Bond question for Petersburg electric upgrades could be on fall ballot – KFSK

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Water from Crystal Lake on southern Mitkof Island is used to generate electricity at Blind Slough. (Joe Viechnicki/KFSK)

Voters this October could be deciding on a bond measure for Petersburg’s oldest and cheapest source of hydroelectric power. The Petersburg borough may seek voter approval to take on debt to pay for repairs and upgrades at the hydroelectric plant at Blind Slough as well as additional backup diesel generators.

The borough’s hydro plant at Blind Slough generates about a quarter of the community’s electricity needs from the water dropped out of Crystal Lake. Construction on it started 100 years ago and it was online by 1925 according to newspaper reports. Two years ago a consultant recommended over seven million dollars in repairs and upgrades.

Utility director Karl Hagerman told the assembly that the borough would need to borrow to pay for that work as well as additional backup diesel generators.

“We do need to move towards adding diesel generation and the cost of that and the cost of finishing, constructing the Blind Slough hydro repairs, that is the reason that we’re looking at bond issuance,” he said.

Hagerman said that additional diesel power is needed during peak demand, if Petersburg loses connection to its main power source, hydroelectric plants near Wrangell and Ketchikan. And the cost of the new hydro and diesel generators would be repaid by customers of the local electric utility, not by tax payers. But borrowing money will likely require an increase in electrical rates. Hagerman said a study of power rates is still in progress.

“The reason that we’re doing a rate study is to determine if our rates, existing rates are adequate enough to take on additional debt to fund these projects,” Hagerman explained. At this point it’s not complete but I can tell you that it’s not and that we are looking at rate increases this year and next year to fund some debt service. I need to be transparent with the community on that issue that these projects really need to occur but it does mean that rates will go up to pay off this debt.”

The borough is waiting for the rate study to be completed before it knows the size of rate hikes that would be needed for this work. The wholesale power provider that supplies most of the community’s hydro power also may increase the cost of that electricity as it replaces a cable south of Petersburg this summer.

On a radio show Monday, assembly member Dave Kensinger thought it made sense to do the work to keep the Blind Slough hydro plant running. However, he was also concerned with the cost of the project increasing.

“I don’t want to see us get in a situation like what happened in Sitka with Blue Lake where they had, where they raised their pool on Blue Lake dam and that project went way, way over budget,” Kensinger said. “I feel confident that we have enough wherewithal within the borough to make sure that doesn’t happen. That’s one of the things that I’ll be paying close attention to is making for sure that when we get bids for this project that we’ll be staying within those bids.”

Back in February the assembly approved the purchase of the new equipment for the Blind Slough repairs for just over two million dollars, contingent on local voter approval.

On Monday the assembly voted 4-0 to approve retaining a law firm to help the borough prepare for issuing bonds to pay for that project. Mayor Mark Jensen and assembly members Taylor Norheim and Jeigh Stanton Gregor were not at the meeting. They’ll still have to consider putting the bonding question on the ballot at a later date.