more jobs, converting us to heat pumps, and creating revenue. We could be self-sufficient and carbon-free, setting us up for the clean energy economy of the future. At least here, the citizens would get back their power.
AEL&P can and should be a public entity. Raise your voice. Be heard. Keep your ear to the ground as this opportunity develops.