The Seward City Council approved a contract with Matanuska Electric Association on Monday night to manage the city’s electric utility after residents voted against selling it last fall to Homer Electric Association.
The contract provides for a part-time utility manager and a full-time operations supervisor hired by MEA. The employees will oversee the day-to-day operations and provide guidance on effectively running the utility that serves nearly 3,000 people.
City manager Kat Sorensen said part of the reason for contracting the positions is that the city cannot offer a competitive salary. A city employee’s salary is currently determined by a wage scale, where even positions with the highest pay fall short of what an average utility manager makes.
“The electric utility manager and the operations plant supervisors are kind of unicorns in the city of Seward wage scale, just because they are on the outside market paid so highly,” she said.
Brian Hickey will be the new utility manager for the city. He said the city is not alone in trying to fill those positions.
“The electrical industry right now, overall, is like everyone else, you know, sort of the Baby Boomers are moving out,” he said, “and there’s a real dearth of qualified people throughout the industry. It’s hard to hire engineers, hard to hire anybody right now.”
Members of the public expressed their concerns about the contract, especially as they also faced a steep rate increase following the failed utility sale. Sorensen said after the meeting that a combination of cold weather and higher rates meant residents paid much more during the first billing cycle since the rate increase.
“What we saw this month with our first billing cycle with the new rates was kind of a perfect storm of a rate increase which is already hard to handle coupled with a high kilowatt usage hour due to the cold,” she said.
Karen Corrigan is the city clerk office’s executive assistant. She spoke against the contract as a private individual.
“You can call it what you’d like, but this is selling the utility without selling it. It is in fact penalizing our citizens for refusing to sell the utility,” she said, “so now we will be charged for this same end result.”
However, city council members and city staff clarified the contract’s details in order to address people’s concerns. The city will pay for the cost of service from MEA with an additional 3% administrative fee. As a nonprofit cooperative, MEA’s service costs are regulated by the Regulatory Commission of Alaska .
The contract also keeps the city from spending more than $850,000 a year on services, which Sorensen said is the amount that would fill the utility’s needs. The funding available this year will be about $600,000. Depending on who is hired and the cost of providing housing and benefits, the city may spend the maximum amount next year.
Sorensen said the contract provides management while the city reworks its future budget and pay structure to offer competitive salaries for those positions internally.
“It’s our goal to get our utility up to where it needs to be, and that includes being able to hire a long term utility manager to fill this role,” she said, “so while Brian (Hickey) and the MEA crew are working with us to get to that point from the utility, we’ll also be working on the back end to do the things that we need to do to figure out how we can get there with the salary.”
The council approved the contract on a 5-1 vote. Council Member Kevin Finch voted against the resolution, and Council Member Julie Crites was absent. Council Member Mike Calhoon said the city is getting a lot from the contract.
“We’re not just getting one and a half employees, as you stated,” Calhoon said. “We’re actually getting all the expertise that MEA has in running a utility for that cost.”
Sorensen will work with MEA to hire an operating supervisor. In the meantime, MEA will provide a part-time employee to fill the position. The contract is set to end at the beginning of 2026, but the city and MEA can end it at any time with four weeks’ notice.
