The Southeast Alaska Power Agency Board of Directors voted on Tuesday, Dec. 11 to hold off on accepting an operations and management proposal from D. Hittle and Associates which recommends the streamlining of operations and management at the Tyee and Swan hydroelectric projects under a single operator.
SEAPA commissioned the report, which was released in September, as an alternative to current staffing and risk management solutions at both locations. According to the agency’s chief executive officer, Trey Acteson, the change in operating structures at the two plants would see a $461,500 reduction in costs – with the possible dismissal of four plant operators.
During his report to the board Acteson pointed out five key questions the three communities had questions about over the last three months.
Since the September meeting, Acteson said he had visited the facilities a couple of times and the three communities multiple times to educate the public about the possibilities of moving the KPU and TBPA utilities under a single operator.
“A request for a recommendation was made of me and I have taken the questions of the community into consideration,” Acteson said. “But this is my assessment and my recommendation is just that, my recommendation.”
Acteson explained that SEAPA's first consideration is from a legal perspective because SEAPA is solely responsible for environmental and FERC compliance and they are responsible for their own bond indenture requirements and many of those requirements trickle down to the core of O&M.
The first question from the communities was why can't SEAPA amend or rewrite the current O&M contracts.
Acteson answered, “That does nothing to address the whole initiative of why this board voted to do the O&M review in the first place and it doesn't address cost,” he stated. “It's just common sense to have the same union contracts and schedules and to begin with a completely clean slate.”
Will the member utility communities lose their voice, if SEAPA moves to a single operator organization?
“SEAPA was organized in such a fashion that the member communities always have a say,” Acteson answered. “They have a direct conduit into SEAPA and we run SEAPA as a prudent business operation.”
What is the impact on jobs?
“There will be no lay-offs of personnel at the plants,” Acteson stated. “But I'm not convinced that we have the skill sets to operate them presently. There need to be skill assessments done, which have not been done by the current operators.”
Will safety be compromised?
“Absolutely not,” he stated. “Safety is our highest priority at SEAPA.”
Acteson’s final point questioned whether the savings quoted be high and unrealistic?
“That is a matter of interpretation,” he stated.
His recommendation was that the board takes the important first steps of canceling the O&M contracts with Swan and Tyee and direct staff to facilitate a transition to a single operator and give a clear determination that will allow staff to develop operating guidelines, as well as business practices and union contracts specific to the operator.
“This is in the best long-term interest of SEAPA, the member utilities and the rate payers,” Acteson said.
A motion made by Ketchikan’s voting member, Bob Sivertsen – one that would delay the approval of the Hittle report until June 2013, and would include a budgeted public relations push by SEAPA, but would not include a proposed amendment for new O&M agreements with KPU and TBPA – passed unanimously.
“Give us a chance, we may be able to make improvements with suggestions,” Sivertsen added on the vote to hold off on approving the Hittle report, saying that the push by SEAPA has brought both Ketchikan Public Utility and Thomas Bay Power Authority together under a unified umbrella against a single contractor at both sites.
Acteson dissented regarding rewriting the O&M agreements, saying to do so was, “not forward thinking,” and would be, “a waste of time and money.”
After the vote, TBPA general manager Paul Southland said he wasn’t entirely dissatisfied with the outcome, but was concerned about spending SEAPA money on publicity efforts.
“I am pleased that the board saw the benefit in extending the period of time to gather information, but I am concerned about SEAPA hiring a publicist to have them communicate to the communities,” Southland said. “I believe I heard Trey say he is adamantly opposed to renewing the O&M agreements with KPU and TBPA, so if you’re hiring someone to do a technical review to make the community’s electrical operations more efficient that is one thing. However, if you’re buying a paid commercial to do what you want to do anyway, I think that is waste of ratepayer funds.”
Petersburg’s voting member, Joe Nelson made an earlier motion to direct staff to revise the O&M agreements with KPU and TBPA before approving the Hittle report – though after discussion, the motion failed by a 1-4 vote, with only Nelson voting in the affirmative.
Outgoing board chairman Jeremy Maxand also added comment about his views on the issue.
“I don’t know why I care so much about this decision,” Maxand began, continuing, “I’m not going to be on this board and I’m probably not going to be a rate payer soon, but I have spent four years trying to bring, from a community that is high in controversy and conspiracy theories and oftentimes politically irrational behavior, a little bit of sanity to this board. I feel like I have a personal stake in how this organization moves forward in the future and I looked at this report and talked to the staff, board members and people in my community. I think this is the right decision to make and I think now is the right time to make it.”
Maxand also brought up the issue of what he feels is happening in Wrangell, and mentioned the concept of divestiture that was recently discussed by the Borough Assembly.
“The same small group of folks who are opposing this are going to spend a lot of time between now and when this board has to make a decision fighting it, and they don’t have to tell the truth about any of this. All they have to do is throw information out there to obscure what we’re actually trying to do,” Maxand said. “That’s what has happened in Wrangell. It’s the same, small group of folks who don’t want to see this happen. And, in fact, it hasn’t been an issue about a single contractor; now in Wrangell folks are talking about divestiture. They’re not talking about rewriting the contract, these folks have people in Wrangell talking about ‘how do we break up SEAPA?’”
Assembly member Bill Privett was first to raise the issue of divesting at a Nov. 30 special meeting.
“I think divestiture of the SEAPA process is something that should be on the table,” Privett stated. “No different than divestiture of the four-dam pool. The second that the thing was signed everybody looked at each other, now we just have to wait for the day when we can all say goodbye to each other. So, I think that’s probably a realistic thing.”
The Assembly also essentially voted down support for the Hittle plan on Nov. 30 – after passing a motion that states that the SEAPA representatives for Wrangell must, “recognize that Petersburg and Wrangell share equally 100 percent of the operating capacity of Tyee Hydro and also that the Operations and Maintenance Agreement be reviewed and consolidated under one operator with cooperation and approval of the.three municipal owners (City of Ketchikan, City of Petersburg, and the City and Borough of Wrangell.)”
In other business, a $2.99 million grant has been apportioned and utilized in the Kake-Petersburg Intertie project, with Acteson adding that an additional $2 million grant is waiting in the wings, and Commonwealth and Associates being named as the project manager.
“I’m very comfortable with their qualifications,” Acteson said of Commonwealth. “The project could start in 2014, and hopefully be complete in 2015.”
According to Acteson, the preferred route of the intertie will follow a northern route on Kupreanof Island, but with plans for an inter-channel crossing to Petersburg still under consideration.
The 2012 audit of SEAPA, which was conducted by the Anchorage-based firm of Mikunda Cotrell, showed no adjustments or errors in the overall budgetary status of the organization – and showed that management was cooperative with the study.
The audit also showed a $2.2 million increase in cash flow during 2012, with a decrease in net liabilities to $1.5 million and a corresponding decrease in net assets to $1.6 million during the year.