RCA Utility Decision Saves City $50 Million

ANCHORAGE, Alaska — The Municipality of Anchorage is now off the hook for what could have been a $50 million judgment against it, after the Regulatory Commission of Alaska issued an order late Monday night approving rate hikes first issued to Anchorage Water and Wastewater Utility customers in 2004.
 
The rate hikes were meant to cover payments that AWWU made to the city in exchange for receiving city services. The payments, essentially a form of property tax, were called Municipal Utility Service Assessments and Municipal Enterprise Service Assessments, or MUSAs and MESAs.
 
In its order, the RCA said that “municipal utilities should be allowed to include in rates a reasonable contribution to assist in supporting the municipal services they receive.”
 
In the past, MUSA and MESA payments had been based only on the value of AWWU property that it had purchased with its own money. The payments increased after 2003, when the Anchorage Assembly passed a law that expanded how much utility property the city could base its MUSA assessment on, allowing it to include the value of property that was contributed to -- not purchased by -- AWWU.  
 
The state Department of Law’s Regulatory Affairs and Public Advocacy Section brought up the issue with the RCA after AWWU increased its rates, so it could collect additional money to make the payments to the city.
 
Had the judgment not been in the city's favor, city finance officials had said AWWU would have had to pay back the additional money it had collected, which amounted to about $50 million.
 
Mayor Dan Sullivan’s spokesperson, Sarah Erkmann, said taxpayers would have likely had to foot the bill.
 
Contact Jason Lamb at jlamb@ktuu.com