Two Homer Electric Association members last week filed a complaint with the Regulatory Commission of Alaska regarding a petition by the Alaska Electric and Energy Cooperative Inc., or AEEC, to be exempt from regulation from the RCA.

HEA members are currently voting by mail on the question of if HEA should be deregulated. Members have until Nov. 27 to return ballots, with the tabulation to be done in December. AEEC is a subsidiary of HEA, with HEA its sole member. The HEA board of directors also is the AEEC board of directors.

HEA members Bob Shavelson of Homer and Peter McKay of Kenai filed the complaint Nov. 15. They charge that HEA is denying consumer members the right to participate in the AEEC deregulation election. AAEC filed its petition for a deregulation election, docket U-16-085, on Oct. 28.

Shavelson, who also serves as director of Cook Inletkeeper, said on Monday he and McKay filed the complaint after failing to get answers from HEA General Manager Brad Janorschke about the AEEC petition for a deregulation election.

“Brad’s refusal to answer a basic question was indicative of a larger problem of trust,” Shavelson said.

AEEC was formed as a way to better manage debt and to get lower interest rates for some HEA infrastructure, HEA attorney Rick Baldwin said at an HEA public meeting on deregulation in September. AEEC owes about $150 million in debt to the U.S. Department of Agriculture Rural Utility Service.

“It’s essentially the same thing as HEA,” Bill Fry, district 3 and lower Kenai Peninsula HEA board member, said of the relationship between HEA and AEEC.

Shavelson and McKay filed their complaint on Nov. 15.

On Friday, the RCA ruled that their complaint was a formal complaint.

HEA received that ruling from the RCA late Friday, Nov. 18, Baldwin said.

In their complaint, Shavelson and McKay ask the RCA to consider if:

• The proposed AEEC deregulation election meets all the requirements,

• The petition for the AEEC deregulation should be modified to require an election of the full AEEC/HEA owners and membership,

• A public hearing should be held, and

• The AEEC deregulation petition be withdrawn and an election be held by the full membership if they decide to deregulate HEA.

“It would be premature for us to talk about the issue until we get a better handle on it,” Baldwin said. “These are issues we’ll have to explore and comment on after we’ve had consideration.”

Shavelson and McKay also complained that in its discussion of HEA deregulation, HEA hadn’t mentioned the AEEC deregulation vote.

“My whole ting here is that the board in May voted to deregulate both entities, and then throughout the summer before the RCA, Mr. Baldwin said he didn’t know if they were going to deregulate the AAEC,” Shavelson said.

The vote to deregulate AEEC by the board won’t happen until ballots are counted and results announced, Baldwin said. The election timing was set up to allow HEA members to first vote on the deregulation issue.

“The reason for the AEEC election is to allow the directors to take whatever action would be indicated by the member vote,” he said.

Baldwin said there are two separate ballots because HEA and AEEC are legally two separate entities. He said if members voted against deregulation, the petition to hold an election would be withdrawn.

“My understanding from the board is the board is going to follow the lead of the members regardless the way it goes,” he said.

Fry said he couldn’t predict how other directors would vote, but he would vote that way.

The alleged lack of transparency from HEA is why Shavelson said opposed deregulation.

“It comes back to trust. If these guys won’t answer a basic question about things, how are you going to trust them if they take away all oversight?” Shavelson asked.

Shavelson and McKay also mentioned a 1985 decision by RCA’s predecessor, the Alaska Public Utilities Commission, regarding a 1985 case involving a predecessor of AEEC, the Alaska Electric Generation and Transmission Cooperative Inc. In that decision, APUC said that AEG&T is placed on notice that “any election to be exempt from the provisions of the Alaska Public Utilities Commission Act must be based on the vote of the consumers of the members of Alaska Electric Generation and Transmission Cooperative Inc.”

Baldwin said he did not want to give a legal opinion on if that 1985 decision applied to the current complaint.

Michael Armstrong can be reached at michael.armstrong@homernews.com.