ENSTAR and its union employees have reached a tentative agreement in a contract dispute, amid continuing concerns over a 48 percent increase in the natural gas provider's billing rates.
The United Association Plumbers and Steamfitters Local 367 and ENSTAR announced the agreement Thursday, one month after union members threatened to strike.
On June 30, union members confirmed their intention to strike after what they called months of failed negotiations. Local 367 members said there were disagreements over health and pension benefits, along with wages.
Colleen Starring, president of ENSTAR, says she is pleased to have reached a mutually acceptable agreement for employees. The agreement is now being taken to the union's membership to be ratified in two weeks.
ENSTAR has a legal monopoly on selling gas to customers in the region, but everything that goes on your gas bill is subject to the approval of a group of people appointed by the governor, in order to consider the interests of customers and what it takes for utilities to stay in business.
That group, the Regulatory Commission of Alaska, is a state-mandated regulatory body that makes rules for water, gas, electric and waste public utilities -- which, unlike a restaurant or store, usually have no competition, and thus no incentive to keep costs down for their customers. At a July meeting, members of the public packed into the RCA's hearing room to question its approval of higher ENSTAR rates the utility says will recoup its losses on underestimating previous gas demand.
“When it makes sense to have one supplier, we sort of make a bargain that we will have a monopoly supplier who doesn’t have to worry about competition,” said Steve Colt, a professor of economics at the University of Alaska Anchorage. “But we're going to use the regulatory process to try to make sure that prices are fair and reasonable.”
By that rule, ENSTAR only makes money on the transport and delivery of gas, and cannot mark up the price of gas.
“There’s a mechanism that’s somewhat automatic,” Colt said. “which allows ENSTAR to simply pass through. Customers, including myself, want to pay the lowest rates that we can. On the other hand, we want the gas to be there when we need it.”
The RCA has to approve every rate change, and works to strike a balance that is beneficial for both the company and customers. ENSTAR spokesperson John Sims says the company buys gas on an as-needed basis, which causes the price variability.
Even for someone like Colt, who specializes in knowing about these complex pricing structures, understanding the nuances of an electric and gas bill can be confusing.
"To be honest, I would have like to see something on the ENSTAR website that could explain this to me and my fellow gas customers a little more clearly,” Colt said.
The RCA discussed possible changes to how often prices are adjusted, which could be a way to give them more stability. Another meeting on ENSTAR will be held by the RCA in August.