Petersburg elected officials this month signed off on the Southeast Alaska Power Agency’s proposal to take on more debt to finance a hydro-electric dam project near Ketchikan. SEAPA is planning to sell bonds to raise its dam at Swan Lake, one of two hydro plants the organization owns.
SEAPA sells power to utilities in Petersburg Wrangell and Ketchikan from its two projects at Swan Lake and Tyee Lake. The agency is looking to refinance existing debt to get a better interest rate and at the same time sell new bonds totaling around seven million dollars. That money will fund the raising of the Swan Lake dam near Ketchikan, a project that will expand the storage capacity for that lake and lessen the need for backup diesel generation in Ketchikan.
Photo from seapahydro.org
The SEAPA board approved the bond issue and refinancing at a meeting in March and the three communities have to give approval for it to move forward.
Petersburg Municipal Power and Light superintendent Joe Nelson is on the SEAPA board of directors and voted no on the bonding issue at that March meeting. He updated the Petersburg assembly this month. “I still feel that it would be cleaner and better for future generations if that money that’s borrowed for the Swan raise project stayed with the Swan project but I was not successful,” Nelson said. Nelson was the only vote against the bond measure when it was considered by the SEAPA board.
Petersburg assembly members wondered why a resolution in support of the bond issue did not mention the Swan Lake project.
“What they’re doing is they’re tying this bond issuance, the collateral for it is the entire SEAPA system,” said borough manager Steve Giesbrecht. “That may be why they don’t specifically call out in the resolution that it’s for the dam raising.”
Besides the two power projects SEAPA also owns transmission lines connecting the three communities.
SEAPA’s debt is a responsibility of that agency only and not the three member communities. The debt responsibility could become an issue if the three communities ever decided to dissolve the organization and have Ketchikan take ownership of Swan Lake while Wrangell and Petersburg take over Tyee Lake. The electrical power from Swan is first dedicated to Ketchikan while Wrangell and Petersburg have first right to the power at Tyee Lake. However, both projects also provide backup power to all three communities.
Mayor Mark Jensen thought the Swan dam raise was a benefit to all three. “I have the same reservations about the whole SEAPA system being collateralized to upgrade the facility that is Ketchikan gets the first rights to its power but actually I think it benefits the whole system to have more water reserve.”
Officials in Wrangell have already approved SEAPA’s bond issue and their counterparts in Ketchikan are expected to vote on the issue this month.
Borough assembly member Cindi Lagoudakis wanted to add wording to Petersburg’s resolution authorizing the bond issue. “I would like to make a motion that we add wording that specifies that this is tied to the Swan Lake project and the refinancing or the collateralizing of the whole system for that purpose.”
Lagoudakis’ amendment passed 4-3 with Kurt Wohlhueter, Bob Lynn and Nancy Strand joining her to vote yes. The assembly then passed the amended resolution 6-1 with Mayor Mark Jensen voting no.
In an email this week, SEAPA CEO Trey Acteson said the wording change is not a problem. He says the process is proceeding and does not foresee any delays with the bond issue. The Swan project still needs approval from the Federal Energy Regulatory Commission. Alaska Power and Telephone, the Cape Fox Corporation and city of Saxman, a partnership pursuing another power project in Ketchikan, have protested the licensing amendment required to raise the Swan Lake dam.
SEAPA has some state grant money for the project and was initially hoping to secure more. However, the downtown in oil prices and the outlook for the state capital budget have the agency relying instead on bonding to pay for the project.
