Board members for Southeast Alaska Power Agency sat down in Ketchikan last week for their two-day regular meeting, examining the regional power provider’s current financial position as well as looking ahead at its future projects.
“It went really well,” commented Wrangell’s representative, Steve Prysunka, after his first meeting. Elected to the Borough Assembly last October, Prysunka was appointed to represent it on the power agency’s board. “I was pleased with the tone of the meeting and how everything went. There was a sense of cooperation to get the job done between the communities.
SEAPA CEO Trey Acteson’s report to the board warned of difficult financial times ahead for the state legislature, which would affect any prospective funding requests. The capital budget may be shelved as the Legislature addresses the $3.5 billion deficits being forecast for the next two fiscal years. The Swan Lake Expansion Project was among the projects entered into this year’s CAPSIS.
“I still believe it is important to maintain a presence in Juneau during the session and keep our initiatives at the forefront,” Acteson reported. “We will also continue work to bolster our position as a technical resource leader on regional power issues and this will pay dividends down the road.”
Through the Alaska Power Association (APA), Acteson stated SEAPA will continue to discuss these issues and also House Bill 78, which is being examined this session. The bill would ultimately circumvent SEAPA’s current RCA exemption, which Acteson said would impose new regulatory burdens that would also affect consumer rates.
The Kake-Petersburg Intertie project also received its Notice of Availability from the United States Forest Service on Dec. 29, 2014, seeking public review of the Draft Environmental Impact Statement (EIS). USFS is the lead agency for the EIS process, assessing the potential environmental impacts of the KPI project.
If constructed, the intertie would extend SEAPA’s existing 175-mile transmission system by an additional 60 miles, from Petersburg to Kake. SEAPA assumed the lead role as project proponent back in 2012, and Acteson said the statement’s release is the culmination of decades of effort.
At the moment, Kake is primarily served by diesel generation, and though costs are subsidized by the state, power usage is capped at 500 Kilowatt-hours per month. Coupled with the comparatively higher rates the community pays, this is said to have a stifling effect on local economic development.
Project specifications for the Swan Lake reservoir extension also continue to develop. A project schedule was presented at previous meetings, and SEAPA special projects director Eric Wolfe expects a new construction cost estimate to be complete and reviewed by midmonth.
“The Swan Lake dam raise was very interesting,” Prysunka said of the board’s discussion. “It’s an excellent project because it’s going to increase the capacity of that reservoir.”
The power agency is still deciding on how the project will be managed, whether through a traditional or new common approach. Depending on which route SEAPA approaches the reservoir expansion, over the next five or six months planners will initiate construction permit applications and finalize designs, with bidding to begin by late summer or fall of this year. It is also working with the USFS to revise its forest service plan for renewable energy inclusion on top of existing land use designation.
SEAPA was awarded about $3 million from the Department of Commerce, Community and Economic Development for the Swan Lake Expansion project, of which $578,000 was to be designated for hydroelectric power storage.
SEAPA is also working to assemble a bond offering to finance the expansion. At the beginning of the 2014 fiscal year it had $13.4 million in outstanding debt on 2009 bonds. Of that, $4.77 million became eligible for early refunding at the end of last June, presenting an opportunity to refinance that at a lower interest rate and realize some savings.
Over the past year the board has discussed combining a refinance with the issuance of additional debt to cover the balance of the Swan Lake expansion, or about $7 million. At current power rates, Acteson reported market conditions are very favorable at the moment for taking on additional debt.
“The bond rates are so low right now, it would be well worth revisiting,” explained Prysunka.
As in its 2009 debt restructuring, subordination agreements will have to be obtained from the parties of SEAPA’s power sales agreement. In the near future, Acteson and SEAPA’s general counsel plan to visit each member utility community to explain this requirement to seek support.
Reader Comments(0)