Sitka won’t be selling any bulk water for a while — unless a prospective buyer wants to make a serious investment in repairing the delivery system.
In a special meeting Tuesday night (4-30-19) the Sitka Assembly decided to hold off on spending up to $1.8 million dollars replacing decades-old valves in the bulk water piping until a customer steps forward to help out with the expense.
Over the last 11 years Sitka has made a lot of money — $1.4 million — selling rights to bulk water.
But in all that time, no one’s ever showed up with a tanker, and no one’s ever turned on the tap.
The bulk water pipeline is connected to the penstock for the Blue Lake hydroelectric plant, which opened in 2015 after a multimillion dollar expansion. In the enormous noise of that project, there might have been a whisper of a problem with the pulp mill-era valves that controlled the bulk water system — maybe even a report.
Assembly member Aaron Bean would like to see it.
“Surely this was considered,” he suggested. “Wherever that report is laying — on someone’s desk, or in a storage unit somewhere, I’d just like to read the logic here. Because I don’t think that we should really be entertaining spending millions of more dollars on something that isn’t even needed at the moment.”
But Garry White, director of the Gary Paxton Industrial Park, pushed back. He’s been actively marketing water — he set up the lucrative deals to sell rights, in fact — and now his board worries that Sitka risks being discredited in the world water market.
“I’m actively working with about six different groups that are interested in bulk water,” White said. “A lot of them are disappointed to hear that we can’t deliver.”
White said that three potential customers all told him — on the same day — that they were turning their attention now to potential water in Greenland. White said that he was reassured by then-city administrator Mark Gorman in 2015 and 2016 that the bulk water system was “good to go.” Now, he told the assembly, he just wanted “resolution.”
But the fix is expensive — over $1.5 million for two alternatives, both of which require draining the penstock to accomplish. Draining the penstock won’t happen at least for another two years, after Sitka has built a federally-mandated filtering plant to serve as the city’s backup drinking water supply.
That project is expected to cost $18 million. Assembly member Steven Eisenbeisz didn’t think Sitka had the money to spare on something as speculative as bulk water.
“Bulk water may happen. It may not,” said Eisenbeisz. “If industry wants it, we have a penstock where I think they could pull from. I don’t want to see us putting $1.8 million into something without any money backing it. There’s no guarantee that we’ll get return on investment, and I don’t think the municipality is in a position to be spending money without a guaranteed return.”
Up until now, the potential return for bulk water sales in Sitka has always been priced at a penny per gallon — or $95-million, if Sitka sold every drop of Blue Lake it had rights to. While that amount of money has never been considered anything but rhetorical, Garry White told the assembly that Sitka would be trading away a significant amount of ownership, if a third-party paid to repair the bulk water system. “We’ll no longer be on top,” he said. “It would be more like revenue-sharing.
Before the assembly moved on, Mayor Gary Paxton directed the administration to locate the missing engineering report from the Blue Lake expansion project, to determine how much was known about the faulty valves at the time the dam was raised.
Note: There is considerable documentation available surrounding the Blue Lake Hydro Expansion and raw water. Here are some useful studies: