MEA ups voltage in power line debate

WASILLA — If the city’s planning commission requires Matanuska Electric Association bury 3 miles of high-voltage power lines, city residents and businesses can expect a significant jump in their electricity rates.

That’s the message MEA General Manager Joe Griffith sent in a strongly worded letter to Wasilla Mayor Verne Rupright dated July 15.

In the letter, Griffith says that if the commission votes to approve MEA’s application to locate the new lines along its preferred route, but that required those lines be in an underground utilidor, the electricity co-op will petition the Regulatory Commission of Alaska to pass on those related costs to Wasilla residential and business ratepayers.

“I have directed my staff and legal counsel to commence work on a request to be filed with the Regulatory Commission of Alaska seeking the creation of a special surcharge on all sales of electricity within the city of Wasilla,” Griffith says in the letter. “This surcharge will result in a substantial increase in the cost of electricity within the city of Wasilla.”

How “substantial” is still being worked out, said Kevin Brown, MEA spokesman. While it will mean a significant increase in what residential customers pay, those that will really feel the hike will be the city’s larger users of electricity. Those include the city, Wal-Mart, The Home Depot and other big-box retailers that also generate a significant portion of Wasilla’s sales tax revenue, Brown said.

“You could potentially see $200,000 to $400,000 a year in increased electrical rates for those entities,” he said. “That’s higher costs to consumers, higher costs to do business. And the other big users in Wasilla are users like schools, government buildings, which will pass their costs on to everyone in the borough.”

As for the city, Rupright provided a letter responding to Griffith sent July 19. In that letter, which “I found was rather electrifying,” Rupright says he’s baffled that MEA has seemingly done an about-face on the issue of placing the high-voltage lines connecting its power substations at Mat-Su Regional Medical Center and Herning Avenue. Those lines would require 80- to 100-foot-tall towers, which city staff and the planning commission have objected to because of the impact they say they’d have on views and property values along the Parks Highway.

In a November 2012 meeting, the city and MEA seemed to be on the same page about altering MEA’s preferred route to set back its towers along the highway behind the business corridor.

“During our discussions in November of 2012, you arose from your seat and stated, and I may be paraphrasing: ‘I agree with Verne. We can modify this in that area into the city,’” Verne wrote.

For his part, Griffith seems to recall that meeting differently.

“I observe that the city of Wasilla’s permitting process has certainly undergone an abrupt about face since our meeting last November, at which you and your staff offered MEA your assurance that permitting this transmission line, as an overhead facility, would not be a problem,” he wrote.

Who bears the cost?

Upgrading the power lines is necessary to serve the Mat-Su’s fastest growing core area, Griffith has said. MEA estimates constructing above-ground towers along its preferred route would cost about $9.75 million. Rerouting the lines to run behind the Parks Highway business corridor would increase that to about $13.4 million. Other routes MEA identified and discounted as not desirable range in cost from $13.9 million to run along Cottle and Fairview Loop to about $40 million to bury the lines.

At its July 9 meeting, the Wasilla Planning Commission seemed to not only favor the options of burying the lines, but to take that a step farther and require MEA build a utilidor, a tunnel that people can walk through to maintain the lines.

When the commission meets again Aug. 13, it’s expected to approve MEA’s application and route, with the stipulation the lines either be buried or located in an utilidor.

“That’s a ridiculous solution to a simple problem,” Brown said of the utilidor proposal.

That option would increase the cost of the project exponentially, well beyond what the cost to simply bury the lines, Brown said.

Either way, MEA says it wants city ratepayers to know what that could potentially mean for their electricity rates, and for how long.

“When all is said and done, this surcharge will set electric rates within the city of Wasilla at a level high enough to fully recover the annual carrying costs of the additional investment related to undergrounding the transmission line,” Griffith wrote. “The surcharge will remain in effect for the expected useful life of the transmission line. MEA presently uses a 36-year life for its overhead transmission line.”

Griffith also promises “face-to-face” meetings with the city’s larger commercial customers “to ensure they fully understand the significant effect this rate increase may have on their businesses.”

Because MEA has an open application with the city’s planning commission, Griffith’s letter to the mayor is misplayed, Rupright says in his response.

“As you are also aware, once the matter was elevated to the planning commission of this city, it is clearly in the public process,” Rupright wrote. “Within that process, several things occur. Neither I nor my administration has ever made it a practice to have ex parte communication with a commission as well as the city council outside of the public process.”

One of the basic areas of disagreement comes with the issue of, is who should pay for costs associated to the project that go above and beyond MEA’s preferred $9.75 million alternative. In industry-speak, that’s referred to as the “rate causer.”

“In Alaska, there is a well-established utility ratemaking principle that the cost causer should be the cost payer,” Griffith says in his letter. “This is the guiding principle under which MEA will be seeking recovery of the additional costs associated with any requirement that transmission lines within the city of Wasilla be placed underground.”

Just because the city’s planning commission won’t rubber-stamp the exact plan MEA wants doesn’t necessarily mean only city residents should foot the bill, Rupright says. There are several much less expensive alternatives, including relocating the lines, that won’t require burying them.

“It appears that several solutions are available as well as a question concerning the merits concerning the proposed plan as it now exists,” Rupright wrote. “The question then may well be who is the rate causer?”

Those solutions include not upgrading the lines at all between those substations, which Rupright says that in prior testimony on two occasions to the RCA, MEA has admitted isn’t absolutely necessary.

In the end, Griffith’s letter isn’t a “threat” to the city of Wasilla or the planning commission, Brown said.

“We don’t make threats,” he said. “We’re drafting the paperwork (for the RCA) right now. We’ will go to the RCA the moment they pass this resolution saying to build it underground in a utilidor.”

Contact Greg Johnson at 352-2269 or greg.johnson@frontiersman.com.

What: Wasilla Planning Commission Meeting

Why: Expected to vote on MEA application to build high-voltage power lines along the Parks Highway.

When: 7 p.m., Wasilla City Hall, 290 E. Herning Ave.