FIFTH OPENING – The Sitka seine boats Hukilau and Rose Lee pump herring aboard this afternoon at the end of Deep Inlet during the fifth opening in the Sitka Sound sac roe herring fishery. The opening was being held in two locations beginning at 11 a.m. (Sentinel Photo by James Poulson) 

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Daily Sitka Sentinel

Assembly Introduces Hike in Electric Rates

By SHANNON HAUGLAND

Sentinel Staff Writer

The Assembly introduced an ordinance with a 5 percent electric rate increase Tuesday night, the first step toward closing a $3.4 million shortfall in the electric fund.

All five Assembly members present voted in favor. Bob Potrzuski and Mayor Mim McConnell were absent.

The ordinance eliminates the lowest tier of users, raising minimum rate from $37 to $44.54 per month. The typical family bill will go from $128 to $140 per month, city officials said. 

The item will be up for public hearing and second reading on Oct. 11 and if passed will go into effect Oct. 12.

Power sales have not been growing as expected, with warmer weather and the low price of oil playing a part. 

The Assembly discussed briefly the possibility of raising rates by a higher percentage, but were concerned that this may cause what Steven Eisenbeisz and Tristan Guevin referred to as an “electrical death spiral” which would further depress consumption.

“We’re at that tipping point,” Guevin said. “We’ve seen electrical use continue to decrease in recent years. ... Looking at 20 percent (rate increase) we would see a dramatic decrease.”

The raise will still leave the electric fund over $1 million short of the level needed for the utility bond covenants.

“We’re in a worse situation than I thought we were,” Eisenbeisz said. “It’s horrifying. We absolutely have to pay this. Even spending less capital is not going to pull us out of this due to how our bonds are set up. ... It’s very eye opening.”

“We have a lot of options to come up with $1.5 million – there are ways to get that money and ways we can cut some things for the city,” said Matthew Hunter, who was presiding at the meeting. “It’s a compounding problem. It’s not going to be fun in the next couple of years.”

Aaron Swanson said he preferred a modest rate increase and finding other funds to keep rates at a reasonable level, instead of funding the bonds solely with a rate increase.

“There are definitely other avenues we can go,” he said.

The Assembly was enthusiastic about encouraging large users to switch to electric heat with a reduced rate for “interruptible” power. The city had budgeted for a $1.6 million shortfall, and 1 percent increase in electric use. The shortfall is actually closer to $3.4 million, according to the chart presented in a work session before the meeting.

“It’s a $3 million problem,” Utility Director Bryan Bertacchi said in an interview after the work session preceding the Assembly meeting. “There are difficult decisions for the Assembly; there’s no really good answers on any of this,” he said.

If the property tax issue passes in next week’s election some new revenue will be available for the electric fund. But City Administrator Mark Gorman said he plans to present other options at the next meeting. Possibilities mentioned at the meeting are transfers from the bulk water fund, the LID fund and the city permanent fund.

“We’re entering a crisis situation when it comes to managing our electric utility,” Gorman said at the work session. “We have to find a way to relieve pressure on our citizens without compromising our economic integrity.”

He added today: “I think we need to take a very close look at our permanent fund. We have to have a stable source of revenue or we’ll be at a crisis point every year. He have to have a recurring subsidy of electric fund, unless we want to pass it on to ratepayers.”

The city already puts earnings from its permanent fund into the general fund budget. This year the amount is $1.3 million. By ordinance the Assembly could increase the amount of the draw, but the city charter calls for the principal to be protected.  

Another expense facing the electric fund is the cost of the 10-year capital improvement plan outlined by Bertacchi, including the overhaul of the Green Lake hydro system and duplications for the  Marine Street substation.

Lawsuits, Landslide

The city approved dedicating $150,000 for legal services and $100,000 for geotechnical services related to the 2015 Kramer Avenue landslide. Gorman said after the meeting that the city is being sued by the family of brothers Elmer and Ulises Diaz, who died in the slide, and by the Friske family, whose home was damaged.

The Friske suit also names the owners of Sound Development LLC as defendants. Both lawsuits seek in excess of $100,000 in compensatory damages and $100,000 in punitive damages.

Other Business

On other agenda items, the Assembly:

– approved a lease to the White Elephant Shop at 323 Seward Street for 30 years, at $1 per year.

– approved an amendment to the lease between the city and the Sitka Animal Hospital. Eisenbeisz voted against.

– passed on first reading an ordinance authorizing the assignment of lease space by Ostrov Enterprises to Alaska Rent a Car at the airport terminal.

– passed on first reading a city code amendment establishing the Student Activities Dedicated Fund, using local license fees from marijuana businesses.

– appointed Richard Parmelee to the Planning Commission, Woody Widmark to the Parks and Recreation Committee, Craig Warren to the Local Emergency Planning Committee, and Lance Ewers as an alternate to the committee.

– changed the code related to the Marine Passenger Fee Fund on final reading.

– heard an update from Sitka Community Hospital CEO Rob Allen, who also presented a check for $463,000 toward repayment of the hospital’s $1.5 million line of credit from the city. He said the hospital will continue with regular monthly payments. He said the hospital now has $5.3 million, or 88 days’ cash on hand. Allen thanked the staff, the Assembly and the community for supporting the hospital.

– heard a report from the administrator praising the search and rescue squad for its work in last week’s search for the lost hiker.

– heard a report from Ben Miyasato about the Parks and Recreation Committee’s discussion of a request to name the Cross Trail after the late Ben Grussendorf.

– heard a reminder from Sara Peterson about the Oct. 4 city election. Voting hours will be 7 a.m. to 8 p.m. at St. Gregory’s Catholic Church (Precinct 2) and Grace Harbor Church, across from Sea Mart (precinct 1). Peterson said today she is being asked why Centennial Hall is not being used. She said the date of the completion of the remodeling was not certain until recently, and there had not been enough time to advertise the election in accordance with city code and state law. “Election Central,” where votes are counted and posted, will be in Meeting Room 3 at Centennial Hall. 

Peterson said anyone with questions about where to vote may call the clerk’s office at 747-1811.

Advanced absentee voting is available 8 a.m. to 5 p.m. weekdays, through Monday, on the third floor of city hall.

 

 

 

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20 YEARS AGO

March 2004

Matthew C. Hunter of Sitka recently returned from Cuba as part of a St. Olaf College International and Off-Campus Studies program. Hunter, a junior physics major at St. Olaf College, is the son of Robert and Kim Hunter of Sitka.


50 YEARS AGO

March 1974

Eighth graders have returned from a visit to Juneau to see the Legislature. They had worked for it since Christmas vacation ... Clarice Johnson’s idea of a “White Elephant” sales was chosen as the best money-maker; Joe Roth won the political cartoon assignment; highest government test scorers were Ken Armstrong, Joanna Hearn, Linda Montgomery, Lisa Henry, Calvin Taylor and David Licari .....

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