GVEA interested in ML&P-Chugach deal
The Fairbanks Daily News-Miner is reporting this morning that the Golden Valley Electric Association is more than a little interested in the proposed $1 billion sale of Anchorage’s Municipal Light & Power utility to the Chugach Electric co-op.
The newspaper says GVEA sent ML&P a nonbonding letter of interest that “provides a purchase price range of $875 million to $1 billion and promises not to raise rates or lay off employees for 24 months.”
“It’s not an offer,” the newspaper reported GVEA CEO Corey Borgeson as saying. “This is a little bit of a defensive move. There is concern that if we lose one of our major suppliers that we may see higher costs of energy from the Anchorage area.”
The letter gives GVEA an opportunity “to work on issues and conditions of the sale,” Borgeson said.
Other entities also have submitted letters of interest, but Anchorage officials are blocked from discussing the proposed deal because of a nondisclosure agreement.
“I am very limited with what I can say,” Kristin DeSmith, communications director for Anchorage Mayor Ethan Berkowitz, told the News-Miner.
Borgeson told the newspaper GVEA is interested in “buying components of ML&P, namely gas wells in Cook Inlet, a new power plant near Eagle River and the Bradley Lake Hydroelectric Project of which GVEA owns a 17 percent share.”
We can only assume GVEA will have better luck at getting sale details than Anchorage residents.
While Chugach and the city promise there will be no property tax increases “as a result of the transaction,” they have not said whether taxes will go down, and, if so, when? And, by how much?
That central question – along with a host of others – has yet to be addressed in detail, in public, even as Church Electric’s slick website urges voters to say yes on April 3 to approve the city’s negotiating the sale. The city also has offered little information.
For instance, there have been others interested in the sale, but who they are or what they offered has not been disclosed. No one has explained the rush to get the measure on the ballot or disclose why the entire deal has been put together in secret.
All we are told in very general terms is that the sale is a “win-win for Anchorage.”
Maybe, but how is anybody to know? Along with no property tax increase, the city and Chugach say the deal will bring reduced long-term electric rates, no job losses at either utility and increased efficiency.
How that can be true is something that needs to be explained, too, along with why the vote also would change the charter to allow sale of the utility with only a simple majority.
The purchase, if approved by voters, must be completed by Dec. 31. Chugach would pay $712 million to cover about $542 million of ML&P debt and $170 million in equity. Over the next 30 years, Chugach would pay a $170 million acquisition payment and $142 million in lieu of taxes. That’s slightly more than $1 billion.
A bothersome point in the deal also is that nobody is arguing against the sale. Mayor Ethan Berkowitz wants the deal, so ML&P is not going to challenge the sale. Chugach wants the sale, so it is not going to, either. Who is asking the tough questions?
This, in fact, may be a great deal for the city, but we should keep in mind that government secrecy goes hand-in-hand with government screwups, no matter the subject – even the sale of a publicly owned utility.