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Mayor's Corner

2018 proposed sale of ML&P to Chugach Electric

Project Timeline

In April 2017, the Anchorage Economic Development Corporation (AEDC) formed an Electric Utilities Working Group to explore the opportunities for merging Municipal Light and Power (ML&P) with Chugach Electric Association, Inc. (Chugach). At the conclusion of their work, the group sent a letter to Mayor Berkowitz and the Anchorage Assembly recommending a merger of the two utility companies.

In June 2017, the Anchorage Assembly passed a resolution urging the Municipality of Anchorage (MOA), ML&P and Chugach to begin substantive steps to explore merger opportunities. While a merger was not possible, an outright sale of the utility was a viable option.

In addition to exploring the opportunities with Chugach, other entities expressed interest in ML&P. Following an in-depth review and an independent analysis of the market value of ML&P, on Dec. 21, 2017, Mayor Berkowitz announced that he would ask voters to approve the sale of ML&P to Chugach in the April 2018 election.

During the month of January 2018, the Anchorage Assembly heard public testimony on the proposed sale of ML&P to Chugach. At the Jan. 23 meeting, the Assembly voted to include the proposed sale on the April 2018 ballot.

Now that the proposed sale of ML&P has been approved by voters, the Municipality and Chugach will negotiate the specific terms of a contract governing the sale (see draft documents below, prepared in October 2018).  The contract will come back to the Assembly for review, and must be approved by the Assembly via ordinance before the end of 2018 for the sale to proceed. Further approval of the contract by the Chugach Electric Board of Directors and the Regulatory Commission of Alaska (RCA) will also be required before the sale closes.  It will likely take about 18 months to complete the sale.

Proposed sale information:

Chugach presentation to Assembly (Dec. 21)

Audio of worksession #1 (Dec. 21)

Text of AO 2018-1(S) (Jan 12)

Audio of worksession #2 (Jan 12)

Chugach Electric Presentation to Assembly (Jan 19)

Audio of worksession #3 (Jan 19)

Municipality of Anchorage Town Hall Presentation (Mar 5)

Chugach Electric Town Hall Presentation (Mar 5)

Payment In Lieu of Taxes Agreement (drafted 10/18/18)

Asset Purchase and Sale Agreement (drafted 10/25/18)

Eklutna Power Purchase Agreement (drafted 10/23/18)

Beluga River Unit (BRU) Fuel Agreement (drafted 10/19/18)

Video of the March 5 town hall presentation was aired on Channel 9 daily at 9:30am through March 31.  It is also available on Mayor Ethan Berkowitz's Facebook page

About ML&P

ML&P 101

About Chugach

Chugach 101

Media and communications

Press release, Dec. 21, 2017

Media stories

FAQs:

If Chugach buys ML&P, won’t this create a monopoly?

No new monopoly will be created as a result of this sale. ML&P and Chugach Electric currently have separate and distinct service areas—and customers cannot choose between utility companies. Utility companies are regulated by the Regulatory Commission of Alaska (RCA).

Won’t this cause rates to skyrocket?

Chugach Electric has committed to not raising rates as a result of this sale, and projects that the sale will result in cost savings. The rates set by utility companies are regulated by the Regulatory Commission of Alaska.

Will this raise taxes?

No.

What will the MOA do with the $1 billion from the sale?

At least $542 million will be used to retire existing Municipal debt. The balance of the $1 billion will be invested in the MOA trust fund, and used to preserve existing utility contribution under the tax cap.

Will ML&P and Chugach employees be laid off due to this sale?

No. Chugach Electric has committed to not laying off ML&P or Chugach employees as a result of this sale.

Does this proposed sale indicate that the MOA will move to privatize other services such as water, sewer, recycling and trash collection?

No. This is a unique opportunity for the MOA, and is the only sale we are considering. The proposed deal is worth approximately $1 billion. Basically, the sale secures the MOA budgets, and is good for taxpayers and ratepayers.

Has the MOA sold a utility company in the past?

Yes. In 1998, Anchorage residents voted to sell the Anchorage Telephone Utility. The MOA trust was established from the proceeds of that sale.

What opportunities does the public have to weigh in on the sale?

Now that Anchorage voters have approved moving forward with negotiations, the Municipality and Chugach will negotiate a contract governing the sale, and the contract will come before the Assembly via ordinance for consideration through the public hearing process.  The Regulatory Commission of Alaska will also review the transaction in a public proceeding before the sale closes.

Past public presentations on ML&P proposed sale:

Thursday, February 8, Rabbit Creek Community Council

Monday, February 12, Mountain View Community Council

Thursday, February 15, Airport Heights Community Council

Thursday February 22, Huffman/O’Malley Community Council

Wednesday, February 28, Hillside Community Council

Thursday, March 1, Turnagain Community Council

Monday, March 5, Public town hall meeting, Loussac Library

Tuesday, March 6, Downtown Rotary

Monday, March 12, Anchorage Chamber, Make It Monday forum

Thursday, March 22, Bayshore/Klatt Community Council

Wednesday, March 28, East Rotary

    • Mayor's Corner
    • Mayor: Ethan Berkowitz
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