Dive Brief:
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Chugach Electric Association has filed an application with state regulators for authorization to acquire Anchorage's Municipal Light & Power (ML&P) for $1 billion, about a year after the city's voters approved the deal.
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Merging the two utilities and their adjacent service territories is expected to create millions of dollars in savings for customers over the long term, utility experts said in the application.
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A review by the Regulatory Commission of Alaska (RCA) is expected to take about six months, utility officials said, with the deal possibly closing in February 2020.
Dive Insight:
Combining Chugach and ML&P will achieve economies of scale expected to generate net savings in excess of $200 million over the next 40 years, the utilities told regulators in the application.
The benefits "will flow from reducing the overall cost structure of the industrial enterprise that produces electric power for the customers in ML&P and Chugach service territories," according to the application.
In a statement, Chugach CEO Lee Thibert said the filing was a "milestone" after thousands of hours of work.
The application requests RCA authority to expand Chugach's service territory, and says the consolidated utility will then file for new rates "after we have enabled achievement of the savings."
"Chugach will propose rate revisions supported by a consolidated revenue requirement in a general rate case in which the Commission will make decisions on how the savings will be shared among customers," the utility said.
In testimony filed with the application, a consultant hired by Chugach, Thomas Lovas, told regulators the proximity and close relationship between the utilities meant there were significant possible savings.
"Economies of scale and eliminating duplicated functions offer savings," Lovas said. "Chugach and ML&P provide electricity to contiguous service areas, share a number of electric generation resources, have several points of
interconnection and have collaborated from time-to-time on improvements to electric power supply."
Chugach has about 68,000 customers, and ML&P has roughly 30,000. "The Chugach service territory surrounds nearly all of the area served by ML&P," Lovas added.
