No SEAPA Council vote
After a two-and-a-half hour special Thursday meeting that grew testy at times, the Ketchikan City Council voted unanimously to defer consideration of Southeast Alaska Power Agency’s proposed change to its operations and maintenance structure. SEAPA is an independent nonprofit energy corporation made up of the municipalities of Ketchikan, Wrangell and Petersburg.
The meeting, which saw City Mayor Lew Williams III and Council members DeAnn Karlson and K.J. Harris absent, was overseen by Council Member and Vice-Mayor Robert Sivertsen. The Council met to consider a report issued by consulting firm D. Hittle & Associates at the behest of SEAPA, which called for terminating the existing operations and maintenance contract for the Swan and Tyee lake hydroelectric projects. The projects are run by Ketchikan Public Utilities and Thomas Bay Power Agency, respectively, but SEAPA proposes to replace them with a single — and currently unspecified — single contractor.
During public comment, SEAPA CEO Trey Acteson reminded the Council that KPU might operate Swan Lake but SEAPA owns it and the Tyee project.
“We have some big risks that we’ve assumed as the owner of these projects,” Acteson said, adding that SEAPA has a fiduciary responsibility to its member utilities and its ratepayers.
After Acteson’s comments, Council Member Sam Bergeron made a motion that the Council recommend to the SEAPA board — an independent body that will make the final decision — that it not consider canceling the existing contracts, but to work to revise them. The motion died for lack of a second. Council Member Marty West brought forward the motion recommended by City Manager Karl Amylon, which was to advise the SEAPA board of KPU’s formal position on the D. Hittle findings. Council Member Matt Olsen seconded.
To elaborate on that position, Tim McConnell, manager of KPU Electric Division, delivered a slideshow presentation to the Council. McConnell likened the ratepayers of SEAPA’s member utilities to that of stockholders, because the municipalities pay the debt incurred from the dams’ construction. McConnell said that if there were to be an outage at one of the hydroelectric projects because SEAPA, or whoever the new contractor was, insufficiently staffed the dams, Ketchikan would pay $65,000 a day in diesel costs.
McConnell said the move by SEAPA was likely so the agency could reduce the number of operators working at the dams in order to save money. The costs accrued from a catastrophic dam failure could “wash out” any savings made from reduced personnel. He said that if the presence at Swan and Tyee lakes were reduced to a single operator or caretaker, that person would be powerless to avert a crisis.
“One person can’t do very much,” he said. He described the D. Hittle report as “a hollow promise, and not really one we should hang our hat on.”
Sivertsen asked McConnell how many power outages the two dams had in the past few years. McConnell didn’t cite a number, but did say there were very few and that was likely because there was always a sufficient number of staff on-hand.
After McConnell, it was D. Hittle consultant John Heberling’s turn to present. Heberling began by pointing to his three-decade career in Alaska energy projects across the state. One of those projects, he said, was studying the feasibility of Swan Lake back when it was first proposed.
Heberling said the costs of operations and maintenance for SEAPA were increasing each year. The increase, in turn, forced SEAPA to consider increasing its wholesale power costs. Heberling said there was no disagreement over the need to revise the decades-old operations and maintenance agreement.
“You want to do what you can to try and streamline the operation to be as efficient as possible,” he said. If the proposed changes were approved, SEAPA could see a cost reduction between $450,000 and $500,000 a year, which in turn could be passed on in rebate form to the member utilities.
Bergeron said he was concerned that the termination of the current agreement would be “deleterious to our economy of scale” in Ketchikan. He said SEAPA should work to refine, and not remove, the agreement “before we talk about terminating something near and dear to many of us.”
Olsen said a concern he had was the possibility of SEAPA pursuing a private contractor to take over the plant operations.
“Those outside contractors have got to make a profit,” he said, adding that meant they might not hire local people to work as operators. He was also concerned that the new contractor might not be union.
Council Member Dick Coose, who joined the meeting telephonically from Mexico, said that even though Ketchikan and KPU were involved with the initial work at Swan Lake, that project belongs to SEAPA now.
“I think we need to be very careful about holding historic ties close to our chest,” he said, adding that SEAPA and the city’s No. 1 priority should be providing cheap, reliable energy to the people.
Acteson criticized Amylon and McConnell for what he called unmerited “slights to our board ... They work very hard.” He said the proposal brought forward was just that, and still subject to further review and change.
He said SEAPA would do a better job of operating the projects than do the current operators. He accused current operators of trying to hire employees who don’t meet minimum qualifications. He added that he had no intention of removing unions from involvement, though he favored a single union for both plants.
Acteson took umbrage at claims that SEAPA-run projects would be less reliable.
“The last thing we want is for reliability to go down,” he said, adding that SEAPA made its name by being reliable. To back up his point, Acteson had SEAPA engineer Eric Wolfe speak.
Wolf criticized McConnell for not knowing the exact number of outages when asked earlier, and said there had been a total of 18 outages at Swan and Tyee, 15 of which were the responsibility of KPU and Thomas Bay Power Agency.
Acteson said the Thursday special City Council meeting was the last stop for him on his outreach tour following the release of the D. Hittle report. He said he had spoken at Wrangell and Petersburg as well.
Following the presentations and comments, the Council voted unanimously to table further discussion until its regularly scheduled Dec. 6 meeting.