Ketchikan City Manager Karl Amylon wants to sell the Whitman Lake hydroelectric dam project to the Southeast Alaska Power Agency.
In a memo to the City Council, Amylon writes that the idea makes sense because under the existing power-sales agreement between the city and SEAPA, the city must purchase hydroelectric power from SEAPA first. It’s only if that power isn’t available that the city then could turn to a new power source such as Whitman.
If the city used Whitman power first, it would have to to reimburse SEAPA, and Amylon writes that could cost the city up to $544,000 a year.
The 4.6 megawatt Whitman project is under construction now by the city-owned Ketchikan Public Utilities. Amylon wants to propose selling the project to SEAPA for $22.3 million. That would allow the city to recover all local expenses, including a $2.5 million grant from the Ketchikan Gateway Borough. The proposed sale price would not include $12.5 million in state grant funds.
If city and SEAPA officials are able to come to an agreement, the actual sale won’t be able to take place until after the city has paid off the bonds for the project. Amylon proposes that SEAPA lease the dam for about $1 million a year starting in 2015, until the bond debt is paid off in 2023. That lease agreement would cover the annual bond payment for the city.
After 2023, SEAPA could exercise its option to buy.
SEAPA owns the two hydroelectric facilities at Swan Lake and Tyee Lake, as well as the intertie that connects the two projects. They serve the power needs of the three communities, with Swan primarily sending its power to Ketchikan, and Tyee providing electricity for Petersburg and Wrangell. The intertie allows surplus power to be sent back and forth as needed.
Amylon has asked the City Council to give him permission to make the proposal to SEAPA. The Council will consider the request during its regular meeting on Thursday.
