Chugach and ML&P to explore potential merger or other relationship

Chugach Board Chair Elizabeth Vazquez and Mayor Mark Begich signed an agreement June 15 aimed at leading to a decision by this fall on whether it makes legal and financial sense for the two utilities to merge or somehow combine operations. The two agreed to appoint a panel of experts to help analyze the possibility of a single utility pursuant to the detailed five principles the two utilities will follow as discussions continue.

"The interests of the people and businesses of Anchorage should take priority in all these discussions and decisions," Vazquez said. "After all they are the owners of these utilities, as taxpayers and/or as co-op members. What we’re after is the lowest cost possible for the customers."

"Through this process, we hope to improve service to customers and stabilize rates by increasing efficiencies and eliminating duplication," said Begich. "I’m pleased the management of both Chugach and ML&P are now open to this new era of cooperation."

At issue is how to provide affordable electricity to residents and businesses in the Anchorage bowl. When initially formed, ML&P was envisioned as the provider to urban residents while Chugach would meet rural needs. Over time, those distinctions have blurred, with ML&P largely serving downtown, Chugach serving most of the rest of Anchorage and Matanuska Electric Association serving portion of Eagle River and north Anchorage.

For several weeks, Chugach board members and Begich have discussed the possibility of joint operations. An oversight team will be appointed to help direct the analysis, including a former member of the Regulatory Commission of Alaska, a Chugach board member, a member of the Anchorage Assembly, an ML&P official and a Chugach ratepayer. The team will be co-chaired by Vazquez and Begich.

The two also signed an agreement identifying five principles under which the team will work, including:

• Ensure the greatest benefit for the existing ratepayers of the two utilities.
• Eliminate duplication of services.
• Increase efficiency of services.
• Create rate stability for current and future ratepayers.
• Maximize asset value for owners of both companies.

Officials from both sides agreed not to pre-judge the outcome, and they could even decide not to pursue a merger or joint operations if the analyses determines it makes little sense.

Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.