At its monthly meeting for November, Wrangell's City and Borough Assembly put the lights out on a proposal to conduct an electric rate study, deciding it was too expensive.
The proposal would have awarded a $24,990 no-bid contract to HDR Engineering to assess the city's capital requirement needs for the next five years, determining whether or not and to what extent it should alter utility rates. The firm conducted a rate study in 2010 for a similar fee, and at the time had recommended that rates remain as they were for the foreseeable future.
Given the state of Alaska's budget situation, which has caused the borough to tighten its own belt in places, Assembly members were resistant to awarding the contract.
“I have all kinds of problems with this,” said Assembly member Daniel Blake.
On one hand, he felt going ahead with a rate study might appear to be going back on assurances given that rates would not increase following the transfer of Thomas Bay Power Authority to Southeast Alaska Power Agency last year. His other concern was the cost: As an example, he pointed out the project manager would be paid $295 an hour for services.
“I don't know anybody that's worth that,” he commented, particularly when rates might be increased to utility customers. Blake said he would prefer to see that money used instead for infrastructure.
“We've already paid once for this process to be done,” said member Stephen Prysunka. He felt HDR had not sufficiently taken the borough's system needs into account when it conducted the last study, and was expressed discomfort with the fee amount being $10 shy of the maximum limit for a no-bid contract.
Assembly member Julie Decker noted that an updated survey of the borough's utility system had not been completed until the last fiscal year, and that the new information might make for a more accurate projection. However, she wondered whether city staff might be able to take the new information into account and make projections of their own using the 2010 results.
Borough manager Jeff Jabusch responded to these comments, confirming that results in the previous study would have been different had the system study been available.
“Unfortunately a lot of this aging of our system wasn't looked at well enough by our staff,” he said. HDR worked with the information it was given, and its assessment reflected that accordingly. Based on the information on future capital requirements provided at the time, the consultants had not recommended an increase. However, a system study concluded during the 2014/15 fiscal year has brought a number of infrastructural issues to light.
“The system study was an eye opener,” electrical superintendent Clay Hammer reported in a memo. It identified that 80 percent of Wrangell's distribution is at or beyond its expected life span, that portions are quickly nearing electrical capacity, and that in many cases the addition of heavy phone and cable trunk lines have grossly overloaded existing poles.
The study also indicated that Wrangell has fallen behind in Industry Redundancy Standards regarding its back up diesel generation. Industry standards dictate that peak demands be met even with the loss of one generator, which is no longer the case for the city. Initial estimates to address the current most pressing problems come in at over $1,000,000, with over $2,000,000 more required to address generation deficiencies.
“We're kind of on the edge of whether our backup power is sufficient if Tyee goes down for any amount of time,” Jabusch summarized.
In the end, Assembly members decided a study would not be necessary to raise rates in the near future if necessary. The depletion of the electrical department's reserves to $900,000 back in 2014 already led the Assembly to approve a seven-percent increase to electric rates. They decided unanimously to reject the contract.
“We can try to do this stuff within the budget as we go,” Jabusch told them. But the 2014 rate rise stabilized the reserve fund's problem, he warned any sizable failures could quickly become overwhelming.
In other business, the Assembly approved a three-year contract with its attorney on retainer, Hoffman & Blasco LLC. The attorney firm will be paid $3,500 per month through the contract's expiry in Oct. 2018.
In a 6-1 vote, the Assembly also approved a year's extension for lobbying services with Ray Matiashowski & Associates, not to exceed $36,000. The city had entered into the contract with the firm last November, and in the contract had an option to extend after one year.
Several appointments were made. Duke Mitchell was named to the Planning and Zoning Commission after supplying a letter of interest. Prysunka and Hammer were reappointed to SEAPA as Wrangell's voting and alternate representatives, respectively. And Rooney was tapped to serve as the Assembly's liaison to the Wrangell Medical Center Board. Cori Robinson was also presented with a certificate of service for her time on the Wrangell Medical Center Board.
A meeting scheduled for Nov. 24 was cancelled, due to its proximity to the Thanksgiving holiday.
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