HB328 PUBLIC UTILITIES: INVESTMENT SURCHARGE | Alaska Bill

Plain English Breakdown

The official bill status indicates the legislation passed both chambers, though no effective date is listed in the provided metadata.

Alaska HB328: Strategic Investment Surcharges for Public Utilities

This law allows public utilities in Alaska to charge a special fee on customer bills to recover costs for major infrastructure projects that support growth and reliable service.

What This Bill Does

Allows public utilities to ask the commission for approval of a surcharge to pay back costs for strategic investments not covered by current rates.
Requires the commission to create rules for how utilities apply for these surcharges and calculate their amounts.
Permits utilities to earn money on construction work in progress, operating expenses during building, and non-capitalized costs through this fee.
Mandates that once a project is finished, its costs move from the special surcharge into standard utility rates at the next general rate case.
Orders utilities to refund customers with bill credits if the commission finds any recovered costs were not spent wisely.

Who It Names or Affects

Public utilities in Alaska that build or buy infrastructure projects.
The state regulatory commission responsible for approving utility rates and rules.
Customers who pay bills to public utilities, as they may see a new surcharge on their statements.

Terms To Know

Strategic investment: Infrastructure projects built or bought that help the state grow economically and keep utility service reliable for customers.
General rate case: A formal review where a public utility asks the commission to set its standard base rates based on costs and revenues.
Surcharge: An extra fee added to customer bills specifically to recover costs for certain projects before they are included in regular rates.

Limits and Unknowns

The law does not list specific dollar amounts or exact dates when these surcharges will start.
It requires the commission to write detailed regulations, which means some rules about how this works are still being created.
The text states utilities must move costs into base rates at their next general rate case but does not say exactly when that review happens.

Official Summary Text

PUBLIC UTILITIES: INVESTMENT SURCHARGE
An Act relating to surcharges for strategic investments by public utilities.

Current Bill Text

Read the full stored bill text

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HOUSE BILL NO. 328

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - SECOND SESSION

BY REPRESENTATIVE KOPP

Introduced: 2/23/26
Referred: House Special Committee on Energy, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to surcharges for strategic investments by public utilities." 1
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 2
* Section 1. AS 42.05 is amended by adding a new section to read: 3
Sec. 42.05.387. Strategic investment surcharge. (a) A public utility may 4
request that the commission approve a strategic investment surcharge to recover costs 5
incurred by the utility for a strategic investment that is not otherwise recoverable 6
through existing commission-approved rates. 7
(b) The commission shall adopt regulations relating to strategic investment 8
surcharges. The regulations must provide a process to apply for approval of a strategic 9
investment surcharge. A public utility may recover through a strategic investment 10
surcharge 11
(1) a return on construction work in progress and operating expenses 12
accrued during construction; 13
(2) a return on the rate base and operating expenses when the 14
investment is complete and in service; and 15
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(3) expenses associated with the construction of a strategic investment 1
that will not be capitalized. 2
(c) The regulations must require that a public utility, when calculating the 3
amount of a strategic investment surcharge, 4
(1) for construction work in progress, including projections and actual 5
costs, use year-end information not subject to averaging beginning-of-year or end-of-6
year balances; 7
(2) calculate the cost of capital using the cost of long-term debt 8
approved or accepted in the public utility's most recent general rate case or formula 9
rate annual revision tariff filing; 10
(3) calculate the cost of capital using the return on equity approved or 11
accepted in the public utility's most recent general rate case; 12
(4) during construction of a strategic investment, include only long-13
term debt and equity in the capital structure; and 14
(5) for a strategic investment that is complete and in service, use the 15
capital structure and overall rate of return that was approved or accepted in the public 16
utility's most recent general rate case or formula rate annual revision tariff filing. 17
(d) A public utility shall notify the commission of the utility's intent to 18
implement a strategic investment surcharge. The notice must comply with regulations 19
adopted by the commission. 20
(e) A public utility may apply an allowance for funds used during construction 21
to specific qualifying strategic investment costs until the surcharge that includes those 22
specific costs is implemented. A public utility may not apply an allowance for funds 23
used during construction to costs that are included in the strategic investment 24
surcharge. 25
(f) A public utility shall file annual updates with the commission, as required 26
by regulations adopted by the commission. An annual update must include costs for 27
construction work in progress on which the public utility will earn a return, amounts 28
that would otherwise be recorded by the utility as allowance for funds used during 29
construction, and any expenses associated with the construction work in progress that 30
will not be capitalized. 31
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(g) When construction of a strategic investment is complete and the 1
investment is in service, the public utility may earn a fair and reasonable return on 2
capitalized costs and ongoing expenses associated with the strategic investment 3
through the strategic investment surcharge until the utility's next general rate case. In 4
the public utility's next general rate case, the utility shall move capitalized amounts 5
and associated expenses for a completed strategic investment from the surcharge into 6
the utility's base rates. The public utility may continue to use the strategic investment 7
surcharge to recover costs and expenses associated with a strategic investment that is 8
not complete and in service. 9
(h) The commission shall issue a final order on a request for approval of a 10
strategic investment surcharge not later than 90 days after receiving a filing from a 11
public utility that meets the requirements of this section and regulations adopted by the 12
commission. 13
(i) If the commission determines that costs recovered in a strategic investment 14
surcharge were not prudently incurred by a public utility, the commission shall order 15
the utility to refund those costs through customer bill credits. 16
(j) In this section, 17
(1) "general rate case" means a proceeding before the commission, 18
initiated by a public utility in accordance with regulations adopted by the commission, 19
in which the commission reviews the utility's costs and revenues to establish the 20
utility's base rates and adjustment clause methodology; 21
(2) "strategic investment" means an infrastructure investment, by 22
either construction or purchase, and associated operating expenses that 23
(A) support growth and economic development in the state; and 24
(B) maintain and improve the provision of reliable utility 25
service to new and existing customers in the state. 26