RCA Considering Changes to Public Notification Rules
Published October 31, 2024
By Brian Kassof
The Regulatory Commission of Alaska (RCA) is inviting public input on possible changes to rules about how utility customers are notified of potential changes to their rates or terms of service. Such notifications are meant to alert ratepayers of impending changes and give them an opportunity to comment on whether these changes are fair and reasonable before the RCA approves them.
The commissioners who lead the RCA have expressed concern that the current method of public notification, which relies primarily on notices placed in newspapers, is no longer an effective way to reach the public. They cite shifts in how people get their news and the reduced publishing schedule of many Alaskan newspapers. At a February meeting of the RCA, Commissioner John Espindola noted the need for a new approach, citing complaints from utility customers who only learned of rate changes after they were implemented.
The RCA is asking for suggestions about what other media or means of communication might supplement or replace current methods. Commissioners have mentioned bill inserts or social media as possible solutions. The RCA is also asking if it should require different methods of communication to reach residents of rural communities.
Currently some types of rate changes, such as cost-of-power adjustments (COPAs), are exempt from public notice requirements, unless they are deemed to be of “significant interest to the public.” The commissioners are now asking whether this term needs to be more clearly defined, following an incident in May 2023. The RCA staff and commissioners did not require public notice be given for a COPA proposed by the local utility in the City of Aniak, despite the fact that it would increase residents’ monthly electric bills by over 400%. This led to greater scrutiny of the RCA’s practices and helped initiate the current discussion of notification policies.
Members of the public wishing to provide input on the RCA’s public notification policies have until 5 p.m. on November 6 to submit their comments. The Order opening the docket contains a number of more detailed questions in addition to the ones discussed here. Comments can be submitted here; commenters should specify that they are referring to Docket R-24-002.
The issuance of public notice of proposed rate changes opens a window for members of the public to make comments on them to the RCA. In September the RCA announced that it was reducing the length of this window from 30 days to 14 days. The RCA is treating this as a separate issue from its discussion of public notification rules; it is not a part of this docket and the RCA is not seeking public feedback about the change. AETP will be publishing an article on this change in the coming weeks.
What is the Purpose of Public Notification and How Does it Work?
The RCA regulates many, but not all, Alaskan utilities. All four major Railbelt electric cooperatives—Homer Electric Association (HEA), Chugach Electric Association (CEA), Matanuska Electric Association (MEA), and Golden Valley Electric Association (GVEA)--are RCA-regulated. (The Railbelt refers to the region between the Kenai Peninsula and Fairbanks). The RCA is led by a five-commissioner panel that makes rulings on utility proposals. They are assisted by a professional staff that advises the commissioners. For more information on the RCA and how it functions, see this AETP article.
Public notification rules are intended to ensure that customers are aware of proposed changes to a utility’s tariff (a tariff is a document that sets out a utility’s rates and terms of service). State statute (AS 42.05.411) requires that a regulated utility file any proposed tariff change with the RCA at least 45 days before it goes into effect, and that public notice be given within 15 days of that filing. The RCA can approve the proposed change, reject it, or suspend it for further consideration. Technically the initial filing of a proposed tariff change with the RCA is considered “statutory notification,” while subsequent efforts to inform the public about the proposal are considered “additional public notification.” Since this docket does not concern statutory notification, all references to public notice in this article refer to “additional public notification.”
3 AAC 48.280 allows the RCA to prescribe methods of public notification, and lists three possibilities: Legal notices in newspapers, publication of a notice on the RCA’s website, and direct communication to affected ratepayers. The RCA currently relies on the first two to provide public notice of utility tariff filings. Notice is also posted to the Alaska Online Public Notice website. Although the utilities pay for these notices, the RCA places them.
The RCA exempts certain types of tariff filings from public notification requirements. These generally include COPAs, as discussed below. Certain required informational filings are also exempted. Utilities can request exemptions in other cases when they believe a filing is not of public interest.
Concerns About the Effectiveness of Newspapers as A Means of Public Notification:
The RCA commissioners discussed the need for new methods of public notification during their meetings on February 14 and March 13. These discussions were motivated in part by the situation in Aniak, but Espindola, who introduced the topic, also mentioned complaints from other utility customers who only learned of rate increases after they were implemented. Commissioner Keith Kurber noted that a growing reliance on social media for news, together with the contraction of the newspaper industry, raised questions about the effectiveness of existing notification practices. Then-RCA Chairman Robert Doyle added that he felt that “newspapers are both ineffective and expensive for notice.” Commissioner Robert Pickett went further, saying that what he termed “phony newspaper notice” was effectively no notice at all. (Kurber and Doyle have both since left the RCA, Kurber in May, Doyle in September).
The newspaper industry in Alaska has undergone severe contraction in recent years, mirroring national trends. Over the past several years, the Peninsula Clarion, Juneau Empire, and the Anchorage Daily News have reduced their publication schedules. The Clarion and Empire went to a twice-weekly schedule in May 2023, and the Clarion cut back to publishing once a week in July 2024. The Anchorage Daily News went from issuing a print edition six days a week to twice a week in July 2024, although it continues to put out an electronic edition six times a week. The Fairbanks Daily News-Miner ended its Saturday edition in September 2023. The Seward Journal closed at the end of 2023.
