Just before it gaveled out on Friday, five days late, the Alaska Legislature passed a bill of particular importance to Sitka: Senate Bill 99, which includes language authorizing the city to apply for a low-cost state loan to complete the Blue Lake dam hydroelectric project.
The authorization is just six lines of text tacked onto the larger bill, but, for Sitka, it could mean significantly lower electricity rates in the future.
“It comes right down to the family when they write the check to city hall to pay for their electrical consumption,” said Sitka Senator Bert Stedman, who inserted the loan language into SB 99, and ushered it through the legislature.
Sitka needs to raise about $18.5-million to finish the Blue Lake project. Officials originally hoped the money would come in the form of a state grant, but the project didn’t make it into this year’s capital budget.
So the city turned to Plan B: a low-cost loan from the Alaska Energy Authority. The Authority has the power to issue loans with interest rates as low as zero percent. That means a loan from the Authority could be a much cheaper way for Sitka to pay for the Blue Lake project than issuing municipal bonds, which is the city’s other choice.
Those savings would then be passed on to Sitka residents and businesses, said City Administrator Mark Gorman.
The city is already planning a 10-percent electricity rate hike in July, to help pay for the Blue Lake dam expansion. That’s pretty much set in stone, Gorman said. But, he said, if Sitka can negotiate a loan with the Energy Authority, it may be able to avoid further rate increases down the line.
City officials were watching Stedman’s efforts in the legislature with their fingers crossed.
“I think he really pulled a rabbit out of the hat on this one,” Gorman said.
The loan still isn’t a done deal; the governor has to sign the legislation into law, and then the city will enter into negotiations with the Alaska Energy Authority. The final loan will depend, in part, on how much money the Authority has available.