Municipality of [LOGO] P.O. Box 196650
Anchorage Anchorage, Alaska 99519-6650
Telephone: (000) 000-0000
Fax: (000) 000-0000
Email : xxx.xxxx.xxx
Xxxx Xxxxxx, Mayor
FOR IMMEDIATE RELEASE Contact: Xxxxx Xxxxxxx, 343-7103
June 15, 2007 Communications Director
2007-48
Anchorage's Two Largest Electric Utilities Explore Joint Operations
Mayor, Chugach Electric Sign Agreement for Greater Efficiencies
With the goal of better service and stable rates for customers, Southcentral
Alaska's two largest electric utilities, Municipal Light & Power (ML&P) and
Chugach Electric Association, have agreed to a process which could lead to a
merger or joint operations of the two companies.
Mayor Xxxx Xxxxxx and Chugach Board Chair Xxxxxxxxx Xxxxxxx signed an agreement
today 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 and detailed five principles the two utilities will follow as
discussions continue.
"For years, many have agreed that it makes no sense for a city the size of
Anchorage to be served by three electric utilities," Begich said. "Through this
process, we hope to improve service to customers and stabilize rates by
increasing efficiencies and eliminating duplication. I'm pleased the management
of both Xxxxxxx and ML&P are now open to this new era of cooperation."
"The interests of the people and businesses of Anchorage should take priority in
all these discussions and decisions," Xxxxxxx 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 costs possible for the customers."
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 the Matanuska Electric Association serving
portions of Eagle River and north Anchorage.
(more)
All three utilities need to build new generation facilities and combining such
efforts could result in substantial savings, Xxxxxx said.
For several weeks, Xxxxxx and Xxxxxxx board members have discussed the
possibility of joint operations. Begich Wednesday met with ML&P employees to
brief them on the possibility and met with the Chugach board Wednesday evening.
Xxxxxxx Chief Executive Officer Xxxx Xxxxxxx briefed Chugach employees Thursday.
The union which represents most of the employees of both utilities, the
International Brotherhood of Electrical Workers, also has been briefed by
Xxxxxx.
Xxxxxx and Xxxxxxx agreed to appoint an oversight team of half a dozen experts
to help direct the analysis. Members will include 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 Xxxxxx and Xxxxxxx.
The two also signed an agreement identifying five principles under which the
team will work, including:
o Ensure the greatest benefit for the existing ratepayers of the two
utilities.
o Eliminate duplication of services.
o Increase efficiency of services.
o Create rate stability for current and future ratepayers.
o 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 analysis
determined it makes little sense.
Chugach represents 64, 300 members and ML&P serves about 30,000 customers.
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