The borough assembly voted unanimously Tuesday to approve an electricity rate hike that will increase the kilowatt-hour charge by 7.5% to 9% for most residential and business customers in Wrangell.
The rate increase comes after the Southeast Alaska Power Agency, which provides Tyee Lake hydroelectric power to Wrangell, Petersburg and Ketchikan, notified the borough in early December that it would increase its wholesale power rate by a quarter-of-a-cent per kilowatt-hour, from 6.8 cents per kWh to 7.05 cents.
The borough’s increase in retail rates will take effect Jan. 20; customers will see the higher charges in their February bill.
Vice Mayor Patty Gilbert raised a criticism of SEAPA. “I would appreciate if they gave the communities advance notice. This goes into effect for the public next month, correct? And we had a month or so notice?”
Mayor Steve Prysunka said he was somewhat surprised at SEAPA’s rate hike. “An increase had been proposed in December (2020), and the (SEAPA) board shut it down because we (Wrangell) didn’t have the time to prepare.” Prysunka is on the regional power authority’s board of directors.
The city of Ketchikan, which operates on a calendar year budget, built the anticipated rate increase into its municipal budget for this year, Prysunka said. Wrangell’s budget year starts July 1, putting the community in the situation of a mid-year rate hike.
“The (SEAPA) board was understanding that we couldn’t move that fast. They put it off until now,” Prysunka said. “I will work very hard to work that there is better communication.“
The rate hike will add about $3 to $5 per month to the average household bill in Wrangell, the mayor said during discussion of the proposal Dec. 14.
The last time rates increased in Wrangell was 2014, Jeff Good, interim borough manager, said on Monday.
The borough assembly on Dec. 14 proposed a 1 cent per kWh increase in electricity rates, applying to all customers, with the decision set for Tuesday’s meeting. There was no public comment on the rate increase at Tuesday’s meeting.
SEAPA’s board on Dec. 10 voted to boost its wholesale rates for the first time in more than 20 years. The catalyst for the rate hike was the $13 million price tag to replace a damaged section of undersea power cable between Wrangell and Petersburg. The line was damaged in 2019, and SEAPA had to borrow money for the repairs last year.
In addition to covering the boost in wholesale power costs, the borough’s retail rate hike is intended to cover replacement costs for infrastructure that is “just aging out, and we have to be prepared, we can’t wait until it happens,” Prysunka said last month. The assembly agreed with the plan to raise retail rates above the SEAPA wholesale cost increase to cover those current and future expenses for the community’s electrical generation and distribution system.
An enterprise fund such as the electric utility is supposed to be self-sufficient.
The rate increase applies to residential, small commercial, large commercial, and shore service for boats. Prysunka said last month there will be another rate increase probably at the end of 2022, “just to grow our reserves enough to deal with the pending infrastructure crisis.”
The base rates remain the same for Wrangell utility customers: $8 per month for residential, $9 per month for small commercial, $13.50 per month for large commercial business, and $4 per month for residential and commercial heat rate service, which was introduced to encourage customers to switch to electric heat. Kilowatt-hour charges are billed monthly based on usage.
Generally, a small household will consume somewhere over 300 kilowatt hours per month, unless someone has a big house, which could push their monthly use past 1,200 kWh, said Rod Rhoades, Wrangell Municipal Power & Light superintendent.
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