In one recent case that drew numerous complaints about the public notification process, the RCA’s selection of newspapers was seen as a problem. The Alaska Power Company (APC), which serves a variety of communities in Southeast and Interior Alaska, proposed a 15% interim rate increase and a 25% permanent rate increase in August 2023. The RCA placed notices about the filing in the Anchorage Daily News, Peninsula Clarion, and Juneau Empire, although APC does not provide service in Anchorage, Juneau, or on the Kenai Peninsula. Many APC customers only found out about the proposed increases after a story appeared in the Haines-based Chilkat Valley News just days before the end of the public comment period (Haines is part of APC’s service area). Over 100 members of the public submitted comments to the RCA in the week following the Valley News story, with many criticizing the selection of newspapers as inappropriate. An RCA spokesperson told the Valley News that the RCA had followed its standard practice, which favors higher circulation newspapers that it believes are a more cost-effective way to provide notice.
A report prepared by RCA staff covering relevant Alaska statutes and regulations was presented at the RCA’s March 13 meeting. Although the RCA voted to open this docket at its February 14 meeting, the Order opening it did not appear until September 20.
Other Possible Means of Notification:
The commissioners concluded that concerns about the effectiveness of newspapers to provide public notice warranted considering a revision of the relevant regulations, particularly 3 AAC 48.280—(statutes are passed by the Legislature, regulations are developed by state agencies to implement them). Several alternate means were mentioned in these discussions, including social media (which commissioners seemed to conflate at times with all electronic media, including online publications). Doyle also talked about using bill “stuffers” (inserts) as a means of notification.
The commissioners mentioned the popularity of electronic media as a news source, while also acknowledging that the cost or availability of high-speed internet connections in some areas could be a significant drawback. A review by AETP of public notification practices in other states did not turn up any examples of social media being used as a primary means of communication about proposed tariff changes. Reasons may include the ephemeral nature of social media posts, uncertainty if a post will appear in an individual’s feed, and the highly fragmented social media landscape. Some states, such as Virginia, allow public notices to appear in online-only publications, but only those who conform to a set of requirements established by the state.
Bill inserts are more certain to reach all ratepayers, but bring their own challenges. One is the potential cost of printing and mailing notifications to customers receiving their bills through the mail (particularly if the notifications must appear on a separate page for greater visibility, as some states require). The second is what sort of notification should be sent to individuals who receive their bills electronically. Finally, there is the issue of timing. Some utility customers are on different monthly billing cycles, relating to the date they established service. It is not clear if these individual billing cycles, the statutory deadlines for tariff filings, and the RCA’s new shortened comment period can be brought into alignment.
The notification requirements used by public utility commissions in other states has been absent from the RCA’s discussions. Some examples of these include ads on broadcast media (particularly radio), prominent notices on utilities’ websites, notices placed in online publications, and direct contact with ratepayers outside of regular bills.
Are Different Types of Notification Needed for Different Communities?
In addition to asking what means of communication would be most effective to provide public notice in general, the commissioners are also asking if different methods are needed to reach people in what they term “urban markets” and “small rural communities.”
During their discussions, commissioners observed that many smaller communities are not served by local newspapers, and that some rural communities lack reliable internet access. This means that channels of communication that may work well in places like the Railbelt may not be effective in communities off the road system. They are asking for input on what means of communication would be most effective in providing public notice to residents of rural communities, and appear to be open to setting different requirements for different regions if appropriate.
When Should Public Notification Be Required for COPAs?
In addition to asking about forms of notification, the RCA is also requesting input on when it should require public notice of COPAs. Current regulations exempt COPAs from public notification requirements unless a change is made to the method of calculation or a filing is deemed to be “of significant interest to the public”(3 AAC 52.504(d)). The absence of a clear definition of this term contributed to the RCA’s failure to require advanced notification of the steep rate increase due to the COPA in Aniak in May 2023. This led the commissioners to ask if there should be defined guidelines for when public notice of COPAs should be required.
COPAs are quarterly filings made by electric utilities to account for changes in fuel/purchased power costs. COPAs consider two factors—expected fuel costs in the coming financial quarter and the difference between projected and actual fuel costs the previous quarter. Each utility has its own RCA-approved formula for determining how to factor fuel costs into its rates. Since they reflect changes in fuel costs, COPAs can increase or decrease utility rates. The RCA has chosen to exempt them from public notification requirements on the grounds that they are essentially an automatic pass-through of the cost of fuel or purchased power.
COPAs appear on utility bills under a number of names. HEA and MEA list them as COPA, CEA as a “Fuel Adjustment Charge,” GVEA as a “Fuel and Purchased Power Charge.” Since fuel/power purchases are just one of several elements that determine electric rates, the impact of a COPA change varies from utility to utility. CEA has identified fuel costs as composing about 30% of their overall rates—this means that a 10% COPA increase at CEA would translate into a rate increase of about 3%.
