The Chugach Board of Directors is considering implementing Simplified Rate Filing (SRF) procedures for base rate adjustments. The purpose of SRF is to establish expedited filing and rate adjustment procedures for nonprofit electric cooperatives regulated by the Regulatory Commission of Alaska (Commission). SRF avoids much of the cost and time-consuming process required by traditional general rate cases by limiting the number of topics that can be considered. If adopted, this change will enable Chugach to make moderate adjustments to demand and energy rates more efficiently than the current process allows.
Under SRF, the Chugach board has the major responsibility for rate adjustments rather than the Commission. However, Chugach is still required to submit filings to the Commission for approval before any rate changes can be implemented. While there is no limitation on decreases, base rate increases under SRF are limited to 8 percent in a 12-month period and 20 percent in a 36-month period. Rate adjustments under SRF only impact energy and demand rates. Changes in fuel and purchased power costs will continue to be adjusted on a quarterly basis through the fuel and purchased power rate adjustment process. If the Chugach board makes the decision to adopt the SRF method, and if approved by the Commission, Chugach would make filings every three months. The filings could adjust rates up or down, or leave them unchanged.
Per 3 AAC 48.730, you are being provided notice that the Chugach board will formally decide whether to proceed with the SRF rate adjustment process at its June 30, 2016 board meeting that will be held at 3 p.m. in the Chugach board room located at 5601 Electron Drive in Anchorage, Alaska.
What is Simplified Rate Filing?
Simplified Rate Filing (SRF) is a streamlined regulatory process to make periodic, limited adjustments to electric rates.
What electric utilities are allowed to use SRF to adjust rates?
SRF can be used by nonprofit member-owned electric cooperatives like Chugach in Alaska. These utilities are governed by a board of directors elected by and from the members that purchase power from the utility.
Who approves SRF filings?
As with other requests to adjust rates, the Regulatory Commission of Alaska (Commission) must approve proposed changes before they can go into effect. Before a filing is made with the Commission, it must first be approved by the member-elected board of directors.
Why is Chugach considering using SRF?
Chugach is re-entering SRF to increase efficiency in the rate adjustment process. Chugach is interested in adopting a more efficient process that would have similar impacts on electric rate levels but with significantly less cost and time requirements. Currently, base rate adjustments are made through general rate case filings that can take upwards of 20 months to complete. In contrast, SRF filings can generally be completed within a three-month period.
Has Chugach operated under the SRF process before?
Chugach most recently operated under SRF from 2010 through 2012, but suspended its participation pending the completion of several general rate case filings in subsequent years.
Will SRF be used to adjust all Chugach rates?
No. SRF will only be used to change what are known as "base rates." One of these is the charge for energy; or the kilowatt-hours you use. The other base rate charge is demand; assessed to the largest customers based upon the rate at which they draw power. Fuel and purchased power adjustments will continue to be made quarterly through other filings.
Why does Chugach need to adjust base rates?
Rates recover the cost of doing business. As those costs go up and down, rates need to be adjusted to ensure that customers are paying the right prices at the right time.
What is the limit on rate changes?
There is no limit to the amount rates can be decreased with SRF. Increases are limited to no more than 8 percent in a 12-month period and 20 percent over a 3-year period.
How will I find out about rate changes under SRF?
Rate changes under SRF require approval of the Chugach board. SRF agenda items are included in the board's published agenda in both Board Finance Committee and general board meetings. Agenda items can be found here.
How soon could demand and energy rates be impacted?
If approved by the board, Chugach will request Commission approval to enter into the SRF process by July 1, 2016 with filings submitted to the Commission on a quarterly basis. At the June 29 board meeting, it is also expected the board will consider initial rate changes that, if approved, would become effective in mid-August.