Rates for several of the city’s enterprise funds– electric, water, wastewater and solid waste – will likely go up next year, pending assembly approval. Some will increase at or below inflation, but other funds are encountering unanticipated costs.
Each of the city’s utility funds will likely see increases this year. When the Sitka Assembly met on February 23, City Finance Director Melissa Haley presented her recommendations: a 3% increase to electric rates, 6% for water, 6.75% for solid waste, and pending a final recommendation from the Port and Harbors Commission, 7.3% for harbors.
If Haley’s recommendations get final approval from the assembly, the wastewater fund will likely see the highest increase at 8.5%.
“Each year, we seem to have one fund that has all of the bad news,” said Haley, “And wastewater gets that honor this year.”
Haley said there were a couple of reasons why: First, some grand funding didn’t pan out. And second, there’s a new disinfection system required by the Environmental Protection Agency that will cost the city $7.7 million. Haley said it’s called an effluent disinfection system..
“We have a permit that allows us to discharge our waste,” Haley said. “And to keep that permit, it will be required that we disinfect, whatever is being discharged.”
KCAW reached out to Environmental Superintendent Shilo Williams for clarification on the new regulations. In an email on Monday (2-27-23), Williams explained that Sitka’s EPA-issued wastewater discharge permit expired in 2007. The EPA has extended that permit ever since- so Sitka, along with six other facilities in Alaska, has been operating under the requirements of the expired permit while they wait for the EPA to draft new rules for discharging waste. Williams said the date for those new requirements keeps getting pushed out, but she’s been told that the EPA will finally release a draft permit out for public notice in the coming months.
Williams said the city currently monitors for fecal coliform in the waste it discharges into the ocean, but the limit for fecal coliform in the old EPA permit is much higher than what’s allowed by Alaska’s current water quality standards, and the new permit will have a lower limit for fecal coliform as well as for enterococci (a bacteria). The new disinfection system will be required to ensure the city meets the new limits for both.
Haley said an 8.5% increase was already planned for the wastewater fund this year, followed by a quarter-percent decrease next year. However, the unanticipated costs of the disinfection system, plus a planned $2.5 million rehabbing of the Lake and Lincoln lift station, would likely force the department to raise wastewater rates again next year after all.
Overall, though, Haley said the rate increases average out to around a 4.8 percent increase, falling a bit under the national inflation rate, which as of January had fallen to around 6.4 percent, down from a high of 9.1 percent last year. On average, Haley estimated it would cost a Sitka family using electric heat an additional $25 dollars a month, around $310 dollars more a year.
Most assembly members were on board with the rate increases Haley recommended. Deputy Mayor Kevin Mosher said he’d never been in favor of rate hikes when he ran for his assembly seat, but soon learned that they were necessary.
“Over time, we have to continue to try to keep up…we’re not keeping up with inflation, but try to keep these funds healthy so that we can continue to build capital, so we can fix this infrastructure,” Mosher said. “So I’m going to approve this as is. I feel like, based on the information you’ve provided us, this is well-thought-out and well-planned to the best of our ability.”
And assembly member Crystal Duncan asked if plans were still in place to steady the rates in FY25 for the electric, water and solid waste funds.
“If we’re looking at year three of these other funds [FY’25], if they remain stable, they should go down next year, kind of in line with what we had approved last year, hoping that we would increase it in year two [FY’24]. And then in year three, we would have a little bit of a reprieve. And of course things can change. But that’s kind of where we’re at if we’re following that model.” Duncan said.
Haley confirmed that that’s the plan, but it also depends on factors that are out of the city’s control.
“For example, [the] electric fund…that one, I would not be at all surprised as we firm up the capital needs if we can’t stay at 2.5%,” Haley said. “Those projections showed inflation flattening out as well. So there’s definitely some assumptions going forward that I think will impact…what we guessed last year for [the next] two years.”
The February 23rd special meeting was only a budget discussion–the group didn’t take official action on the enterprise fund rates. The rates will be finalized when the assembly approves the final budgets later this spring.
