Alaska Statutes
Alaska Stat. § 42.05.431 (2026)
Power of commission to fix rates
✓ current as of July 2026
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Sec. 42.05.431. Power of commission to fix rates.
(a) When the commission, after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility for a service subject to the jurisdiction of the commission, or that a classification, rule, regulation, practice, or contract affecting the rate, is unjust, unreasonable, unduly discriminatory or preferential, the commission shall determine a just and reasonable rate, classification, rule, regulation, practice, or contract to be observed or allowed and shall establish it by order. A municipality may covenant with bond purchasers regarding rates of a municipally owned utility, and the covenant is valid and enforceable and is considered to be a contract with the holders from time to time of the bonds. The financial covenants contained in mortgages and other debt instruments of cooperative utilities organized under AS 10.25 are also valid and enforceable, and rates set by the commission must be adequate to meet those covenants. However, a cooperative utility that is negotiating to enter a mortgage or other debt instrument that provides for a times-interest-earned ratio (TIER) greater than the ratio the commission most recently approved for that cooperative shall submit the mortgage or debt instrument to the commission before the instrument takes effect. The commission may disapprove the instrument within 60 days after its submission. If the commission has not acted within 60 days, the instrument is considered to be approved.
(b) A wholesale power agreement between public utilities, or between a public utility and an independent power producer, is subject to advance approval of the commission. A rate set in accordance with a wholesale power agreement must disclose a state or local tax exemption provided to a utility or independent power producer. After a wholesale power agreement is in effect, the commission may not invalidate any purchase or sale obligation under the agreement. However, if the commission finds that rates set in accordance with the agreement violate this subsection or are not just and reasonable, the commission may order the parties to negotiate an amendment to the agreement and if the parties fail to agree, to use the dispute resolution procedures contained in the contract. In this subsection, “independent power producer” means a legal entity, other than a public utility or a joint action agency established under AS 42.45.310, that owns or operates a facility for the generation of electricity.
(c) Notwithstanding (b) of this section,
(1) a wholesale agreement for the sale of power from a project licensed by the Federal Energy Regulatory Commission on or before January 1, 1987, and related contracts for the wheeling, storage, regeneration, or wholesale repurchase of power purchased under the agreement, entered into between the Alaska Energy Authority and one or more other public utilities or among the utilities after October 31, 1987, and before January 1, 1988, and amendments to the wholesale agreement or related contract, and the wholesale agreement or related contract assigned by the Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that purchases the project from the Alaska Energy Authority, are not subject to review or approval by the commission until all long-term debt incurred for the project is retired, or, for a wholesale agreement or related contract assigned to a joint action agency formed under AS 42.45.310, until all long-term debt incurred to pay the purchase price to the Alaska Energy Authority is retired; and
(2) a wholesale agreement or related contract described in (1) of this subsection may contain a covenant for the public utility to establish, charge, and collect rates sufficient to meet its obligations under the contract; the rate covenant is valid and enforceable.
(d) Meetings between the Alaska Energy Authority and public utilities concerning a wholesale agreement for the sale of power or other matter exempted from review of the commission under (c) of this section must comply with AS 44.62.310.
(e) Validated costs incurred by a utility in connection with the related contracts described in (c)(1) of this section must be allowed in the rates charged by the utility. In this subsection, “validated costs” are the actual costs that a utility uses, under the formula set out in related contracts described in (c) of this section, to establish rates, charges for services and rights, and the payment of charges for services and rights. This subsection does not grant the commission jurisdiction to alter or amend the formula set out in those related contracts.
(f) In the establishment of rates of a utility furnishing solid waste material collection and disposal service, the commission shall permit recovery of reasonable, net capital and operating costs relating to solid waste recovery and recycling services after considering the utility's recovery of revenue associated with the service.
(g) In the establishment of rates under this chapter, the commission shall promote cost-effective solid waste recovery and recycling services.
(h) When setting or reviewing rates for a public utility that sends or receives power over the power transmission interties between Fairbanks and Healy or between Anchorage and the Kenai Peninsula, the commission shall consider those costs that have not been directly assigned to other individual generating utilities by the utility responsible for the construction of the intertie to have been incurred for the system existing on August 11, 1993.
(a) When the commission, after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility for a service subject to the jurisdiction of the commission, or that a classification, rule, regulation, practice, or contract affecting the rate, is unjust, unreasonable, unduly discriminatory or preferential, the commission shall determine a just and reasonable rate, classification, rule, regulation, practice, or contract to be observed or allowed and shall establish it by order. A municipality may covenant with bond purchasers regarding rates of a municipally owned utility, and the covenant is valid and enforceable and is considered to be a contract with the holders from time to time of the bonds. The financial covenants contained in mortgages and other debt instruments of cooperative utilities organized under AS 10.25 are also valid and enforceable, and rates set by the commission must be adequate to meet those covenants. However, a cooperative utility that is negotiating to enter a mortgage or other debt instrument that provides for a times-interest-earned ratio (TIER) greater than the ratio the commission most recently approved for that cooperative shall submit the mortgage or debt instrument to the commission before the instrument takes effect. The commission may disapprove the instrument within 60 days after its submission. If the commission has not acted within 60 days, the instrument is considered to be approved.
