The Ketchikan City Council is still on track to approve an ordinance that would hike electric rates by 12.5%. The increase was approved in its first reading at Tuesday’s rescheduled city council meeting.
Outgoing Ketchikan Public Utilities Electric Division Manager Jeremy Bynum told the council that the rate increase is long past due.
“We’re getting so far behind every year that that mountain is just – it’s exponential at this point. We’re so far behind,” Bynum said. “I don’t like rate increases. I don’t think ratepayers like them. But we have some tough decisions to make.”
Ketchikan Public Utilities Electric Division is facing a structural deficit of over $5 million and has been operating at a loss for over a decade. Bynum said this loss has been compounded by the fact that the city’s electric rates have been consistently outpaced by inflation and even with the 12.5% increase, this would still be the case. Bynum told the council that to truly begin addressing the electric division’s needs and the city’s aging infrastructure, they would need to raise rates by up to 35% in the next seven years.
Council member Mark Flora acknowledged the need for a rate increase but he said that the city finds itself between a rock and a hard place. Flora said that even though this increase doesn’t come close to addressing the utility’s infrastructure needs, it is still on the verge of being untenable for the average family.
“We find ourselves in a predicament in our community, where quite frankly, regardless of the utility or the rate structure, rates are not going to save the day,” Flora said.
Flora proposed an amendment to the ordinance that would cut the increase in half – 6% as opposed to 12.5%. The motion failed in a 3-4 vote.
City Manager Delilah Walsh noted that if the city attempted to complete all of the infrastructure upgrades the electric division needs this year, the entire Ketchikan Public Utilities as a whole would be completely broke by 2026. She said that this increase does not solve their financial problems but it’ll help prevent rolling blackouts and suspended services in the future.
Multiple council members noted that the city had been “kicking the can down the road” and not increasing electric rates at all for years. Council member Judy Zenge said that because of that, the council has a responsibility to start digging the utility out of that hole.
“We have to at least attempt to mitigate some of it. We’re not going to be able to take care of it all at once, but part of the reason we’re here is because we chose to do nothing. We can’t afford to do that anymore. We just can’t,” Zenge said.
The increase passed 4-3 with council members Mark Flora, Jai Mahtani, and Riley Gass voting against it.
This wasn’t the final vote, though. The increase has to be approved at a second reading following a public hearing to go into effect. The public hearing and final vote are scheduled for the next city council meeting on January 16.
