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Electric rate hike will help pay for Blue Lake dam

An enormous concrete pump truck pours footings at the new Blue Lake powerhouse. The rig can place 500 yards a day. (Blue Lake Expansion Project photo)

An enormous concrete pump truck pours footings at the new Blue Lake powerhouse. The rig can place 500 yards a day. (Blue Lake Expansion Project photo)

The Sitka Assembly took the first step toward raising electric rates last night. Sitka plans a 10 percent across-the-board increase. The goal is to help pay for big projects, especially the expansion of the Blue Lake dam.

Only one member of the public, John Stein, testified on the rates last night.

“I use electricity. The city seems to think the people who use electricity should pay for it,” he said. “And I agree. I support the rate increase and I support the Blue Lake project. Thank you for doing it.”

Even so, others in the community have raised concerns about the increased cost of electricity. Utility Director Chris Brewton says he’s well aware that increasing the rates must be tempered with keeping power affordable.

“I don’t want to sound really hokey here, but I tell our folks in our department: We don’t serve account numbers in this town, we serve friends, families and neighbors. We all know who we are. So our objective is to keep our costs as low as possible,” he said.

The rate hike comes as Sitka prepares to borrow nearly $30 million from the Alaska Municipal Bond Bank to help pay for the Blue Lake dam. But the ordinance passed last night actually lists a higher amount. Interim Municipal Administrator Jay Sweeney says the city’s consultant did that, to keep options open in case money does not come from the state legislature this year.

“So he’s written it for $50 million to cover all contingencies,” Sweeney said. “Our planning is roughly $28 million this time, and we only have an approval at $44.5 million for the bond bank in total.

That means if the city needs more money, it will have to go back to the bond bank — which loans large sums of money to Alaska cities and towns. It would take a vote of the bank’s board of directors to send more money to Sitka.

The Blue Lake hydro project is the largest public works undertaking in city history. Crews are raising the height of the dam more than 80 feet. Doing so will mean Blue Lake can generate more electricity for Sitka. It’s estimated to cost a total of about $140 million.

Raising electric rates is part of an agreement which requires a certain amount of money to be coming into the city in order for the bonds to be granted.

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