Local News

Rates to rise as Blue Lake project moves forward

Hikers Brant Brantman and Brian McNitt watch work on the Blue Lake Dam project, from the east side of the gorge. (KCAW photo by Robert Woolsey)

Sitka’s electric rates are going up effective July 1.

The flat 15-percent increase for all customers will put residential energy charges between 9 and 18 cents per kilowatt hour, depending on usage.

The city is about to issue bonds to pay for the Blue Lake dam expansion. In order to do that, it had to promise its lenders that it would raise a certain amount of money.

READ: Ordinance 2013-06 outlines the new electric rates.

The final approval of the rate changes was one of several energy decisions the Assembly made last night. It also purchased a critical piece of Blue Lake infrastructure. The apparatus, known as a switchgear, is expected to cost more than $700,000.

Assembly members also agreed to pay the Forest Service $10,000 a year for the next decade. Because the city is eating up some Forest Service land by expanding Blue Lake, it has to compensate the federal government. The money is expected to be used to fertilize Redoubt Lake and improve sockeye salmon habitat.

And the Assembly agreed to hire S&S General Contractors to blast away some rock near the city’s Jarvis Street diesel power plant, in order to make room for an expansion there. Instead of asking for direct payment, S&S is asking the Assembly to make debt payments of about $107,000 on a quarry lease approved earlier this year.

“We are getting this work done at a fraction of the cost that it would cost if we went out for open bid,” said city Utility Director Chris Brewton. “So, in effect, what we’re doing is saving several hundred thousand dollars of our project funds by going this route.”

The payments amount to just over $4 per cubic yard of rock removal. That compares to bids in place on the Blue Lake project that range between $100 and $4,200 per cubic yard, depending on the difficulty of the work.

Assembly Member Mike Reif wanted to know why the rock removal contract wasn’t put out for bid.

Reif: “Why wouldn’t another contractor look at that rock sitting there on the hillside saying ‘Hey, I can remove that. I’ve got some projects I can use that for. I can store it. Give me a chance to bid on it, and I can do it fairly quick.’ Why aren’t we providing that opportunity to other contractors?”
Brewton: “I would say based on the fact that we have firm prices for rock removal at a large project underway at various locations … and we know what we’re paying for the Blue Lake project. We look at the cost of this is going to be, relative to those prices, and it’s 1,000 times less. So there’s no doubt in my mind that, if we go out for bid, the only thing that’s going to happen is there’s going to be an increased cost.”

Municipal Attorney Theresa Hillhouse added to that. She said the city charter requires the Assembly solicit bids for work like this, unless the Assembly finds circumstances require special treatment. In this case, the city needs the rock moved quickly, and already has a qualified contractor on hand.

Brewton called it, quote, “a rare confluence of events.”

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