(b) A wholesale power agreement between public utilities, or between a public utility and an independent power producer, is subject to advance approval of the commission. A rate set in accordance with a wholesale power agreement must disclose a state or local tax exemption provided to a utility or independent power producer. After a wholesale power agreement is in effect, the commission may not invalidate any purchase or sale obligation under the agreement. However, if the commission finds that rates set in accordance with the agreement violate this subsection or are not just and reasonable, the commission may order the parties to negotiate an amendment to the agreement and if the parties fail to agree, to use the dispute resolution procedures contained in the contract. In this subsection, “independent power producer” means a legal entity, other than a public utility or a joint action agency established under AS 42.45.310, that owns or operates a facility for the generation of electricity.
(c) Notwithstanding (b) of this section,
(1) a wholesale agreement for the sale of power from a project licensed by the Federal Energy Regulatory Commission on or before January 1, 1987, and related contracts for the wheeling, storage, regeneration, or wholesale repurchase of power purchased under the agreement, entered into between the Alaska Energy Authority and one or more other public utilities or among the utilities after October 31, 1987, and before January 1, 1988, and amendments to the wholesale agreement or related contract, and the wholesale agreement or related contract assigned by the Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that purchases the project from the Alaska Energy Authority, are not subject to review or approval by the commission until all long-term debt incurred for the project is retired, or, for a wholesale agreement or related contract assigned to a joint action agency formed under AS 42.45.310, until all long-term debt incurred to pay the purchase price to the Alaska Energy Authority is retired; and
(2) a wholesale agreement or related contract described in (1) of this subsection may contain a covenant for the public utility to establish, charge, and collect rates sufficient to meet its obligations under the contract; the rate covenant is valid and enforceable.
(d) Meetings between the Alaska Energy Authority and public utilities concerning a wholesale agreement for the sale of power or other matter exempted from review of the commission under (c) of this section must comply with AS 44.62.310.
(e) Validated costs incurred by a utility in connection with the related contracts described in (c)(1) of this section must be allowed in the rates charged by the utility. In this subsection, “validated costs” are the actual costs that a utility uses, under the formula set out in related contracts described in (c) of this section, to establish rates, charges for services and rights, and the payment of charges for services and rights. This subsection does not grant the commission jurisdiction to alter or amend the formula set out in those related contracts.
(f) In the establishment of rates of a utility furnishing solid waste material collection and disposal service, the commission shall permit recovery of reasonable, net capital and operating costs relating to solid waste recovery and recycling services after considering the utility's recovery of revenue associated with the service.
(g) In the establishment of rates under this chapter, the commission shall promote cost-effective solid waste recovery and recycling services.
(h) When setting or reviewing rates for a public utility that sends or receives power over the power transmission interties between Fairbanks and Healy or between Anchorage and the Kenai Peninsula, the commission shall consider those costs that have not been directly assigned to other individual generating utilities by the utility responsible for the construction of the intertie to have been incurred for the system existing on August 11, 1993.
Notes of Decisions
Cited in 13
cases (1 in the last 5 years), 1976–2024 · leading case: Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019).
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive the APUC's approval.”
Alaska Pub. Utils. Comm'n v. Mun. of Anchorage, 555 P.2d 262 (Alaska 1976). “The last sentence of AS 42.05.431 (“Power of commission to fix rates”) states: A municipality may covenant with bond purchasers regarding rates of a municipally owned utility, and the covenant is *264 valid and enforceable and is considered to be a contract with the holders from…”
United States v. RCA Alaska Commc'ns, Inc., 597 P.2d 489 (Alaska 1979). “[13] AS 42.05.431 further authorizes the commission to determine and order "a just and reasonable rate" when it has found upon investigation and hearing that a rate "demanded .”
Far North Sanitation, Inc. v. Alaska Pub. Utils. Comm'n, 825 P.2d 867 (Alaska 1992). “Moreover, Far North argues that AS 42.05.431, which requires a hearing before APUC may establish rates, also does not expressly authorize suspending existing rates.”
Matanuska Elec. Ass'n v. Chugach Elec. Ass'n, 152 P.3d 460 (Alaska 2007). “AS 42.05.431(a) clarifies the power of the Commission to set rates: When the commission, after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility for a service subject to the jurisdiction of the commission, or that a…”
Matanuska Elec. Ass'n v. Chugach Elec. Ass'n, 53 P.3d 578 (Alaska 2002). “421, and AS 42.05.431. 37 . Glacier State Tel. Co.”
Alaska Pub. Utils. Comm'n v. Mun. of Anchorage, 902 P.2d 783 (Alaska 1995). “is unjust, unreasonable, unduly discriminatory or preferential, the commission shall determine a just and reasonable rate, classification, rule, regulation, practice, or contract to be observed or allowed and shall establish it by order.”
