The organization that sells hydro-electric power to Ketchikan, Wrangell and Petersburg finds itself in an unusual situation this year – plenty of electricity to sell and a decreasing demand from customers in the three Southeast communities. A warm, wet winter and lower oil prices are factors.
The Southeast Alaska Power Agency owns the Tyee Lake power plant near Wrangell and the Swan Lake plant near Ketchikan, along with transmission lines that can send electricity from those plants to the three communities.
SEAPA’s director of special projects Eric Wolfe told that agency’s board of directors this month that demand for hydro power this year is well under capacity.
“We have way, way, way more resources than load,” he said. “This morning, we had the lowest load ever, below the range of the existing control system, 4 megawatts. We had less than 25 percent of the capacity of one machine as our total deliveries this morning.”
SEAPA has been spilling water out of its plant at Tyee Lake and even turning off those turbines for periods of time in an attempt to draw down the lake level at Swan Lake.
CEO Trey Acteson explained the warm wet winter has meant a lower demand for power.
“So warmer, loads are lower. Fish processing may be a little bit lower too. We haven’t seen that pick up much this year,” he said.
With lakes full around the region, Petersburg and Ketchikan can rely more on locally owned hydro plants, before buying power from SEAPA.
Board member and Wrangell electrical superintendent Clay Hammer noted another factor.
“Speaking just strictly from Wrangell’s standpoint, I know the cost of fuel dropping has really impacted our sales,” he said. “Our big municipal boilers, all the ones that can, have all jumped ship and all gone back to oil. So I know city wide, that has impacted our revenues.”
It wasn’t that long ago that SEAPA was encouraging conservation and looking into potential new electrical sources to add to its system to keep up with a growing demand. In an effort to increase capacity, the organization this spring started a multi-million dollar project to raise the lake level at Swan Lake.
Acteson reminded the board that the situation can swing back the other way rapidly.
“Three years ago, I think, four years ago, Andy, I think Ketchikan burned almost three million bucks in diesel,” he said. “So things can switch change really fast the other way. So I always have that in the back of my head that we could be sitting here a couple years from now saying we need to build another hydro project. So always something to keep in mind.”
The three communities have backup diesel generators for when the system is down or if there’s not enough hydro power to sell.
That’s not the case this year. In fact, SEAPA is leasing a piece of equipment called a load bank to use some of the output from Swan Lake and keep the lake level low there while construction is underway.
Board members heard that SEAPA is expecting a drop in revenue in the upcoming year because of decreased power sales. Board member Joe Nelson of Petersburg wanted to look into ways to reverse that trend.
“I’m looking for any way to increase our system load whether that means going to existing customers and deal with them with potentially special rates to do certain things so they don’t switch back to oil for instance,” he said. “Go out to the new marijuana growers and maybe get them a special rate, you know, be creative. Because we can’t just continue to spill the kind of water we’re spilling and sit idly by. We gotta be proactive.”
Others on the board urged caution with the surplus. Here’s Clay Hammer of Wrangell.
“If we go out and we find new load that’s all well and good, but then if weather and fuel prices all go back to normal then we may be stuck in the situation where we’re having to raise rates to add more capacity to the system potentially. I don’t know. This situation we’re in may be temporary,” he said.
SEAPA is not raising rates for the upcoming year. The board approved a wholesale power rate of 6.8 cents a kilowatt hour for power sold to the utilities in the three towns. That rate hasn’t changed in 18 years.
The board also approved a rebate totaling $800.000 for this past year’s power sales. That will be divvied up between the three communities based on their power purchases, and essentially lowers last year’s power rate to around 6.3 cents a kilowatt hour.