Assembly will consider increase in electricity rates

Ratepayers will have a chance to weigh in next Tuesday on the borough’s proposed increase in electricity rates for residential and commercial customers. If approved, the rate hike would increase the kilowatt-hour charge by 7.5% to 9% for most residential and business customers in Wrangell.

The move comes after the Southeast Alaska Power Agency, which provides Tyee Lake hydroelectric power to Wrangell, Petersburg and Ketchikan, notified the borough in early December that it would increase its wholesale power rates by a quarter of a cent per kilowatt-hour, from 6.8 cents per kWh to 7.05 cents.

The wholesale rate hike will take effect Feb. 1.

The Wrangell Borough Assembly on Dec. 14 proposed a 1 cent per kWh increase in electricity rates, covering all customers. The assembly will take public testimony and consider the increase at its Jan. 11 meeting. If approved, it could take effect later in the month.

Mayor Steve Prysunka, during discussion of the proposal Dec. 14, said the rate hike would add about $3 to $5 per month to the average household bill.

SEAPA’s decision emerged from an 11-hour meeting on Dec. 10 in which the agency’s board members proposed a quarter-of-a-cent wholesale rate hike, the first increase in more than 20 years, Prysunka said. The catalyst for the rate hike was the $13 million price tag to replace a damaged section of undersea power cable between Wrangell and Petersburg. The line was damaged in 2019, and SEAPA had to borrow money for the repairs.

Wrangell also faces replacement costs for infrastructure that is “just aging out, and we have to be prepared, we can’t wait until it happens,” Prysunka said of the need to add an additional amount to electricity rates, beyond what is needed to cover the SEAPA wholesale rate.

An enterprise fund such as the electric utility is supposed to be self-sufficient, but as Borough Assemblymember Anne Morrison pointed out, Wrangell’s fund is not able to cover all of its anticipated future needs.

If approved at the Jan. 11 assembly meeting, the rate increase would apply to residential, small commercial, large commercial, and shore service for boats. Prysunka said there will be another rate increase probably at the end of 2022, “just to grow our reserves enough to deal with the pending infrastructure crisis.”

The base rates would remain the same: $8 per month for residential, $9 per month for small commercial, $13.50 per month for large commercial business, and $4 per month for residential and commercial heat rate service, which was introduced to encourage customers to switch to electric heat, said Rod Rhoades, Wrangell Municipal Light & Power superintendent.

Kilowatt-hour charges are billed monthly based on usage, on top of the fixed base rates.

Generally, a small household will consume somewhere over 300 kilowatt hours per month, Rhoades said, unless someone has a big house, which could push their monthly use past 1,200 kWh.

People tend to get apprehensive about any increase or cost, said Jake Harris, general manager at the Stikine Inn.

“It’s a tough balance, trying to appease the public. I would rather see a gradual, yearly increase to keep up with the cost structure,” he said, rather than a big jump. Harris said he’s facing a 40% increase in his costs to operate his business next year. “A few bucks a month” in his energy bill is the least of his concerns, Harris said. “This was inevitable. We saw this coming years ago.”

In Petersburg, the borough assembly last month approved two electricity rate hikes for 2022, totaling 19% to cover the wholesale rate hike and to pay for renovations and replacements of local generating capacity.

Rates in Petersburg will go up this month, and again in July.

Much of the additional revenue will go toward paying back the bonds voters approved in October for an overhaul of Petersburg’s Crystal Lake hydroelectric plant.

The additional revenue from higher rates will also repay the cost of an additional standby diesel generator in Petersburg.


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