About 6,000 commercial and 25,000 residential customers of Anchorage Municipal Light and Power (ML&P) will see their monthly bills increase by between 25 percent and 30 percent in 2017, when the utility prepares to start paying for the $275 million cost of constructing a major power plant.
The rate hike – of $14 to $16 more per month – is intended to cover the replacement price of the city’s 1970s-era George M. Sullivan Power Plant 2 in East Anchorage. Construction on the new plant was completed in 2014, according to the Alaska Dispatch News.
The ML&P proposal is expected to be introduced in early December, according to a report by the local news outlet.
The electric utility hasn’t put forward a major rate increase in some time, City Manager Mike Abbott told Anchorage Assembly members on October 11. While the new plant is expected to lead to significant long-term natural gas savings, the short-term cost of construction will fall to customers, Abbott said.
ML&P’s General Manager Mark Johnston, who also attended the meeting, said ML&P’s other units are either at maximum life expectancy of 35 years or beyond that, according to a segment on the regional NBC-TV affiliate KTUU. ML&P historical has had a reliability rate of 99.9 percent, but Johnston said the power company has had an increase in power outages over the last 18 months, which could be related to its aging units.
“We could have continued to use the old equipment that we have; it would have continued to degrade, and we would have had less reliable service,” Johnston said. “We would have seen costs start to increase because it costs to maintain it and that’s assuming you can find the parts to maintain it.”
If approved by the Assembly, the proposal would then head to the Regulatory Commission of Alaska.