Electric rates in Sitka are going up over 30-percent, starting with the next billing cycle. The rate surcharge will stay in place for at least a year.
Low water levels in the community’s two hydroelectric reservoirs forced the municipal utility last month to begin running its backup diesel generators all the time.
The amount of the surcharge could change, however. The Sitka assembly voted unanimously last night (Thu 12-1-11) to allow the Electric Department to adjust the surcharge depending on how much diesel fuel is needed to keep the community powered until the spring snow melt.
That Sitkans were going to have to pay more for electricity this year was never in doubt. Due to a prolonged dry spell – by Southeast Alaskan standards – Sitka has only five month’s of water to run its two hydro plants for six months.
The electric utility recently revised upwards its estimate of how much diesel fuel it will take to get to May 2012 — $3-million.
City code already has a provision for a rate surcharge any time the utility burns more than $50,000 in diesel fuel in a year.
Electric Director Chris Brewton told the assembly that the time had come.
“Whatever we decide tonight, this fuel surcharge is going to be put into place. We’re looking at a substantial amount of money we’re spending, and we’ve got to recover that cost.”
That means a hike of $.03 per kilowatt-hour, a thirty-three percent increase over Sitka’s base rate of $.09 per kilowatt-hour, beginning with the next utility bill in December.
Brewton proposed spreading the surcharge out over a full year, but adjusting the rate – up or down – each quarter, to reflect changes in the amount of rainfall, snowmelt, or the cost of fuel. The existing ordinance requires setting the rate for an entire year.
Brewton told the assembly that it was important to try and stay in step with the actual costs of diesel generation. Getting too far out in front meant overcharging rate payers; getting behind could prove disastrous. He ran some hypothetical numbers:
“For example, if we say we’re going to need $2-million in fuel, and end up burning $4-million, we’ve under-collected by $2-million. So that means we can’t start collecting that until the next year. If you add any future generation on top of that, suddenly you’re looking at a position where you’ve got a $.40 or $.50 fuel surcharge.”
There was some concern on the assembly over the fairness of the quarterly adjustment scheme. Mim McConnell said she had spoken with commercial fishermen upset over having to pay a surcharge in the fall, to make up for water drained from the lakes in the summer when they’re mostly gone.
Brewton responded that electric demand – despite increased population from seasonal workers, more visitors, cruise ships, and seafood processing – was much lower in the summer months than in the winter. He suggested that people pointing fingers should point them upwards.
“This situation we’re in now, you can’t blame any particular class of customer. We’re here because we’ve had a low water year. Our dams are not full. Loads haven’t changed that substantially over the last four years. It’s simply that we’re in a low water year.”
According to National Weather Service data easily available online, Sitka should have had about 78 inches of precipitation by now this year. As of December 1st, we’re at about 58 inches – 20 inches down.
But a drought in Sitka is still pretty wet. Assembly member Phyllis Hackett suggested residents were failing to grasp the situation.
“I’ve had well-informed people come up to me and say, Is this really a problem? I mean, c’mon, is it real? Which just surprises the hec out of me.”
Beginning with their December utility bills, Sitkans will see how real the problem is. Sitka Conservation Society intern Bitty Balducci has been working with the Electric Department on a public education campaign since last summer. Recently, she’s been giving programs in the elementary schools describing Sitka’s hydro shortage.
Balducci says this first billing is an important opportunity for educating a general public that, so far, has been hard to reach.
“We are trying to put something together to go in the electric bill when that surcharge goes out. And as Chris mentioned, we are also trying to put together a rebate program, which has not been established in any way yet. But we’re trying to get that so people can get those energy-efficient appliances that will give them the big savings with some money back.”
Balducci added that “If you want to think about conservation, think heat” as the most effective way to reduce electric usage. 43-percent of Sitka’s overall electric consumption is residential, most of it hot water and electric heating, and most of that growth has come in the last ten years as the price of fuel oil has increased.
The assembly asked if the Electric Department could suggest a course of action for the public. Director Brewton was blunt:
“So, what do we do? We are certainly in critical trouble. We need folks to get serious and switch to a non-electric heat source.”
The assembly voted unanimously to adopt the surcharge and the quarterly rate adjustment structure.
