A chart breaks down the formula for meting out this year's power rebate to Southeast Alaska Power Agency customers. Its three constituent communities have traditionally received an annual return, with portions determined by historical usage.
Meeting in Wrangell this week, board members with Southeast Alaska Power Agency approved a municipal rebate and power rates for the coming year.
Headquartered in Ketchikan, the organization generates and distributes power for the Gateway Borough, Wrangell and Petersburg. Board membership is split between the three member communities, meeting at regular intervals throughout the year to set rates and direct projects.
Pending a successfully completed audit, member communities would split between them a rebate of $800,000, to be deducted from the agency's earnings. Wrangell would receive just over a fifth of this based on a historical proportion of its power usage within SEAPA, coming to $172,021. Effectively, the rebate amounts to a reduction in overall cost to utility customers, lowering the wholesale rate by half a cent.
The rate board members reaffirmed for the coming year came to 6.8 cents per kilowatt hour, one which SEAPA chief executive Trey Acteson explained had remained unchanged for two decades. In terms of usage over the past year, power sales were up for all communities above expectation. Coupled with lower than expected expenditures, the CEO reported that the financial position is good.
In the long term, however, in order to remain in a position to undertake extraordinary expenditures – be they for capital improvement projects or unforeseen emergencies – staff recommended creation of a rate stabilization fund, a sort of savings account. Board members were asked to consider establishing an account with an initial deposit of $2,000,000, to come from SEAPA's revenue fund.
"I've thought long and hard about this, about what would be an appropriate level to start the fund," said Acteson.
He asked that members further consider that realistically, more deposits will be needed to keep ahead of upcoming obligations, such as licensing and bonding. Language in the proposal made clear that deposits made to the fund would be considered ahead of rebates. "The reality is we're going to need way more money than if we just put away $1,000,000 a year until we need it."
"I'm in favor of setting up funds," offered Robert Lynn, the voting member from Petersburg.
"If we have the fund and we don't put in enough money, then we're doing ourselves a disservice," said Bob Sivertsen, an alternate on the board for Ketchikan. Acknowledging that this would make community rebates less likely in the future, he pointed out it would take a larger organization like SEAPA to fund large-scale projects, which individual communities would be unable to support on their own. "It's going to take a regional effort."
Although rebates would be affected, if run successfully the fund would have the effect of keeping the base rates down by acting as a buffer for sizable expenses.
The board reached agreement on the proposal, electing unanimously to establish the fund.
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