For three weeks in June, about two dozen attorneys and witnesses crowded into a hearing room at the Regulatory Commission of Alaska’s offices in downtown Anchorage to discuss the minute details of Enstar Natural Gas Company’s request for a rate increase. Southcentral Alaska’s only gas supplier wants to boost residential bills by 4.6 percent to pay for mostly infrastructure investments.
“They are requesting to increase their rates and so we are evaluating the reasonableness of that rate increase for residential and commercial customers,” Grace Salazar said. Salazar is a spokesperson for the Regulatory Commission (RCA), which serves as a kind of court for utilities.
Enstar filed the rate case with the RCA last year and the panel of commissioners heard it this June. The commission’s job is to make sure the rate increase is just and reasonable for consumers. The RCA also exists to insure that utilities can recover their expenses with a reasonable rate of return.
That’s a big concern for Lindsay Hobson, a spokesperson for Enstar. She said the rate increase would recover costs for $70.5 million of mostly infrastructure investments since 2013. One big project the increase will help pay for is an upgrade to the company’s Potter Gate Station.
“We have twin pipelines that run across Cook Inlet there and the upgrades allowed us to physically inspect those pipelines, which is really critical for a system that is nearing 60 years of age,” Hobson said.
The Alaska Department of Law argued the increase was too much at hearings on June 5th, highlighting a miscellaneous expenditure for more than $300,000 dollars, which includes things like, “pizza parties, barbecues, and donuts, pies for celebrations, ice cream, cake” [and] “golf.” Hobson said with 200 employees, they use parties to promote safety. Hobson said the miscellaneous expenditures also includes things like safety gear for employees and safety-related advertising.
Hobson said it is a normal expenditure for any company, providing employee engagement which the company believes will result in better customer service.
If the request is granted, average residential bills will go up by a total of about 4.6 percent. That translates to $5.47 for the average residential customer, a portion of which ($1.92) has already gone into effect. So they’ll increase $3.55 more.
This is a separate increase from the gas cost adjustment which takes place this July. That will be another 8 percent, according to the volume of gas each household uses.
Several utilities that produce power from natural gas and use Enstar’s lines to transport it, including Matanuska Electric Association and Municipal Light and Power, argued against how costs are split in the proposed increase. JL Properties, also weighed in against the increase. All interveners to the rate case were contacted for this story and declined to comment or did not return phone calls by deadline. The RCA is expected to make their final decision by September 22.