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Chugach and MEA negotiate interim power sales agreement

Chugach and Matanuska Electric Association have come to terms on a contract that will provide power into 2015 while construction continues on a new MEA power plant.

MEA has been a wholesale customer of Chugach for decades, but decided it would build its own power plant to serve its customers when its current contract with Chugach expires at the end of 2014. However in August, MEA notified Chugach that its plant, the Eklutna Generation Station (EGS), will not be fully available on Jan. 1, and that it would be interested in an arrangement to continue to purchase power while work progressed.

Chugach and MEA subsequently negotiated an interim power sales agreement beneficial to both organizations. MEA is assured a power supply, as well as a market for any electricity generated by its new plant. Chugach and the customers on its system (including the Seward Electric System) will benefit by having MEA continue to share in the fixed costs of the interconnected system.

Under the terms of the agreement, Chugach will continue to meet the full requirements of MEA through March 31, 2015 at existing demand and energy rates already approved by the Regulatory Commission of Alaska (RCA). In anticipation that some of the 10 individual 17-megawatt generating units at EGS may be available, Chugach agreed to purchase from MEA the output of up to four units at the plant. Under its contract with Hilcorp, MEA will provide the gas for the power it purchases from Chugach and what it uses at EGS. Chugach will pay the weighted cost of gas for the first quarter 2015 that it would otherwise have paid its own fuel suppliers. The power purchased from EGS will be pooled with other generation and provided across the Chugach customer base, with costs recovered through the fuel and purchased power charges.

The interim power sales agreement provides mutual financial benefits. For the 3-month period of the agreement, the agreement is anticipated to add approximately $10 million in base rate revenue to the Chugach system and potential purchased power expense paid to MEA of up to $4 million (excluding fuel).

The short-term contract allows Chugach’s fixed costs to continue to be spread over a much-larger customer base. If approved, Chugach will postpone for three months filing a general rate case to compensate for the loss of MEA as a wholesale customer. As happened when Homer Electric Association left the Chugach system at the end of 2013, losing MEA will cause rates to rise for the remaining customers on the Chugach system as fixed costs are spread across fewer kilowatt-hour sales.

Chugach filed the power sales agreement and related tariff changes with the RCA, requesting approval by Dec. 31 for rates effective Jan. 1, 2015.

Scammers threaten disconnection

One of the scams in use around the country – including in Alaska – is to call people up and threaten that their electric service will be disconnected immediately if a supposed past-due bill isn’t paid. The goal of the scammers is to obtain credit card or other financial information. Chugach does not do business this way. Before service is disconnected for non-payment, Chugach follows steps laid out in its tariff. Those steps include advance notification. Chugach also does not take credit card payments directly, but instead refers customers wishing to pay by credit card to a third-party payment service. Customers who receive a call demanding payment to avoid an immediate disconnect should hang up, call Chugach to check the status of their account and report the incident to the police (online reporting is available in Anchorage at muni.org/apd).