Anchorage Municipal Light and Power Bills are about to go up. The rate hike is due to construction of a new power plant.
Bills started going up Oct. 25 by $11 or $12 for the average residential customer.
This increase is primarily to fund the utility’s investment in the Southcentral Power Plant that went into service in January on the Campus of Chugach Electric Association.
“Our cost of that is about $111–$127 million all told, and that’s almost a $400 million plant,” Jim Posey, the General Manager of ML&P, said. “And the two utilities got together and put it in one place, on the south side of town. That is a big driver of the rate increase that we have today.”
Chugach customers saw their rates increase by about $4 on average back in February.
The rate increases are different because Chugach is a cooperative with a different rate structure. The silver lining of the utility price hike, officials say, is that the new plant will require up to 30 percent less natural gas. Posey says the slight increase in power bills will pay off over the long run.
“Fuel is our biggest cost, and if you can save 25 to 30 percent as we are, you’ll see fuel savings alone of around $4-6 million, but the cost of the mortgage is still what you gotta cover, and over time that declines,” Posey said. “But your fuel savings are absolutely locked in for 30 years with this.”
In addition to fuel-efficiency, ML&P officials say other benefits of the new plant, include: better power supply reliability, lower maintenance costs, and a significant reduction in emissions.
Another rate increase of about $3 to $4 to cover construction of the Southcentral Power Plant is expected in early 2016. The rate increases together total 22 percent.
The increase still has to be approved by the Regulatory Commission of Alaska.