The Sitka Assembly is exploring modulating electric rates with the seasons. Under the proposed ordinance, customers would 19 cents per kWh in the summer and 12 cents per kWh in the winter. (Emily Kwong/KCAW photo)
The Sitka Assembly is trying to raise revenue to balance the city’s books. Last meeting, they raised the sales tax cap. And last night, they focused on raising electric rates. But with uncertainty over how those rates would be adjusted in the future, they decided to postpone their vote.
Mayor Matthew Hunter hopes this proposed rate hike will be the last for awhile. After introducing the agenda item, he said, “This is marked as being our final one after this dam project. Is there any public comment for this ordinance on first reading?”
The Assembly raised rates twice last year, once in May and once in October. The city is still short what it needs – by $2.2. million – to pay for electrical infrastructure and keep up with Blue Lake dam bond payments.
The city Electric Department is proposing a rate hike of 15% this year. Here’s the proposed rate for residential customers – a flat 15 cents per kWh.
The ordinance (Ord 2017-05) proposes a flat rate hike of 15%, effective April 1st, and the elimination of a tiered rate structure. That means that regardless of how much electricity a customer uses, the rate would be the same. This is true for households, boats, and for general service customers, big and small. So, a household that uses 1500 kilowatt hours a month would pay a bill of $245. Right now they pay $209. Monthly and disconnection fees remain the same.
The Assembly supported the measure, but took issue with some of the language. Particularly, the line saying that the rates may be adjusted annually according to the Consumer Price Index and at the discretion of the administrator.
The Assembly spoke against that, wanting to retain control of that decision in the form of an ordinance that required two readings. And while they want a mechanism for inflation-proofing Sitka’s electric rates, some questioned tying it to the CPI.
“If our costs don’t go up and the CPI goes up, why would we raise our rates? So I don’t really like it being tied to the Consumer Price Index personally,” said Assembly member Bob Potrzuski. ” That’s a good point. I think that’s why the word is may, not shall,” said City Administrator Mark Gorman in response.
The Assembly wants all future rate increases to come before the Assembly, rather than be placed in the hands of the administrator. They directed city staff to make changes to the ordinance’s language.
With uncertainty lingering over the language, the Assembly unanimously moved to postpone the ordinance, directing city staff and Assembly members Kevin Knox and Steven Eisenbeisz to make additional changes.
Speaking hypothetically, Hunter said it was important that future Assemblies have their pulse on electric rates. Past Assemblies left rates largely dormant and this has created a shortage of working capital for the city. “If we programmed in a 1% rate increase, if we’d done that 20-30 years ago, we’d be in a much better place now,” Hunter said.
Utility Director Bryan Bertacchi suggests a seasonal rate structure, where customers pay more in the summer months and less in the winter months.
The Assembly also postponed discussing an ordinance (Ord 2017-06) to make electric rates change seasonally. Residential customers would pay 19 cents per kilowatt hour in the summer and 12 cents per kilowatt hour in the winter.
Utility Director Bryan Bertacchi floated the idea at the last Assembly meeting and over the phone with KCAW, spoke to its merits.
For people that are here in town or struggling with being able to heat their homes and stay warm in the winter, that would be helpful. And then the rates would equally higher in the summer. It helps us capture more dollars in the summer from folks that aren’t here in the winter.
Eisenbeisz wants to know what the public thinks of this. “I don’t have a solid opinion on this and I really want to hear from the public their thoughts on this,” he said. “Flood my inbox. Flood all of our inboxes.”
The Sitka Assembly will next meet on March 7th at to review the next round of applicants for city administrator and again on March 9th to discuss the general fund budget. Their next regular meeting is March 14th. All meetings begin at 6 p.m. in Harrigan Centennial Hall.
