The Petersburg Borough will receive nearly three million dollars in federal grant money for an upgrade to its hydropower plant. Petersburg’s Utility Director Karl Hagerman has been managing the upgrade since planning began in 2018.
“It was very gratifying to be the recipient of the grant, it was excellent news,” he said.
The grant is from a program that is part of the Biden administration’s Bipartisan Infrastructure Law. The Department of Energy has a program that incentivizes the development and use of hydroelectricity. This grant focused on efficiency improvements. More than 70 million dollars were available. Only 46 municipalities received grants nationwide. The Petersburg Borough is the only recipient in Alaska.
The Blind Slough hydro plant provides Petersburg with its cheapest source of electricity. The plant is powered by water from a dam at Crystal Lake, located partway up Crystal Mountain 17 miles south of Petersburg. It’s one of two hydroelectric sources for the town and supplies roughly 25% of the power that’s consumed. Most of Petersburg’s electricity comes from hydropower at Tyee and Swan Lakes. The Borough purchases that power from the Southeast Alaska Power Agency, or SEAPA, a publicly owned consortium that supplies Petersburg, Wrangell and Ketchikan with power at wholesale rates.
Hagerman said the upgrade was needed to keep the Blind Slough facility operational. Some components of the plant were deteriorating. Since the upgrade was completed in December, there have been some issues. But Hagerman is optimistic.
“The company that sold us the equipment, saw that we were having a problem that they felt they could remedy,” he said. “So they sent an engineer to Petersburg to work on the failed component, and make sure that it would not fail again.”
All of the fixes are under warranty, so the Borough didn’t have to pay for the repairs.
Funding for the upgrade initially came from two places. About a third came from money that Petersburg’s Power and Light had saved up over the years. The rest of the project was paid for by an electric utility revenue bond for $7.5 million that voters approved in 2021. The $2.9 million in grant funds will replace some of that bonded money. The bonded money can then be put towards a planned generator project, which voters also approved in the bond.
When energy loads are high during the winter months, or the connection to the power fails, the borough relies on backup diesel generators. Hagerman said the town needs to be able to generate more backup power.
“Our diesel generation capacity is very close to not being enough,” he said. “In fact, depending on what’s going on, it may not be enough, and so it’s very important for us to have that capacity in the diesel plant to get people’s lights and heat back on when it’s zero degrees outside.”
The new generator will be at Scow Bay. Hagerman said the ability to transfer bond money to the Scow Bay generation project will have a huge impact on rates. That’s because Petersburg Power and Light won’t have to increase rates to fund the project.
