January 19, 2012 | Vol. 39, No. 3

PMP&L continues to push for plant relocation to Scow Bay

Petersburg Power and Light Superintendent Joe Nelson reminded the city council Tuesday night of the department’s efforts to relocate their downtown plant to Scow Bay.

Photo courtesy of the Michael Nore collection ©
This undated photo of Power House Manager Joe L. MacKechnie and Cliff Roundtree in front of the Petersburg Municipal Power & Light Power House building was taken after 1935, when MacKechnie noted the purchase of the International pick-up in his memoirs. Note the power lines protruding from the building to send power to downtown Petersburg.

Nelson said in 1983 the city-owned utility provided 60% of the town’s power with diesel generation and 40% came from the Blind Slough hydro facility.

In 1984 the city went to 100% hydropower generation when the Tyee Lake project came on-line, providing power to both Wrangell and Petersburg.

Despite a rate decrease the utility continued to build reserves that reached $4 million in 2003 when Nelson arrived to manage the department.

According to Nelson the city manager instructed him to make plans to move the plant to Scow Bay. The cost to build a new building with shop space, equipment storage and administrative offices, plus add 20% additional diesel capacity, was $20 million, according to Nelson. The city was unable to secure grant funds from the State for such a project.

Lacking reserves to carry out the capital project in a single phase, the utility went piecemeal, according to Nelson. They moved their storage yard and later built an equipment storage shed on land near the city’s substation that was purchased from Reid Brothers Construction Company. Approximately $1.7 million was spent on those projects.

After doing design work for a new headquarters building, it came to light that the Reid Brothers shop, located adjacent to the city owned property, might be for sale. They said, “maybe, if the price is right,” according to Nelson.

This past year, Nelson placed $2 million in his budget to potentially purchase the Reid property and hoped to negotiate a purchase for $1 million as a first payment and then make 5 additional payments over the course of five years on the balance.

Nelson said the utility could cover the purchase by using reserve funds and would not have to increase customer rates.

Subsequently, Nelson said, in October of 2010, the city manager and city attorney determined that the purchase of the Reid building would have to go to a vote of the electorate.

“We lost a year since that decision was made last October,” Nelson said.

“We’re sitting here with the money in the bank, but our hands are tied until such time as it goes to a vote,” Nelson said.

Currently the utility reserve fund stands at $5 to $6 million and Nelson said he must maintain a minimum floor of $2.5 million in reserves for unexpected emergencies and liabilities, but there are adequate funds to purchase the Reid shop.

“If you look at the overall plan, of getting us off this corner and out to Scow Bay, there isn’t enough money,” Nelson concluded.

At the conclusion of the meeting Koenigs commented, “Based on what Mr. Nelson said, the acquisition of the Reid shop should be put on the next ballot. If it’s (a public vote) required, then let’s get it moving forward so the community can make that decision.”

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