Member Profile - Chugach Electric Association

Anchorage utility has ‘powered Alaska’s future’ for nearly 70 years

A Chugach Electric Association employee works on a power line near Indian along Turnagain Arm.
By Carly Horton Stuart

AGC Summer Member Profile Chugach Electric Association

Anchorage was a far different place in 1948.

The population was less than 20,000. There was no public high school, major library or international airport. Alaska wouldn’t achieve statehood for another 10 years. With electricity in short supply, the city relied on cobbled-together sources that included diesel generators and the boilers and generating equipment of a wrecked ocean-going tanker beached at the mouth of Ship Creek.

On March 1, 1948, to create the distribution system that would meet current and future residents’ electricity needs (the Anchorage population increased nearly 1,500 percent between 1940 and 1951), Chugach Electric Association was incorporated as a Rural Electrification Administration cooperative.

Discussions had started the year before, when 200 individuals came together to form a cooperative with the goal of turning on and keeping the lights shining for Anchorage. Today, Chugach is Alaska’s largest electric utility, providing service to more than 68,000 members at 84,000 metered locations.

According to Julie Hasquet, Chugach’s corporate communications manager, three primary types of ownership exist for electric utilities: investor owned, where profits go to shareholders; municipal systems, where profits go to the local government; and cooperatives, in which to receive service you must become a member and margins are allocated back to the members of record for the year in which they were earned.

“Through superior service and safe, reliable and competitively priced energy, Chugach is fulfilling the responsibilities of a public utility organized as a member-owned, nonprofit electric cooperative,” Hasquet said.

Chugach is a “vertically integrated” electric utility, meaning it provides generation, transmission and distribution services to parts of Alaska’s Railbelt. It accomplishes this through generation facilities, such as the jointly owned Southcentral Power Project and Eklutna Power Plant; the state-owned Bradley Lake Hydroelectric Project near Homer; and Fire Island Wind, a wind-turbine project three miles off the coast of Anchorage.

Its area extends from Anchorage to the northern Kenai Peninsula, and from Whittier to Tyonek. The utility’s 531.2 megawatts of generation capacity includes 2,153 miles of energized line — 434 miles of transmission line including Chugach’s share of the Eklutna transmission line; 896 miles of overhead distribution line; and 823 miles of underground distribution line.

The cooperative philosophy means Chugach exists solely to serve its members. Its seven-member board of directors, elected from within the membership, “sets policy, employs a CEO and fulfills fiduciary responsibilities,” Hasquet said.

In years when revenue exceeds expenses, those margins are allocated to the members of record for the year in which they were earned through the Capital Credits program. In December 2016, more than $4 million in a retail Capital Credits retirement was distributed among 58,795 members from the year 1990 and a portion of 1991. Checks ranged from a few dollars to $179,000, with an average credit/check of $61.

Over its nearly 70-year history, Chugach has experienced its share of challenges. There are operational challenges faced by utilities operating in the Alaska environment, such as those brought about by avalanches, earthquakes, snowstorms, volcanos and wildfires.

In recent years, the company successfully managed and mitigated the construction of a major new power plant, the expiration of a pair of long-term wholesale contracts to provide power for two other utilities, and the transition of natural gas producers and contracts in the Cook Inlet Basin.

Thanks to years-long, thoughtful planning, the addition of a new power plant and the loss of two wholesale customers resulted in only modest increases in rates.

“The average Chugach members in the three major service categories — residential, small commercial and large commercial — today pay less for electric service than customers of other Railbelt electric utilities,” Hasquet said.

Chugach continues to receive high ratings from its members in annual surveys. Recently, it has taken a leadership role in seeking to work with other utilities on behalf of their collective customer bases.

  • In 2013, the jointly owned (70 per-cent Chugach/30 percent Municipal Light & Power) Southcentral Power Project was completed ahead of time and under budget. “Its efficiency is saving members millions of dollars a year in avoided fuel purchases,” Hasquet said.
  • In 2016, Chugach and ML&P jointly purchased ConocoPhillips’ one-third working interest in the Beluga River Unit gas field (30 percent Chugach/70 percent ML&P) — a deal that is estimated to save the residents of Anchorage millions of dollars and supply a significant portion of the utilities’ gas needs over the next two decades.
  • This year, Chugach, ML&P and Matanuska Electric Association announced they had reached agreement on a joint power pool, which will use the most efficient units of the three utilities to serve the collective needs of their customers, providing additional fuel savings and further reducing carbon emissions. The details of the agreement are still being worked out, and the utilities plan to file for approval from the Regulatory Commission of Alaska in 2018.

“MEA and Chugach Electric have been integrally linked for decades,” said MEA CEO and general manager Tony Izzo. “Recently, our relationship shifted from a wholesale power-purchase arrangement to a partnership between two vertically integrated utilities. This, combined with new leadership, has resulted in innovative solutions that promise to reduce costs, lower carbon emissions and improve reliability for our members. We are optimistic this is just the beginning of a more cohesive and cost-effective Railbelt electric system.”

Looking ahead, Chugach CEO Lee Thibert said the company is “very excited about a resolution recently passed by our board emphasizing sustainability as a business philosophy for Chugach. As a member-owned, not-for-profit cooperative, we are focused on creating and supporting a strong economy for future generations of Alaskans. Sometimes called the ‘triple bottom line,’ it means you take a more holistic view of the business and the implications of decisions.”

Part of that approach, Thibert continued, “is evaluating economic, social and environmental measures when we are considering projects and initiatives. Focusing on a long-term, sustainable business helps ensure we meet the present-day business needs without compromising the ability of future generations to meet theirs. Our goal is to provide a stable supply of energy for the long term at a reasonable price. By being a sustainable energy provider, we support economic development and job creation for Alaskans.”

Carly Horton Stuart is a freelance writer who lives in Anchorage.