Seward Utility Needs to Sell

Posted on: October 27, 2009 | admin | 1 Comment | Print Article | Rate Post:

(23 votes, average: 4.52 out of 5)

What is the City of Seward doing in the electrical business? Well, as an enterprise fund it was once making good money at the expense of inflated electrical rates to its residents and businesses. However now the infrastructure is in great need of repairs to the questionable tune of $24 million.

While the utility has enabled the city to meet past budgetary needs and wants, it failed to fund the future maintenance and repair account that is now catching up with us. Furthermore, given demands for alternative energy sources, infrastructure development, and the fast pace of new energy technology, Seward’s utility enterprise will be challenged to keep up without significant cost increases to its citizens. The good news however is that our utility is worth something. According to the city’s 08’ Comprehensive Financial Report, pages 90-92, the net asset value of our utility, before any upgrades, is estimated at $23 million. This includes the generous deduction of $28 million worth of depreciation expense also known as the book value of potential capital improvements.

Per the latest budget work sessions, the administration and council are in pursuit of raising utility rates and fees to help mitigate needed repairs. Between, electrical rates, fuel and food costs, the cost of living in Seward is undoubtedly high. One sympathetic council member suggested that people will need to save by cutting their electrical usage. Well if the city needs to make more money on the sales of electricity to repair their utility, this logic does not hold. The city makes money by brokering electricity at high rates disguised as fuel surcharges, operations & infrastructure fees, and consumer price increases (CPI). Therefore the last thing council should do is encourage people to conserve. In fact you should feel encouraged to light up the town during the holidays. Ironically it comes with duel benefit- give the town a festive spirit while you make money for our local utility. But remember, it will cost you.

I urge the citizens of Seward and those in the outlying areas, (who unfairly and unfortunately have no representation of utility cost control on council), to protest the pro-long existence of Seward’s utility in its current fashion. It should be sold to an entity that specializes in the power business and shares back its profits to its customers. The City of Seward is entering an arena of utility demands that is going beyond their scope of management. Consequently, it is truly questionable whether the utility department can legitimately sustain a well maintained and updated facility without it further effecting the cost of living to its customers. In his address to Rotary on October 20th, Mayor Dunham wishes to see young people and those who grew up in Seward, return to live and participate in the community with their families. While his wish is well meaning it is questionable when the cost of living proves so high.

Another concern is that we cannot deny the incentives and potential mandates from state and federal grant sources for the allowance of alternative and renewable energy sources. A plausible assumption is that the city must provide credits for those who come up with alternative sources of energy regardless of how it fits into their budget. This credit request has already been denied to a utility user who wanted to use alternative wind energy. This is intolerable, and shame on you Seward for coming up with excuses for such allowances. If our neighbors, Homer Electric, can institute an energy buy back program why can’t Seward?

In the latest Interim Newsletter I received from our local State Representative, Paul Seaton, he noted the following, which I encourage you to look into: “There is a federal personal tax credit available that will cover 30% of qualified expenditures on a renewable system providing electricity to your place of residence. Details can be found at: http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US37F&re=1&ee=1”

It is peculiar, if not legally risky, for our local utility to deny energy credit requests when our federal taxes fund programs encouraging the use of less expensive energy sources. The city of Seward better get on board or sell out, otherwise be accused of road blocking conservation efforts and cost savings among its utility users. By now I hope I have provoked everyone’s passionate interest to do something.

Before concluding however, I care to clarify with emphasis, that my support of selling the utility does not reflect how well those who work within the utility department do their jobs. From the head of the electrical department to those compassionate souls in billing and collections, they all deserve accolades. It is just unfortunate these city employees are called to do a job that is so stressful and almost indefensible when it comes to unreasonable utility rates and an ill maintained infrastructure.

Its time to resurrect the effort of selling our utility. We did this eight years ago, and it should have sold then but narrowly failed. We deserve what we tolerate, however if you no longer believe you deserve more hikes in your utility rate then don’t tolerate them by voicing your concerns to council members and the city administration. Its time to act folks, otherwise its going to be another long, cold, dark, and expensive winter for us all.

Rhonda A. Hubbard

A long time Seward resident tired of high utility costs

Please contact me if you feel the same at kruzof@ak.net / 224-5584

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