SEAPA may streamline hydro project operations
The meeting of the Southeast Alaska Power Agency Board of Directors on Sept. 19-20 in Petersburg discussed an agenda item that may signal the end of the Thomas Bay Power Authority, as we know it.
A decision by the board to consolidate TBPA and Ketchikan Public Utilities in SEAPA, based on the finding of an internal agency report, will have to wait, however, for input from the Borough Assembly, Petersburg’s City Council and the Ketchikan Borough Assembly.
John Heberling of the consulting firm D. Hittle and Associates performed the study of the organizational structure and said that his firm saw several opportunities for cost savings.
“We had our people look at this and we feel that the amount of work to be done at the projects could be done with fewer people,” Heberling said. “And there is potential for some savings in labor costs.”
Heberling also recommended changing to one contracting entity for both projects, instead of two. He said, with a reduction of four staff, SEAPA could see a savings of nearly half million dollars annually. He also stated that another benefit of a single contractor would be employees at the power plants could train to work at both sites and move back and forth between Swan and Tyee lakes.
Although the board voted to take a measured approach to the plan, Jeremy Maxand, the chair of the SEAPA board, said the plan is being considered based upon the 2009 connection between the Tyee Lake and Swan Lake plants – a fact that did not exist when the operation and management agreement for TBPA and KPU was established in 1997.
“Basically, if we were to change how the two plants are operated by consolidating the operation and maintenance agreement into one, single contract, that would be a significant departure from how we’ve done business for years,” Maxand said. “It was unanimous that it’s important to make sure that our respective governing bodies understand what the report says and why this change is important.”
During the meeting, Maxand was blunt about what he sees as a lack of communication among the two hydropower facilities and SEAPA.
“The way the two are managed is highly dysfunctional and it is inefficient to try to make decisions by tracking down managers to try to do things. That is unacceptable,” Maxand said.
Afterwards, Maxand added that the change is necessary due to the Swan-Tyee Intertie.
“With the construction of the intertie between the Swan and Tyee project, the way they are managed and operated needs to be reviewed,” Maxand said. “It’s our hope that the study will provide insight and recommendations on how to more efficiently operate the two plants together in the best interest of the ratepayers.”
Such a decision, if enacted, would essentially cancel the partnership agreement between TBPA and SEAPA for the operation of Tyee Lake Hydroelectric Plant – and will reportedly see a $461,500 reduction in costs thanks to the dismissal of four plant operators, TBPA’s General Manager Paul Southland, and the operations transportation fund from the SEAPA rolls. An assistant operations manager and roving caretaker would also reduce costs at the site from its current level of $711,500 annually down to $250,000.
It’s a move Southland said would be detrimental to his organization and its employees.
“This report recommends the elimination of Thomas Bay Power Authority,” Southland said. “TBPA has five full-time employees based in Wrangell with annual payroll wages and benefits of approximately $500,000 that could be displaced.”
Trey Acteson, the CEO of SEAPA said concerns about planned automation systems and the loss of jobs at the Tyee plant is something he has been weighing carefully during the reporting process.
“SEAPA is very sensitive to the potential impacts of the labor and their families in the communities,” Acteson said. “We’ll be looking at how to make that transition if the board decides to go in that direction, so that it has the least impact on folks.”
Acteson also added that the plan, if managed well, could see a reduction-in-force over a period of time.
“It could turn out to be managed mostly through attrition, and that is one of the benefits of making the notification to the communities in the near future. It gives us more time to manage the loss more effectively,” he said.
Maxand added that any talk of losing jobs in the Wrangell area is too early to speak on at this point.
“That conversation is premature,” Maxand added. “Somebody is going to have to operate and maintain the plant and that will take people. There is no reason those people can’t come from Wrangell. It’s in Wrangell’s and Petersburg’s best interest to make sure that whatever arrangement is made is to have equity of employment between the communities, and that is something we’re going to be taking a hard look at.”
“Those people,” Southland said, would amount to nothing near as many as are currently employed at the facility.
“While I certainly appreciate (Maxand’s) leadership and trying to delay any potential decision in order to give the communities a chance to weight in, I think the report speaks for itself and how it anticipates the restructuring of the organization,” Southland said. “They want to see an automated facility at Tyee and Swan with just a few caretakers.”
Former SEAPA CEO Dave Carlson presented a history of the projects and the organization at a meeting of the SEAPA board in Petersburg Wednesday and Thursday.
According to Carlson the current structure of the public entities was not a good example of streamlined government. “To pass the operating budgets for Swan Lake and Tyee, it takes 33 people,” he stated. “You have to get the Thomas Bay Power Commission, the City and Borough of Wrangell, the City of Petersburg, City of Ketchikan, and the SEAPA board really has to approve the budgets.”
In the report, the question of how costs can be cut by lowering staffing was addressed via questions posed to the board.
“What improvements could be made in the operations and maintenance of the hydro and transmission projects?” the document states. “What would be involved in establishing an unmanned or caretaker approach to operation of the hydro plant? Should the projects be operated and maintained by one entity rather than two separate contractors? What costs and benefits could be realized with alternative approaches to operation and maintenance compared to the current approach?”
That current approach utilizes Southland as the manager, with an office manager, foreman, two operators, a relief operator, a right-of-way foreman, and two seasonal workers.
Aside from Maxand, other members of the SEAPA board were unavailable for comment on this story.
If SEAPA votes to take over sole management of the Tyee plant, along with Ketchikan Public Utility functions, they would most likely utilize staffing levels with 14 positions – a CEO, executive assistant, controller, director of operations, director of special projects, an assistant operations manager, a senior operator, three junior operators, a roving technician, a right-of-way foreman, and two seasonal workers.
Utilizing a secondary management contractor, in conjunction with SEAPA’s current organizational setup, staffing would include an operations supervisor, senior operator, three junior operators, a roving caretaker, a right-of-way foreman, and two seasonal workers.
“For SEAPA to fully undertake O&M of the Swan Lake and Tyee Lake projects… it would likely require a staff of about eleven regular employees plus some seasonal related to the right-of-way clearing. These would be an increase in payroll, purchasing, human resources, public affairs and training functions SEAPA does not now provide,” the report states.
The four operators at Tyee Lake are employed by TBPA, which also employs Southland as a manager and Rhonda Christian as office manager. The cost of Southland’s salary is charged to SEAPA through a net-billing arrangement, while the City and Borough of Wrangell and the City of Petersburg fund Christian’s position,
Although annual energy generation at Tyee has been 48,198 MWh based on actual generation over the period of 1991 through 2011, the output has until recently been far below the capability of the project. The Tyee project was built to supply up to 138 kV, but is presently operating at around 69 kV.
Under the O&M contract alternative plan, TBPA would enter its last year of operation in partnership with SEAPA on July 1, 2013, with the end of TBPA’s operation of Tyee coming on July 1, 2014.
The matter will be discussed at SEAPA’s next regular board meeting set for Dec. 11 in Ketchikan.