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Hydroelectric project millions over budget
A Southeast Alaska hydroelectric project has come in millions over budget, but is expected to bring Juneau plenty of power for years to come.
Alaska Electric Light & Power now is trying to persuade the Regulatory Commission of Alaska to let it raise its rates.
The utility is trying to show that it deserves to collect an extra $15.8 million or more in additional revenue after finishing the project. The utility says it wants $12.6 million at first and the rest can come later.
The RCA denied an interim rate increase request in June and scheduled a hearing July 6 for the utility to further explain its request.
“They’ve given us an opportunity to go back and provide them with some more information,” said AEL&P President Tim McLeod.
The rate hike request is based on a calculation of the amount of profit that the RCA believes the utility deserves to make on its own investments, and how much it deserves to make on money the utility borrowed to invest in the company.
The company’s conclusion is it should be allowed to collect $43 million from ratepayers. That’s up from the $27 million it collected in 2009. The utility says it has a revenue “deficiency” of $16 million.
At the July 6 hearing, the utility expects to have to defend the merits of the new Lake Dorothy hydroelectric project to the RCA commissioners.
Original cost $35 million The Lake Dorothy project originally was expected to cost $35 million. When construction began in 2005 the cost was estimated at $50 million. McLeod said it eventually cost $70 million, following a number of problems during construction, many of them related to the remote location and rugged terrain.
Among questions the regulatory commission will have to answer is whether the rates sought are just and reasonable as mandated by state law.
That’s something that RCA spokeswoman Grace Salazar could take a year or more to determine. The commission, however, has promised an interim decision by mid-July.
“The RCA has a long-standing record of denying rates that are unjust and unreasonable, and approving only those that are just and reasonable to provide adequate and reliable utility service,” Salazar said.
—The Associated Press
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