SEAPA board rejects borough assembly's rate decrease request
The Southeast Alaska Power Agency took no action regarding a request made by the Petersburg Borough Assembly to reduce wholesale power rates to member communities in lieu of issuing annual rebates.
SEAPA typically gives member communities rebates, a lump sum fund, once a year. The letter, approved by the assembly last month, requested the current 6.13 cents per kilowatt-hour rate be reduced to 6.8 cents.
“The agency now has enough history to accurately predict its financial performance, so that a modest lowering of the rate would not adversely impact the on-going operations, and would be sustainable,” the letter states.
In a letter to Petersburg Borough Vice Mayor Cindi Lagoudakis, SEAPA Board Chairman Bob Sivertsen wrote that SEAPA is pursuing state funding for the Swan Lake Reservoir Expansion Project and that lowering the rate could “adversely impact how legislators view our needs.”
The letter stated SEAPA anticipates only receiving partial funding for the $13.5 million project from the state, and the remaining portion would require loans or bonds, creating additional debt service.
“SEAPA’s financial advisor advises that in the bond market, greater preference is given if SEAPA reflects a history of raising rates rather than remaining flat or lowering the rates,” the letter states.
Petersburg Borough Power and Light Superintendent and SEAPA Board member Joe Nelson said he thinks the rates should be lowered because it would fulfill a promise made by SEAPA to lower rates once reserve dollars were healthy.
In an interview last month, SEAPA CEO Trey Acteson said rebates are more appropriate because they offset changing power rates.
Rebates are issued based on SEAPA's relative cash reserves and are determined by the board of directors.