Contractors work to install a new powerline on Vank Island between Wrangell and Petersburg in July. (Photo courtesy of Trey Acteson/SEAPA

A wholesale provider of hydroelectricity in Southeast Alaska has approved an increase in the cost of power for the first time in over two decades.

The Ketchikan-based Southeast Alaska Power Agency, or SEAPA, sells electricity to utilities in Ketchikan, Wrangell and Petersburg. The power is generated from two remote lakes, one near Wrangell and one near Ketchikan.  For over 23 years the wholesale cost has been 6.8 cents a kilowatt-hour.

But in a unanimous vote, the power agency’s board on Friday, December 10 decided to hike the rate by a quarter-cent to 7.05 cents per kilowatt-hour. SEAPA chief executive officer Trey Acteson outlined several reasons for the increase during the online board meeting.

“You know it’s very simple, we have increased debt service, we have enhanced transmission line right of way planning, we have infrastructure investments and we have inflation and we haven’t had a rate increase for over 23 years,” Acteson said.

The cost of that electricity has even dropped below that 6.8 cents in some years during the past two decades. Strong power sales allowed SEAPA to keep rates flat for two decades. In years with plenty of rainfall and snowpack to fill hydro reservoirs, the agency has even paid occasional rebates to local utilities.

But now, SEAPA has to pay back the bond debt from a 13 million dollar replacement of a submarine power line between Wrangell and Petersburg that failed in 2019. It also expects to replace other aging electrical infrastructure in the future. The board Friday approved a long term capital project plan for some of that work.

Board chair Bob Sivertsen of Ketchikan agreed a rate hike is necessary.

”I think we’re pretty proud of the fact that we’ve kept it at 6.8 cents for so many years,” Sivertsen said. “I think that it’s creeping up on us to a point where we will start to fall behind and ask for bigger rate raises if we don’t start with little nibbles now.”

The rate hike affects the wholesale cost, the price for that power sold to public utilities in the three communities, not the price consumers pay for electricity. Local utilities can absorb the increase or pass on the additional cost to their customers. Utilities in all three communities are expecting to boost local rates or already have. And it may not be the last rate hike for SEAPA. CEO Acteson has told the board of the need for a total increase of at least half a cent per kilowatt hour to cover costs and replacements.

SEAPA’s two hydro plants at Swan Lake and Tyee Lake were part of what was once called the Four Dam Pool, along with projects in Kodiak and Copper Valley. They were built by the state in the 1980s and eventually sold to locally-run cooperatives and power agencies.

The power provider has had several large expansion projects over the past few decades. SEAPA connected its two hydroelectric plants with a transmission line in 2009. It also added water storage at Swan Lake in 2016. But the $13 million cable project is one of the largest replacements of the original system.

SEAPA is an underwriter of KFSK in Petersburg where this story was produced.