HomeMy WebLinkAboutFunding Request_GovernorIL • 'i Borough of
Coast Guard City, USA
Karen J. Rehfeld, Director
Office of Management and Budget, State of Alaska
By e-mail: karen.rehfeldAalaska.gov
Dear Director Rehfeld:
City and Borough of Sitka (CBS) requests that $43,000,000 be included in Governor
Parnell's FY'2014 Governor's Budget to permit the City and Borough of Sitka to
construct the Expansion to Maximum Capacity of the Blue Lake Hydroelectric Project.
This project is a compelling State's interest and a cornerstone of Sitka 's future
economic development and prosperity.
CBS owns and operates its electric utility and has been working for several years to
expand its Blue Lake Hydroelectric Plant to maximum energy capacity. The
Municipality has received the required Federal Energy Regulatory Commission license
and arranged to finance the project with $49,000,000 from the State of Alaska and
$52,000,000 in municipal bonds. Unfortunately, the July 2012 bids for construction were
all substantially above estimated cost of $50,000,000, with bids ranging from
$84,000,000 to $101,000,000. The successful bid was $93,000,000.
If CBS tries to bond an additional $43,000,000 as well as the remainder of the
$52,000,000 already committed, electric rates would have to increase by more than 60
percent, and CBS would have to assume massive additional debt. This could cripple
Sitka's competitiveness with other Southeast communities and cause even greater
economic loss than Sitka has suffered ever since the closure of Sitka's largest
employer, Alaska Pulp Corporation, in 1993. Therefore, the State's assistance is
urgently needed to enable the Blue Lake Hydroelectric Project to be constructed.
Sitka has exhausted its hydroelectric resources and must develop additional power
without unreasonably high power costs in order to permit economic expansion. It is no
longer realistic for CBS to fund this increased cost at 50 percent. CBS therefore asks
the State to "close the gap" by including $43,000,000 in the Governor's Budget to permit
Sitka to complete this critical community infrastructure upgrade. This project is the
Municipality's highest priority. Your assistance would be greatly appreciated.
Sincerely �}
Jim inley, Muni cipa Administrator
c : Senator Stedman
Representative Wilson
Mayor and Assembly
Providing for today .,, preparing for tomorrow