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SEAPA asks for refinancing support from member utilities

 


Southeast Alaska Power Agency (SEAPA) CEO Trey Acteson spoke before the Petersburg and Ketchikan borough assemblies last week and the Wrangell Assembly on Tuesday to update the communities on the progress of the Swan Lake expansion project and apprise them of their role in upcoming refinancing efforts.

The current dam at Swan Lake is 174 feet tall and 430 feet wide with a spillway slot that is 15 feet high and 100 feet wide.

"Essentially the project is to fill that spillway slot, be able to raise the reservoir 15 feet," Acteson said. "It gives us an extra 25 percent active storage in that reservoir so pretty good bang for the buck with small modifications."

Acteson said the expansion project would provide more energy to the agency that supplies power to Petersburg, Wrangell and Ketchikan, and also to capture spill.

"We spilled for several months this year," he said. "And once that spill goes over the dam, that's energy lost forever."

Capturing that spill through the expansion would save up to 12,000 megawatt hours a year, the equivalent of 800,000 gallons of diesel. That would spell savings for Ketchikan, which uses diesel power to supplement the hydropower provided by SEAPA. Acteson said it would also benefit Petersburg and Wrangell, whose power comes mainly from the Tyee Lake hydro facility.

"Swan is essentially Petersburg and Wrangell's long-term backup. If something were to happen at Tyee, if we had a big transformer failure there or something, we're still able to push power up through the intertie," he said. "I think that's probably the biggest risk mitigation factor."

With the original design, the project was estimated to cost $13.3 million, but Acetson said his crew is working on a simplified design that aims to reduce the cost by a couple million dollars. With $3.9 million in state funding, SEAPA is still looking for about $7 million to fund the expansion.

During their community visits, Acetson and SEAPA counsel Joel Paisner explained they were looking for those funds in the bond market. Along with refinancing $4.77 million of existing 2009 electric revenue bonds, SEAPA is looking to sell $7 million in bonds to help fund the Swan Lake project.

"Basically we've had to pull a team together—a bond council, financial advisor, underwriter—to help us sell the bonds in the market," Paisner explained. He added that refinancing will save the agency about 2 percentage points on interest rates.

"The rates are really, really favorable and that's why we're here doing this now because it'll save the agency money and keep the rates stable, allow us to do this project going forward and hopefully not impact the wholesale power rate," Paisner said.

He explained final pricing and selling of the bonds is slated for mid- to late April, with access to the funds occurring by late April or early May. In the meantime, Paisner is seeking permission from a representative of each member utility to sign documents to allow for the transaction and "some minor technical changes" to SEAPA documents.

"Basically there's really no changes to the underlying documentation," Paisner said, adding that major governing documents like the power sales agreement and bylines will remain unchanged.

“Do you have an estimate to the communities about what it costs?” Wrangell Assembly member Stephen Prysunka asked.

Paisner indicated the only associable costs would be in hiring the services of a bond counsel, which Acteson indicated he would be open to reimbursing.

Addressing the risk Wrangell would face in signing off on the changes and about SEAPA's total debt capacity, Paisner explained member utilities are not under obligation to pay for debt incurred by SEAPA. Rather, they pay just for the power purchased from the provider. The agency's total outstanding debt is currently $13.4 million.

If all goes according to plan construction on the Swan Lake dam will begin next year.

 

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