The question of when a COPA change is of significant public interest came to the forefront after the RCA failed to flag a 968% COPA increase filed by the Aniak Light and Power Company in April 2023. By the RCA’s own estimates, once Power Cost Equalization (PCE) offsets were factored in, this COPA would increase the monthly bill of someone using 500 kilowatt hours a month from $150 to $619. The increase would be even steeper for customers using more power. The unusual size of this COPA was attributed to a number of factors, including an on-going underestimation of fuel costs by the utility and a rise in fuel prices. The RCA allowed the increase to go into effect in mid-May 2023 without public notice. As a result, most Aniak residents only discovered the rate hike when they received their May bill.
Over 30 Aniak residents detailed the hardships created by the sudden rate hike at a public meeting of the RCA commissioners on June 28, 2023. (For more on the impact of these rate increases, see the excellent reporting by KYUK from June 26 and June 29, 2023). After the public outcry, the RCA rescinded the rate increase and required Aniak Light and Power to amortize the higher fuel costs over a 24-month period.
It is not clear if, at the time of the Aniak case, the RCA was considering the size of a COPA when deciding if a filing was of significant public interest. Then RCA-Chair Kurber did not mention it in his August 21, 2023 letter to the Aniak Energy Steering Committee (a group formed in the wake of the rate hike). And while Laura Simeon, a member of the Steering Committee and Tribal Administrator for the Aniak Traditional Council, explicitly pointed to 3 AAC 52.504(d) in her response to Kurber’s letter, an October 12 reply by the RCA simply stated that “the RCA has not historically issued public notice for COPA filings…” without reference to this regulation. The RCA did say in its October 12 letter that it was examining its internal procedures and regulations, part of the process that led to the opening of the current docket.
The Aniak Energy Steering Committee first suggested defining a COPA that increased rates by more than 10% as being of significant public interest. This figure was also included in a resolution passed by the Alaska Federation of Natives (AFN) at their 2023 Annual Convention. The AFN resolution identified the failure to flag the Aniak COPA as a symptom of a bigger problem—a lack of understanding at the RCA of the unique energy challenges facing rural Alaskan communities. To fix this, the resolution called for additional training on rural energy issues for the RCA staff and for legislation requiring that at least one RCA commissioner be an Alaska Native tribal member.
The commissioners are asking three questions about public notifications for COPAs. First, should there be a firm definition of what constitutes significant public interest, such as the 10% impact on overall rates recommended by the AFN? The focus on the impact of a COPA on overall rates or a total monthly bill, as opposed the percentage increase of the COPA itself, is a reflection of the fact that the impact of a COPA on overall rates varies from utility to utility.
Second, if such a benchmark were established, should it be included in regulations or would an internal RCA policy suffice? Inclusion in regulations would make a benchmark harder to change and would make it visible to the public. An internal policy would be more flexible, but would only be known to the public if the RCA took steps to publicize it (as well as any subsequent changes to the policy).
Finally, the commissioners are asking how any required public notice of COPA increases should be communicated to the public—should they rely on the same mechanisms that are chosen for regular public notice of other tariff changes, or should there be special rules about notifications of these COPAs?
SRF Notifications
One type of filing has not been a part of the RCA’s discussions about noticing tariff changes—Simplified Rate Filings (SRFs) made by electric cooperatives. SRFs, like COPAs, are quarterly adjustments. But while COPAs only apply to the fuel cost component of a bill, SRFs adjust overall rates (excluding monthly customer charges). They allow cooperatives to adjust their revenues to match expenses. SRF increases are capped at 8% a year (or 20% over three years). Although the RCA does not appear to be contemplating changes to the public notifications rules for SRFs, they are worth mentioning, since they illustrate what types of notifications some Alaskan utilities believe are an effective way of alerting members of impending rate changes.
Like COPAs, SRFs are exempt from the public notice requirements of AS 42.05.411. But the regulation that exempts them, 3 AAC 48.730(c), requires a cooperative filing an SRF to “provide its customers with reasonable notice of any rate adjustments…either before or at the time the rate adjustment takes effect.” Cooperatives include information about how they will provide this notice in their SRF filings. These can include a variety of methods-an SRF filed by GVEA in March 2024 said the cooperative would notify members of the rate change in the following ways: Email messages, a Facebook posting, notice in its Ruralite magazine, a message on members’ May bill, display ads in newspapers in Fairbanks and Delta Junction, and a message on its website.
What’s Next?
The RCA will continue to accept public comments on the questions raised in the docket until 5 p.m. on November 6. Filed comments will be posted to the RCA website. The RCA will then consider these comments as it drafts new regulations and policies on public notification of tariff changes. In previous regulation dockets the RCA has held an additional public comment period after it prepared draft regulations. The RCA must file a final order including any changes to regulations by September 20, 2026.
