HomeMy WebLinkAboutAEA - Chairman Robert M. Pickett Letter - Tariffs and Rates REF_Aug_2009IMM
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701 W. 8 VAvenue, Suite '100
Anchorage, Alaska 99501
The Alaska Energy Authority (AEA) was charged with the responsibility to develop a progra
to administer the Renewable Energy Fund. Part of the legislative direction was to include
independent power producers in this program. This is the first time that independent power
producers were included in energy grant programs in Alaska, so extra effort was made to ensu
public benefits were obtained for grant funds. I
All grant agreements include the following grant condition regarding cost -based rates
requests for a certificate of public convenience and necessity (CPCN) by IPPs. I
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Rates for power provided as a result of generation or transmission facilities built with grant funds
may be subject to review and approval by the Regulatory Commission of Alaska (RCA), or if the
rates are not subject to RCA review and approval, they may be subject to review and approval by
the Authority to ensure reasonable and appropriate public benefit from the ownership and
operation of the Project."
The Authority has developed a simple procedure that allows statutory compliance as well as
meeting the grant conditions.
To facilitate this provision, AEA proposes to hire an independent economist to develop a cost -
based rate for electric sales with an appropriate rate of return on equity that will be accepted by
the applicant as a grant condition. The allowable cost -based rate represents the highest rate,
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cost rates or PURPA rates will not apply for projects which obtain REF grant funding.
When complete, the rate analysis will be provided to the applicant and be included with filings at
the RCA. Application of a CPCN is also a grant condition, RCA action must be completed prior
to the issuance of any construction grant funding.
As this REF is a developing program, the IPP REF projects will be used to form a template for
setting of future REF cost -based rates.
V appreciated the opportunity to workwith the RCA commissioners and staff as we identified
concerns and solutions. I have directed the AEA staff to continue to work with the RCA to
develop the detailed procedure for REF IPPs as they relate to the RCA.
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Steven Haagenson
Executive Director