Former manager: MEA deregulation is bad idea

JIM PALIN

Spectrum

Matanuska Electric Association is currently proposing to the members that they vote to deregulate the cooperative from the jurisdiction of the Regulatory Commission of Alaska (RCA).

As a former general manager of MEA (1981-1989), I strongly oppose the move to deregulate because the risks are too great and the benefits too few. Without regulation I am concerned that rates will increase, accountability will decrease, and service may decline.

MEA is claiming that if they are regulated, charitable organizations may not receive donations from MEA. I do not agree with this claim, as most other regulated utilities, including MTA and Chugach Electric, contribute to charitable organizations.

I believe this is a smokescreen to divert our attention from the real issues involved with deregulation. The RCA has stated that charitable contributions cannot be included in the rate base, but there are sources of funds, including profits after all expenses, within MEA that may be used for such contributions.

In the recent RCA order, they state, "the regulations provide avenues to allow MEA to make whatever charitable donations it desires." The RCA has complimented MEA on their desire to make such contributions.

I understand MEA recently sent a letter to many charitable organizations about their ability to continue contributing to them. I consider this a lobbying effort to seek a "yes" vote for deregulation.

MEA is a cooperative, but it is also a monopoly.

Independent professional oversight by the RCA will disappear with deregulation of MEA. MEA is proposing to establish a "member-run board of tariff appeals."

This board would be independent of the MEA board of directors and management, and selected from a pool of all interested members and chosen by lottery. However, the board of directors would have the final say.

With all due respect, I doubt many of the volunteer members of the board of tariff appeals will have the expertise to deal with the complex issues that may come before them.

Under deregulation, the board and management will have all the authority, without independent professional oversight from the RCA, to increase your electric rates, handle consumer complaints, various fees, line-extension charges, relocation costs, service interruptions standards, and on and on, as well as have sole discretion in how they spend our money.

Members already have the right to appeal to management and the board. Deregulation will eliminate RCA's independent professional oversight and the right of an MEA member to appeal to the RCA will be eliminated.

The tiny amount of 30 cents for regulation on a $100 electric bill is well worth the professional oversight of MEA by RCA.

Without regulation, the board of directors and management are more important than with regulation. Over time there may be changes on the board and/or in management. Possible changes and the impact of those changes are unknown at this time. Without regulation by independent professional oversight, there is a future risk to MEA members. MEA members need confidence in the board and management, whether regulated or not.

Comparing rural Copper Valley Electric (CVEA) to MEA from a deregulation standpoint is interesting! I understand deregulation may be working well for CVEA. But, CVEA only serves about 10 percent (3,400) of the number of consumers served by MEA.

CVEA has little growth in the number of consumers it serves. MEA is probably the fastest growing electric utility in the state, if not the nation. CVEA generates its own electricity. MEA purchases most of its electricity from Chugach Electric, the cooperative they attempted to acquire and spent an unknown amount of money to do so.

CVEA is an active member of the Alaska Rural Electric Cooperative Association, a statewide trade organization that works closely with the electric cooperatives on issues affecting the industry. MEA is not a member.

CVEA has a good working relationship with their work force, which saves them money. MEA does not have a good working relationship with some of their work force, which is costing us money.

This vote for deregulation would be a major change for MEA members. I do not think it is in the best interest of members to lose the independent professional oversight provided by the RCA. Please get additional information from www.utilitywatch.org and join me in voting no on deregulation of MEA.

Jim Palin was the general manager of MEA from 1981 to 1989.