A power agency in southern Southeast is floating plans to finance a project to increase its hydro storage capacity by selling bonds.
The Southeast Alaska Power Agency, or SEAPA, sells electricity to utilities in Ketchikan, Wrangell and Petersburg. That organization wants to raise the height of a dam at Swan Lake near Ketchikan to boost the amount of water it can store there. Swan Lake is one of two hydro plants on the SEAPA system.
SEAPA CEO Trey Acteson told the Petersburg borough assembly this week the plan was to fill in the spillway on the Swan Lake dam. That would allow SEAPA to store more water in Swan Lake and generate more hydro-electricity. “First of all it provides more energy,” Acteson said. “It allows us to capture the spill. We spilled for several months this year and once that spill goes over the dam that’s energy lost forever.”
Raising the Swan Lake dam should cut into the amount of diesel power generated in Ketchikan when hydro power is not available.
Acteson is speaking with municipal leaders in Petersburg, Wrangell and Ketchikan this month about the Swan Lake dam project and plans to finance the work. SEAPA already has just under four million dollars in state grant money to fill in the spillway and has been seeking additional state funding. However, given the state’s financial outlook, SEAPA is now looking to bond for the additional seven million dollars instead.
SEAPA plans to refinance existing debt of nearly five million dollars to save money with a lower interest rate and at the same time sell new bonds totaling around seven million dollars for the Swan Lake project. Acteson said that additional debt would not impact the wholesale cost of electricity to the utilities.
Assembly members in Petersburg questioned SEAPA attorney Joel Paisner about financial risk for the municipalities if SEAPA was to default on the debt. They also asked about whether the agency, created by the three municipalities was near its debt limit.
“Obviously if we take on debt we have to be able to pay it off,” Paisner said. “So that’s the limitation. But there’s no legal bar to that like a mill rate that you get up against on a local municipal level.”
SEAPA is already repaying over 13 million dollars in bonds issued when the agency split off from Kodiak and Copper Valley utilities under the old Four Dam Pool Power Agency.
Elected officials in Petersburg, Wrangell and Ketchikan have to approve the additional debt for SEAPA to move forward. The agency also still has to complete design work and licensing but hopes to fill in the Swan Lake spillway in 2016.