By Tim Bradner
Alaska Journal of Commerce

A consumer group has gone to the Regulatory Commission of Alaska and state Superior Court to try to stop Chugach Electric Association's board of directors from adopting a four-year contract with some of its employees.

Chugach Consumers asked the RCA Dec. 4 to issue an emergency order to Chugach to delay the action on the labor contract for employees represented by the International Brotherhood of Electrical Workers Local 1547. Alaska Superior Court Judge Craig Stowers issued a temporary restraining order Dec. 6, barring the board of Chugach from considering the wage increases. Stowers set a hearing for the matter for Dec. 15 in Anchorage.

The labor contract was added to the board's agenda with little public notice other than a posting on the utility's Web site Nov. 30, according to Ray Kreig, a vice chairman of Chugach Consumers and a former Chugach Electric board member.

Chugach spokeswoman Patti Bogan said she could not comment on the issue before the board had taken action.

The RCA has never intervened in a utility wage issue before, but Kreig said the agency has authority to do so. State law grants the RCA authority to “investigate the management of a public utility and its wage and salary scales and agreements for the purpose of determining inefficient or unreasonable practices that adversely affect the cost or quality of service of the public utility,” according to the complaint filed with the RCA.

The proposed contract would increase wages and benefits for Chugach's IBEW workers by 21 percent over four years, Kreig said. The first year increase is 11 percent, followed by 5 percent the second year and 5 percent in the third year.

While this wouldn't have a dramatic immediate effect on local electric rates — rising fuel prices are having much more significant impacts — a few percentage points in the rates will add up. The cumulative effect of the increase over time would be substantial, he said.

“Chugach's rates are already 20 percent over what they would be if the utility followed national norms in good business practices,” Kreig said.

“IBEW workers will get a nice fat bonus, but our grandchildren will be paying for it,” Kreig said.

Kreig said that Chugach Consumers would intervene in a rate case now pending before the RCA as to how any wages increase would be reflected in Chugach's rates. In its filing with the RCA, Chugach Consumers said the Chugach board action is important because it will set precedent for subsequent utility contracts.

“Chugach Electric Association has historically charged very high non-fuel rates to its customers compared with national averages for electric utilities of a similar system configuration,” the consumer group said in the filing.

In 1992, Chugach charged distribution customers 3.5 cents per kilowatt hour above the wholesale cost of generated power and transmission, while national norms for systems of similar customer usage and service density were paying 1.25 cents per kwh. In 2004, Chugach was charging 4.5 cents per kwh while the national norm was 1.5 cents/kwh.

Labor is 17 percent of the total cost of electric service, Chugach Consumers said in the filing.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.