Judge will decide MEA's transmission fate

WASILLA — A price rate previously granted to Matanuska Electric Association has been suspended until August, and will see a hearing before an administrative law judge, the Regulatory Commission of Alaska has ordered.

MEA filed for a new rate for “wheeling” services — transmission from one utility’s service area to another’s — in December 2015. MEA will not be able to charge for wheeling services until at least August 2016, and potentially later, according to a Feb. 5 filing.

The rate filing by MEA shows the utility intends to offer some wheeling services at a lower rate than those offered by Chugach Electric Association, who MEA accuses of contesting their lower rate to protect a monopoly.

For example, the proposed annual MEA rate for Scheduling, System Control and Dispatch is about $1.83 per kilowatt. The cost for those same services through the Chugach system is $2.08 per kilowatt. The annual rate for reactive supply and voltage control — power absorbed or generated to keep voltage at acceptable limits during transmission — is about $2.85 per kilowatt for MEA and $2.87 per kilowatt for Chugach. Other services are provided by Chugach at lower rates: spinning reserve, essentially the extra capacity in generators that are online but not operating at full capacity and used in the event of a contingency, would cost utilities $10.03 per year per reserved kilowatt, versus about $26.30 per year per through MEA’s transmission system.

The lower rates don’t generally apply to customers inside MEA, but could affect electric rates for customers in other utilities that use power potentially flowing through MEA-constructed transmission lines, according to the filings.

“The utility most likely to benefit from MEA’s transmission services is Golden Valley Electric Association, Inc., because (Goldon Valley) could potentially wheel power through MEA’s transmission system up the intertie to serve its customers in Fairbanks,” reads a filing letter signed by former general manager Joe Griffith.

During the public comment period, Chugach objected to MEA’s proposed rates, according to a letter filed by Mark Johnson, Chugach’s general counsel. MEA had not offered accounting records showing the rates were necessary, and the transmission rates would represent a “piece-meal” ratemaking for different services, Johnson wrote. MEA should be required to wait to introduce the transmission rates at the same time it revised all of its rates, what is known as a general rate case.

Chugach has a similar case pending before the RCA, and it would be inappropriate to grant MEA’s rate without also deciding Chugach’s case, Johnson wrote. Finally, past transmission tariffs submitted by Chugach and the Homer Electric Association were subjected to additional scrutiny, and MEA should face the same scrutiny, Johnson wrote.

“As a matter of fairness, MEA should be required to justify, explain, and defend their proposal with as much rigor as has Chugach and (Homer Electric Association),” he wrote. “Postponing action on MEA’s case holds the potential for much greater efficiency depending on the nature of the commission final decision on Chugach’s pending transmission rate case.”

MEA responded by saying that the rates they were proposing were first-time rates. Regulations don’t require accounting records to back them up, according to a response letter by MEA general counsel David Pease.

MEA should not be required to wait for a general rate case because it would take more than a year, Pease wrote. In the meantime, the company would miss out on revenue potentially generated by existing transmission assets connecting the Eklutna Generating Station to the Teeland substation. Wheeling fees account for hundreds of thousands of dollars in revenue for Chugach per quarter, according to past Chugach filings.

“MEA should not be required to wait for a general rate case to be decided in order to collect wheeling revenue, especially since it will be more than a year from now when MEA’s rate case will be filed,” Pease wrote. “All Chugach’s second point seeks to do is prolong a wheeling monopoly presently enjoyed by Chugach.”

MEA would also charge customers only for the specific equipment used in transmission, Pease wrote, which was different than Chugach’s past approach to charging the maximum rate regardless of what infrastructure was used.

Chugach was seeking to limit competition, Pease wrote.

“No potential transmission customer has filed any comments to the MEA transmission tariff filing,” he wrote. “Ironically, it is a transmission wheeling competitor that is seeking to delay implementation of MEA’s transmission tariff.”

MEA viewed the review as largely a procedural matter, said spokeswoman Julie Estey.

The commission’s order sets a preliminary hearing for 9:30 a.m. on March 2, in the East Hearing Room of the RCA building, 701 West Eighth Ave., Suite 300, Anchorage.

Administrative judge John P. Wood has been assigned to review the case, according to the order.

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.