Blue Lake overflows its spillway in September. Work on raising the dam’s height is scheduled to begin this week. (Photo: Ted Laufenberg)

Construction crews are scheduled to break ground this week on one of the largest projects in Sitka history. Two years, and millions of dollars from now, the Blue Lake dam should be 83 feet taller and Sitka should be able to make more electricity from water.

Raising the height of the Blue Lake dam has already cost millions and taken years of work to conduct surveys, obtain permits and design the thing. And, for years, Dean Orbison has been one of the people wading through hundreds of thousands of pages of permits, designs, contracts, regulations, surveys, reports.

“Well, it’s kind of exciting to finally do something, shall I say, productive?,” says Orbison, a generation engineer for the city’s Electric Department, and project manager on the Blue Lake dam expansion.

He just moved his office from the city’s public works complex on Jarvis Street out to the Sawmill Cove Industrial Park. That’s where the equipment and workers will do a lot of staging for the job. But the work itself takes place about two miles up Blue Lake Road.

“The equipment that’s going to be going up to the lake is pretty incredible,” Orbison said. “We’re going to have a crane that reaches entirely across the dam.”

Portions of Blue Lake Road will be closed to the public for up to two years while the project is underway.

“First of all, we’ll be hauling spoils out from all of our blasting,” he said. “All the rock we’re blasting up there, for the most part, is going to be hauled back to the industrial park. We can’t have the general public on the road getting run over by the big trucks.”

The road will still be open as usual from its base at Sawmill Creek Road up to Heart Lake. But the area beyond, including the campground, will be closed.

But closing the road won’t be the only impact the project has on the general public. Utility Director Chris Brewton told the Sitka Assembly last night that electric customers will likely see changes on their bills.

“I fully anticipate that we’re going to have significant changes to not just the rates themselves, but the rate structures,” Brewton said.

In July, the Assembly boosted electric rates for people who use very little electricity, and those who use a lot. The idea was to set a minimum amount people had to pay to get utility service, and then promote conservation by charging extra to heavy users.

But the Blue Lake construction contract came in upwards of $90 million, despite engineering estimates that originally put the cost around $50 million. Sitka has asked the state legislature for money, and also is planning to borrow from the Alaska Municipal Bond Bank.

And Brewton says now that the project will cost more than originally thought…

“Our objectives have changed,” he said. “We’re not really looking at conservation per se, we’re looking at maximizing sales and trying to keep costs as low as possible for our rate payers, per class, but also recovering adequate revenue to meet our bond covenants and maintain the utility.”

In other words, Brewton is saying they want to keep rates attractive to customers, but the city also needs to make enough money to pay back whatever it borrows. He didn’t toss out any numbers on Tuesday night. Exactly how the rates get retooled will depend on how much money the city ends up borrowing.