Alaska Fed'n for Cmty. Self-Reliance v. Alaska Pub. Utils. Comm'n, 879 P.2d 1015 (Alaska 1994). “Additionally, AS 42.05.431(b) requires advance approval by APUC of a wholesale power agreement between public utilities, such as the power sales agreement between AIDEA and GVEA.”
Stevenson v. Burgess, 570 P.2d 728 (Alaska 1977). “The question presented for review here is whether AS 42.05.431 limits the statutory authority of the Commission to regulate rates when present or proposed bond covenants are involved.”
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc. (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive 6 See ALASKA ENERGY AUTH.”
Mun. of Anchorage v. Regulatory Comm'n of Alaska, 215 P.3d 327 (Alaska 2009). “381(a); AS 42.05.431(a). 13 . Tariff Provisions, supra note 6, at 47.”
Golden Heart Utils., Inc. & Coll. Utils. Corp. v. Regulatory Comm'n of Alaska; Off. of the Attorney Gen. Regulatory Affairs & Pub. Advocacy Section; Fountainhead Dev., Inc.; Greater Fairbanks Cmty. Hosp. Found., Inc.; Found. Health, LLC; JL Props., Inc.; Timmons & Larson, Inc., MV Investments LLC, D/B/A Sunrise Bagel & Espresso; Pac. Rim Assocs. I, Inc., D/B/A Clarion Hotel & Suites; H2O 2U LLC D/B/A Water Wagon; & Univ. of Alaska Fairbanks (Alaska 2024). “”); AS 42.05.431(a) (“When the [RCA], after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility .”
— Alaska Stat. § 42.05.431(a) — 6 cases
Matanuska Elec. Ass'n v. Chugach Elec. Ass'n, 152 P.3d 460 (Alaska 2007). “AS 42.05.431(a) clarifies the power of the Commission to set rates: When the commission, after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility for a service subject to the jurisdiction of the commission, or that a…”
Far North Sanitation, Inc. v. Alaska Pub. Utils. Comm'n, 825 P.2d 867 (Alaska 1992). “Moreover, Far North argues that AS 42.05.431, which requires a hearing before APUC may establish rates, also does not expressly authorize suspending existing rates.”
Alaska Pub. Utils. Comm'n v. Mun. of Anchorage, 902 P.2d 783 (Alaska 1995). “is unjust, unreasonable, unduly discriminatory or preferential, the commission shall determine a just and reasonable rate, classification, rule, regulation, practice, or contract to be observed or allowed and shall establish it by order.”
Mun. of Anchorage v. Regulatory Comm'n of Alaska, 215 P.3d 327 (Alaska 2009). “381(a); AS 42.05.431(a). 13 . Tariff Provisions, supra note 6, at 47.”
Golden Heart Utils., Inc. & Coll. Utils. Corp. v. Regulatory Comm'n of Alaska; Off. of the Attorney Gen. Regulatory Affairs & Pub. Advocacy Section; Fountainhead Dev., Inc.; Greater Fairbanks Cmty. Hosp. Found., Inc.; Found. Health, LLC; JL Props., Inc.; Timmons & Larson, Inc., MV Investments LLC, D/B/A Sunrise Bagel & Espresso; Pac. Rim Assocs. I, Inc., D/B/A Clarion Hotel & Suites; H2O 2U LLC D/B/A Water Wagon; & Univ. of Alaska Fairbanks (Alaska 2024). “”); AS 42.05.431(a) (“When the [RCA], after an investigation and hearing, finds that a rate demanded, observed, charged, or collected by a public utility .”
— Alaska Stat. § 42.05.431(b) — 3 cases
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive the APUC's approval.”
Alaska Fed'n for Cmty. Self-Reliance v. Alaska Pub. Utils. Comm'n, 879 P.2d 1015 (Alaska 1994). “Additionally, AS 42.05.431(b) requires advance approval by APUC of a wholesale power agreement between public utilities, such as the power sales agreement between AIDEA and GVEA.”
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc. (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive 6 See ALASKA ENERGY AUTH.”
— Alaska Stat. § 42.05.431(c) — 2 cases
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive the APUC's approval.”
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc. (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive 6 See ALASKA ENERGY AUTH.”
— Alaska Stat. § 42.05.431(c)(1) — 2 cases
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive the APUC's approval.”
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc. (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive 6 See ALASKA ENERGY AUTH.”
— Alaska Stat. § 42.05.431(e) — 2 cases
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc., 436 P.3d 1015 (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive the APUC's approval.”
Regulatory Comm'n of Alaska v. Matanuska Elec. Ass'n, Inc. (Alaska 2019). “9 That changed in 1986, when the legislature amended AS 42.05.431 to require that wholesale power agreements receive 6 See ALASKA ENERGY AUTH.”
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