Assembly approves utility rate hikes:

water by 25%, electrical by 10%

Ryan Long

June 25, 2009.

Wrangellites will see an increase in their utility rates soon as the Wrangell Borough Assembly voted in a rate increase at the last Borough Assembly meeting.

Rates for water will increase by 25% from $24.36 to $30.45 and electrical rates will increase by 10%.

The water treatment plant, according to a report put forward by City Finance Director Jeff Jabusch, has steadily grown since its opening in 2002 and, as it has aged, has required an increase in man hours and maintenance. This coupled with an increase in State regulations and testing requirements have led to a consistent shortfall in the budget. Without the proposed rate increase the shortfall in the Water Department will be approximately $78,000.

Jabusch also indicated that funding is currently sought to update the technological works of the Water Department as a more long-term solution to the cost water as a utility in Wrangell.

According to Jabusch, the rate increase will put Wrangell in the middle of the pack when compared to other regional water rates. “Currently we’re $24.36 a month for water and we would go up to $30.45. Petersburg is $34.74 and will go up to $41.26. Ketchikan is 30.90. Sitka is around $16 dollars but that is going up. They are very fortunate with the water they have there, as it’s almost drinkable. Juneau is $23.06 and Haines is still more than Wrangell,” said Jabusch.

In addition to troubles with the Water Department, the light department is also looking for a rate increase due to increases in cost of operation. These costs are mainly due to an increase in cost of personnel, particularly the hire of a new lineman to comply with national standards. Jabusch noted that in three to five years the Southeast Alaska Power Agency might be in a position to reduce wholesale rates and subsequently lower costs to consumers.

Assembly member Warren Edgley advocated the addition of a sunset date to any motion passed in favor of the rate increase in order to allow a future Assembly to look at hiring out a rate study in order to further streamline Wrangell’s rate structure. “As you know I don’t think the rate system is rational. If we vote this in it’s permanent. Is there a way we can put a sunset date on this so we can look at it again after a certain period of time? All I’m really concerned about is the fairness and the cost as it’s distributed to the consumers so they’re on a level playing field,” said Edgley.

Jabusch indicated that a rate study could be productive and helpful for future budgeting, but that something would have to be done in the short term in order to maintain the level of service currently available. “My concern is that the water department is a sinking ship and we need to do something immediately to keep the ship from sinking. I don’t think a rate study is a bad thing and it needs to be done regularly. I think it’s a good process and an exercise and it helps Assembly members and the public understand at least how the process went through and how the thinking went behind it,” said Jabusch.

Mayor Don McConachie indicated that putting a sunset date on the rate increase might give false implications. “The only thing that I will say about sun setting a date is that when you set that date it gives the feeling to the public that that raise is going to go away. That can be very difficult to overcome. I would rather see it put to a date when the rates will be revisited,” said McConachie.

Jabusch noted that a rate study will be useful, but that it would be difficult to accomplish in the short term and may be better considered in the autumn months. “If we want to do a rate study we couldn’t do it out of the water department. I’d probably have to go through RFP between now and the end of August, but once the fall rolls around there is normally some time to do things like this. I don’t see any problem with that and I don’t think it’s a bad thing to do,” said Jabusch.

The Assembly members agreed that setting up a chance to review the energy rates during each budget cycle would be the best avenue for future consideration of rate structuring for Wrangell’s utilities.

The Assembly approved the second reading of the motion to increase the utility rates unanimously during their regular meeting.