When the State of Alaska granted Enstar Natural Gas Company the exclusive rights to deliver gas to Homer, they did so with the promise that it would be closely regulated. The monopoly was to bring a benefit to the consumer through the efficiency of a seamless system. The regulator’s job was to make sure the consumer got a square deal.
When Enstar came to Kachemak City with a proposal to install our distribution system in our right-of-ways, they offered us a deal of doing it at a cost that was almost double the regulated rate. After it was complete, they would own it. Kachemak City’s reply was, never mind, we can do it ourselves easily for less than the regulated rate. Enstar said we couldn’t do that, but negotiated with us and we ended up with a job cost that was significantly less than their first offer and provided “savings” to our citizens.
We had also asked the Regulatory Commission of Alaska to help us try to get back to the published rate, but they said it was fine for Enstar to charge more than the regulated tariff. What is the purpose of publishing approved costs if they mean nothing? As consumers, we were left just dealing with the monopoly, and the RCA was completely eliminated from the process. We were on our own.
In 2012, Enstar filed for a surcharge to pay for the 25 percent of the total cost of construction that then Gov. Sean Parnell insisted we be obliged to pay. Enstar said in a letter to him that by their calculations the surcharge would be paid off in 10 years and we would then get the same rates for gas as every other Enstar customer. The picture Enstar painted for the commission fit that promise. It showed we would pay $2.55 million, together with the returns and taxes, for a couple of months past 10 years when it would be finished.
On Jan. 23, Homer Mayor Castner called Enstar to find out where we were in the pay-off. What he learned from the conversation was that nothing had been paid down, and in fact owed more than the original amount. On Jan. 31, Castner wrote to Enstar to find out 1) How much has been paid? and 2) How much do you think we owe you? Enstar’s response came on Feb. 6 when they filed for a new tariff that took the unearned gains of five years of accumulated interest, and fixed it into an asset that could be “amortized” into a new rate. They have never provided the answer to the two simple questions above.
So where was the RCA as all this unfolded? Zzzzz — sleeping. They say it doesn’t matter that Enstar was 100 percent off in the sales picture they painted, or that the 44 percent increase to the job cost was sure a surprise. They protect their process, because once they say it is right and fair, then, by golly, it must be so.
To go back and look at the “facts” that they took to be true and might be otherwise is against their rules. Isn’t it great to be so infallible? The RCA has failed to save us from the excesses of a monopoly that they were obligated to save us from.
Philemon Morris is a former mayor of Kachemak City.
