The City and Borough of Juneau and Canada’s Hydro One say they’ve reached common ground over the future of Juneau’s 125-year-old private power company.
State regulators are reviewing the acquisition of Juneau’s power company by Hydro One. Hearings are set to begin later this month over whether the Canadian company is “fit, willing and able” to operate Alaska Electric Light & Power.
But a 22-page joint-agreement filed with the Regulatory Commission of Alaska late Tuesday means those hearings likely won’t happen after all.
In it, Hydro One pledges 39 binding commitments covering corporate independence for AEL&P and assurances over its assets and transparency on how it operates.
In return, the city drops its petition to intervene. As the sole third-party in the hearing, that would streamline the acquisition.
“Collectively, these commitments are very good for the community and they assure that the community will continue to see AEL&P similar to the way it is now,” attorney Kirk Gibson said. Gibson is based in Portland, Oregon, and negotiated directly with Hydro One’s attorneys on behalf of the city.
Gibson said Hydro One’s acquisition of AEL&P’s Spokane-based parent company, Avista Corp., is a complicated and expensive deal requiring approval of regulators in five states. One of the commitments states that Juneau’s 17,000 ratepayers won’t foot that bill.
“We know that they’re paying more for Avista than it was in its market value,” Gibson said. “And as an investor, you’ll want to collect those differences. What it’s saying here is, that they won’t get it from AEL&P.”
Hydro One praised the outcome.
“Hydro One is pleased that we have reached a settlement agreement in the merger proceeding with the City and Borough of Juneau,” Ferio Pugliese, executive vice president for corporate affairs, wrote in a statement to KTOO. “This positive step forward underscores the long-term benefits from the merger of Hydro One and Avista for AEL&P customers, employees and the community.”
AEL&P has an option to purchase the Snettisham hydroelectric plant once it completes its payments to the state. That’s led to concern over the future of a state-owned hydroelectric complex that generates most of Juneau’s electricity. One of the commitments pledges that none of AEL&P’s assets could be used by Hydro One as collateral; there were concerns that a piece of publicly financed infrastructure could one day be used as security against a private corporation’s debt.
“They can’t use Snettisham or other big generation assets as collateral for loans to do anything outside of Juneau without getting separate RCA approval,” Juneau Assemblyman Jesse Kiehl said. “That was a big, big concern. The community talked a lot about the assets here in Juneau including Snettisham — which was built by the federal government — could be pledged against loans elsewhere.”
Acquiring Snettisham would also require approval by the RCA.
Critics of the Hydro One purchase say they’re still looking at the details.
“I really appreciate that CBJ has intervened and therefore they’ve had a seat at the table and they’re able to negotiate a more comprehensive document than the previous iteration was,” Margo Waring said. Waring is a board member of Renewable Juneau, which advocates for carbon-free energy. “I’m going to be reviewing the current document for rate protection, the status and protection of Snettisham and the transparency of processes now and in the future.”
The settlement also includes a $1 million rate credit over five years.
AEL&P says that would save the average ratepayer about 54 cents a month.