Assembly holds electric rate study workshop

During a special meeting on Dec. 17, city staff and members of the City and Borough Assembly met with Wrangell Municipal Light and Power superintendent Clay Hammer to discuss looming problems with the island's power infrastructure.

In a workshop, Hammer boiled down the findings of a system study concluded this summer which found four primary areas of concern with Wrangell's power system. The meeting was prefaced by intermittent power outages downtown throughout the day after Feeder 1 failed.

Conducted by Electric Power Systems, a consultancy, the four main issues found were with distribution, load growth, generation and pole attachments. In laying out a prioritized list of fixes to pursue in the next five years, the EPS report put forth a rate case study and the immediate suspension of Wrangell's heating service rate reduction subsidy.

The subsidy was originally set up to encourage residents to change over from oil-based heat to electric by hooking up a second meter to a central heating system. The rates for that system would be fixed at the utility's 1,200+ kilowatt-hours rate, which is now at 8.56 cents per kWh. Standard rates begin at 13.48 cents for the first 300 kWh, reducing from there.

"It's a policy that's costing more to implement than it is paying dividends," Hammer said.

Borough Manager Jeff Jabusch explained the subsidy was a good idea when it was desirable to boost electrical usage, but by now the city is reaching its load capacity for winter heating.

With around half of all residences using electric heat and with fuel prices so low, Hammer said the time was right to cap the program.

"We need to be very careful about how we use the power that we have," he said. "It behooves us to use what we have very wisely."

Capping the program as well as raising rates across the board would allow WMLP to better save up revenue for pursuing needed projects, which in all have been estimated will cost between $3 million and $3.65 million. These include buying a needed three Megawatt standby generator; replacing aging poles along Church Street, Case Avenue, Zimovia Highway and Cow Alley; and replacing the existing H structure and substation getaways supporting the grid.

At the moment WMLP has better than $1.19 million in savings, and Jabusch said the city has money on hand to initiate some projects.

On capping the heating subsidy program, Assembly member Dave Powell questioned whether a cap would be unfair, thinking instead it should be ended outright. Jabusch said he could consult with the city's attorney on that.

Hammer also wanted the city to move forward with commissioning an electric rate study. At its Nov. 10 regular meeting, the Assembly rejected such a study, feeling the $25,000 it would cost to be too high an expense. It felt instead that rate changes could be calculated in-house using results from a study commissioned in 2010.

"It would be my preference that any changes be based on sound financial advice," Hammer said.

As discussion pressed past the allotted hour mark and into the special meeting itself, Assembly members decided they would need to schedule another workshop.

The Assembly received other potentially poor news about Wrangell's infrastructure. During his manager's report in the regular meeting, Jabusch explained the Shoemaker Bay Harbor float replacement project is in danger of being passed over for funding.

Earlier this year the Harbor Department applied for Tier I capital project funding from the Alaska Department of Transportation and Public Facilities (DOT). Last month it learned the project was ranked second for consideration out of four Tier I projects. However, funding can only be received in full as requested, and Wrangell submitted a proposal for $5 million in state funding to match its own contribution.

In his budget for the 2017 fiscal year, Gov. Bill Walker approved $5 million for the capital projects program. As a $1.6 million proposal put forward by Kodiak is ranked highest for next year's projects, there would not be enough money left in the fund to meet Wrangell's request, so the priority passes on to the next possible project.

"We don't think that's quite right," Jabusch told Assembly members. They agreed, afterward passing a resolution urging the Legislature to put more funds into the program.

If Shoemaker was approved for state funding, the city would put up the other $5.7 million, with $3.2 million coming from harbor funds and the other $2.5 million through the issue of revenue bonds.