Despite dimming income over the past fiscal year, board members for Southeast Alaska Power Agency were informed the future is still a bright one. At its June 18 meeting in Ketchikan, CEO Trey Acteson reported SEAPA remains financially strong and well-positioned leading into the next fiscal year.
Sales revenues through last month were $1.3 million below budget, or about 12 percent. While weather volatility has played a hand in the shortfall, a consistent drop from anticipated power consumption by Ketchikan through the 2015 fiscal year has also contributed. The power sales agreement signed with the city permits it to generate power for itself.
Power consumption in Wrangell remained close to budget through the winter, slightly surpassing expectations in December and January and coming just short in April. In May its usage saw a significant rise above budget, despite spending several days off-line for maintenance.
Demand is expected to pick up shortly, and Acteson reported provision should not be an issue. Despite a dry spell through May, reservoirs are all at brimming point, which should amply meet summer peak demand.
The cost should remain reasonable as well, with rates remaining among the cheapest in the nation. At the meeting the board approved the current rate of 6.8 cents per Kilowatt-hour for another year. On average, American cities typically pay around 12 cents per kWh.
“That is 17 years now without a change in our wholesale rate,” said Clay Hammer, Wrangell's member at the meeting.
“Right now we're going into our busy part of the industrial season,” he explained. “The processing season is in front of us right now, and all the lakes are full.”
SEAPA's revenue shortfall was offset by lower year-to-date administrative and operating expenses of $4.5 million versus $5.58 million budgeted.
Through its sale of Electric Revenue Improvement and Refunding Bonds last month, the Swan Lake Reservoir Expansion Project is now fully funded. On May 6 about $10.3 million were sold, with true interest cost at a favorable 3.85 percent.
While initially estimated at $11.36 million, estimates for the Swan Lake project had come down to $10 million. Capacity at the dam will increase by 25 percent, with completion expected by the end of 2016.
The passage of House Bill 46 on June 5 will potentially allow access to further low-cost capital through Alaska Municipal Bond Bank, as the opportunity to refinance the remainder of 2009 bonds comes due in 2019. As interest rates are expected to rise in the interim, Acteson explained the benefits of the Bond Bank over private capital markets will increase.
“It's going to help our organization immensely down the road,” he said.
SEAPA members approved another rebate for their communities as well. Funding was unexpectedly freed up after geothermal exploration on Bell Island came up unfavorably. $1.5 million was approved for next year, with $342,000 of that to go back to Wrangell.
“That'll be one of the biggest ones we've ever had,” Hammer said.
Regarding Bell Island, Acteson said the next round of testing – involving drilling – would be very expensive to pursue. Though SEAPA is anticipating the final report, it decided not to continue.
“We were being very cautious in approaching that decision point,” he explained.
In the near-term the agency will continue increasing efficiencies at facilities, such as the Swan Lake expansion. For the mid-term, an alternative, viable power source might be wind.
“Wind's fairly quick to deploy, easy to permit, pretty scaleable,” said Acteson.
SEAPA's next meeting will be held at Wrangell's Nolan Center, on Sept. 23 and 24.
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