Municipality of Anchorage wins MUSA case
Dispute had been before the RCA for years
Contact: Sarah Erkmann
ANCHORAGE- The Regulatory Commission of Alaska (RCA) last night issued its decision in favor of the Municipality of Anchorage (MOA), finding Anchorage Water & Wastewater Utility’s (AWWU) “Municipal Utility Services Assessment” (MUSA), or payment in lieu of property taxes, is allowed in rates charged to AWWU customers.
The RCA concluded that municipal utilities should be allowed to include in rates a reasonable contribution to assist in supporting the municipal services they receive. The decision essentially saves the MOA, or taxpayers, up to $50 million in potential reimbursement.
Mayor Sullivan is pleased by the RCA’s ruling. “This is good news for the city, and for taxpayers. The decision provides clear guidance on the issue, and brings long-running and expensive litigation to an end.”
The issue has been ongoing since the RCA determined in 2005 that a portion of customer utility bills dedicated to MUSA (payments to the MOA in lieu of taxes) should not be allowed in utility rates.
AWWU leadership appealed the RCA decision to the Alaska Supreme Court. The Supreme Court found no reasonable basis for the RCA’s determination that MUSA payments could not be included in AWWU rates.
The Court remanded the case back to the RCA for further proceedings to make a determination on the merits of the reasonableness of AWWU’s proposed rate increase. AWWU spent more than $1.4 million defending the inclusion of MUSA in utility rates.
- AWWU does benefit from municipal government services
On page 27 of the order, the Commission concluded that the government services provided to AWWU were the same as those provided to the community as a whole and that "AWWU would not be able to provide safe, secure and reliable water and wastewater service absent the underpinnings of a civilized society."
- AWWU has met its burden in proving tax equity
The Commission believed AWWU’s hypothetical tax assessment provided evidence of it meeting the second prong of tax equity tests on page 34.
- MUSA payments do not have the characteristics of a dividend
On page 37, the Commission determined that it is not within the scope of ratemaking to determine the appropriateness of how the MOA chooses to spend its MUSA revenues. They determined that it is a fiscal policy issue within the purview of the voting public. Because MUSA is comparable to a tax, MUSA payments do not have a characteristic of a dividend.
- AWWU and MOA are affiliates
The Commission determined that because MOA and AWWU are "one in the same," that they legally can be described as affiliates.
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