MEA seeks to change rules for developers

PALMER — Matanuska Electric Association’s proposed changes to the way it reimburses subdivision developers is getting universally poor reviews in that community.

“I’d just go on the record as saying this is a terrible idea,” Chuck Spinelli, a longtime and prolific builder of Valley homes, said at a Friday meeting called to discuss the rules changes.

“I think it’s a horrible idea,” added developer Butch Moore.

Currently, if an individual or a developer pays to extend a power line into new property, MEA will pay the developer a reimbursement out of fees charged to new customers who hook into that newly extended line. MEA proposes eliminating that reimbursement and asking developers to put up a deposit of $2,100 per lot for hookups to lots sold out of the subdivided land.

MEA Acting Chief Financial Officer Matt Reisterer said the program as it stands puts the costs on the wrong people.

“The current policy is extremely generous,” he said, adding that it’s generous to developers at the expense of ratepayers. “It adds a cost to MEA members.”

The changes to the rules will need to get approval from MEA’s board of directors before they can go into effect. Friday’s meeting was to inform developers and other members of the public.

Moore pointed out that at the end of the process, MEA is handed a new line that a developer paid to put in.

“It’s a free gift of an asset to MEA,” Moore said.

Reisterer said that the line itself is free, maintaining it is not.

“It’s a huge transfer of responsibility,” he said.

What about lines that go in, then wait for homes to be built on the land it’s meant to service?

“For us, unless it has a service on it, it’s a liability,” Reisterer said. “It’s a liability because it’s sitting there and it needs maintenance.”

Moore did some rough calculations based on a subdivision he did on the banks of the Susitna River. He said that when he put service in, it cost him $4,500 a lot. When he was reimbursed by MEA, he received $3,000 of that back. Thirteen of his 47 lots sold, so he wound up recouping $39,000 of his initial investment of $211,000.

Under the new proposal, MEA wants him to put up a deposit, which means that for a lot that doesn’t have power, he would pay $6,800 per lot. That’s money that gets passed rdown to the person buying the lot.

“When lots are selling for $30,000, $40,000, that’s a huge increase,” he said.

Assemblyman Jim Colver attended the meeting and testified that his worry is for rural users.

“We have a lot of people that aren’t served yet,” he said.

If the change makes it harder for people in rural parts of the borough to get connected, that would be worrisome, Colver said. He suggested MEA take a look at a “double-branch” policy, maybe one set of rules for individuals who want a line and another for developers. He urged MEA to proceed deliberately.

“What are the issues that you’re trying to solve? Let’s look at it, take some time,” he said.

Spinelli used a metaphor to describe how what MEA wanted to do would look like if it were a plan implemented in his business.

“Spenard (Builder Supply) is going to pay for the lumber on my houses and I’m going to make money selling them,” he said.

He said reimbursements like MEA’s are standard practice everywhere he’s built homes, be it in the Valley, Anchorage, Idaho or California.

But, Reisterer said, the current process is something of a legacy at MEA. It was implemented at a time when MEA was trying to encourage building out its system. Now MEA is focused on a new phase — building that system more robustly to meet future needs. The company is building a power plant near Eklutna and plans major upgrades to large power lines running through Wasilla.

“We’re building for the next step,” he said.

Contact Andrew Wellner at 352-2270 or andrew.wellner@frontiersman.com.