The borough assembly’s special energy committee voted 7-0 Monday to send two options and a recommendation to the borough assembly meeting Tuesday night.
The options represent borough manager Jeff Jabusch’s assessment of possible futures for the Thomas Bay Power Authority. The options, delineated by the committee in discussion at a previous meeting, amount to a list of positives and negatives for either the City and Borough of Wrangell or Southeast Alaska Power Agency running the Tyee Lake hydroelectric facility.
A two-page memo drafted by Jabusch outlined the ups and downs of either scenario.
Were Wrangell to take over the project, it would give “Wrangell a more hands on involvement in the project on a day to day basis,” the document reads. It “would give us the opportunity to have a closer working relationship with SEAPA as it relates to things going on at Tyee.”
The disadvantages include Wrangell having to cover roughly $90,000 of net non-billable costs currently not covered by the operations and maintenance contract between TBPA and SEAPA. The borough would also shoulder the burden of paying the Public Employees Retirement System contributions without a portion of the State’s standard contribution, on the chopping block because of budget constraints, according to the memo. The work would also place a higher workload on the borough accounting office, which would be tasked with managing TBPAs accounting requirements.
The other option committee members identified in discussion in the Nov. 18 meeting, under which SEAPA would absorb TBPA, could eliminate Wrangell’s annual $55,000 contribution to TBPA, strengthen the relationship between Petersburg and Wrangell, eliminate the PERS liability for the borough by moving TBPA employees to a union pension plan, and reduce the workload for the borough’s accounting department. The department currently provides audits and monthly and annual reports for TBPA.
The chief disadvantages of a SEAPA-run Tyee would be losing control over activities there, and no longer directly controlling Tyee’s budget, according to Jabusch’s memo.
Moving the PERS obligation off the city books – one result of a shift to SEAPA ownership — and shifting it to the union books could mean reduced pension costs, Jabusch said.
“We pay 22 percent on each employee,” he said. “The state puts in between 13 and 17 percent. The state is looking at possibly not paying their share. If nothing changed, we just keep paying the 22 percent for forty years, or whatever.”
Committee members might be getting ahead of themselves by seriously considering the SEAPA plan, which hasn’t been formalized, said TBPA office manager Rhonda Christian, who attended the committee meeting.
“Everybody keeps talking about an offer on the table, and I haven’t seen anything,” she said. “What I have seen is a memo that was supplied by Mr. [SEAPA CEO Tray] Acteson and I’ve seen a brief presentation to the communities of Wrangell and Petersburg. Do we have a formal offer on the table that I haven’t seen? Why would we consider something that hasn’t been formally put on the table? I just find it very unusual that we’d be considering something that’s not formally in writing and hasn’t been put on the table.”
Officials have made no specific written offer, said Bryan Ashton, Wrangell’s representative to the SEAPA board of directors. However, Acteson’s Sept. 9 presentation to the joint meeting of the Wrangell and Petersburg assemblies was made with the sanction of the SEAPA board, Ashton said. The Petersburg assembly voted in October to approve the offer as presented at the meeting, though officials said any additional movement forward would have to be negotiated between Petersburg and Wrangell – who jointly funded TBPA’s net non-billable expenses of about $110,000, until Petersburg withheld their contribution in early September – and SEAPA.
“This is just the initial phases of this,” said Wrangell Light and Power Superintendent Clay Hammer. “First step is to throw it out there and find out if folks are even interested in it. I think this just the initial phases of a potential offer.”
The net non-billable portion of TBPA stems from SEAPA predecessor the Four Dam Pool Power Project, which connected governance of Tyee to facilities as far away as Kodiak Island under one roof. Since each project was run and managed differently, officials at each utility had an incentive to claim that all costs were billable, since they could then spread costs out among all project rate-payers instead of just their taxpayers. The net non-billable portions were thus created to prevent that sort of abuse of the electric bills, said Jabusch.
While the options appear clear-cut from a financial perspective, serious questions remain about SEAPA’s ability to be accountable to its rate-payers, Ashton said.
One step to address accountability would be for SEAPA to maintain recordings of minutes for longer, Ashton said. A second recommendation by the committee would help address that. It instructs Borough Clerk Kim Lane to write a letter to SEAPA recommending that action. All committee recommendations must be approved by the Assembly.
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