About Southeast Alaska Power Agency
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The three member utilities are located in Southeastern Alaska in a remote area of the state that is accessible only by air or water.
Ketchikan
Ketchikan is located on Revillagigedo Island and has a population of 13,200. In 2007, the utility served 7,305 customers,78% of whom were residential. Revenues for 2008 were 42% residential, 41% commercial, 11% industrial and 6% other sales.
The city's economy is based primarily on fishing , seafood processing, forest products, transportation, government, and tourism. It is a major port of call for cruise ships, with 900,000 visitors annually just from cruises.
Most households are not on electric heat, so the conversion to electric heat from oil will continue to drive customer growth, as the overall population growth is flat. The utility's customer base is diverse, with the leading five customers representing 12% of energy sales. The electric utility had peak demand of 24 MW in 2007 versus 34 MW in owned hydro resources and 23.7 MW in diesel capacity.
In 2007, the agency's Swan Lake provided 82,195 MWh of energy (49.9% of all city resources#, followed by owned hydroelectric power of 79,995 MWh #48.5%# and diesel generation #about 1.6%#. The utility's average cost of power in 2007 was a very manageable $51.02 per MWh.
Once Tyee and Swan are connected by the ongoing Swan-Tyee Intertie project, the system will be better able to serve cruise ships, which will use city power when docked. This is expected to boost loads in the future.
Rates are low: Residential rates, at 9.9 cents/KWh, have been stable since 1999, and are especially affordable given that the median household income levels are 103% of the national average. The utility's financial performance has been strong, with 1.96x DSC and a very strong liquidity at $17.3 million, or 502 days of operations, in 2007.
Petersburg
Petersburg is located on Mitkof Island and has a population of 2,965. In 2008, the utility served a 2,102 customers, 65% of whom were residential. Revenues for 2008 were 37% residential, 59% commercial and industrial, and 4% harbor sales.
The city's economy is based primarily on commercial fishing and seafood processing. Unemployment is approximately 6.8%. The use of electric cars and trucks is increasing, which has helped to fuel load growth, yet little population growth is occurring.
The utility's customer base is concentrated, with the leading 10 customers representing 35% of energy sales. The electric utility had peak demand of 9 MW in 2008 versus 2 MW in owned hydro resources and 10 MW in diesel capacity. In 2008, the agency's Tyee Lake provided 32,505 MWh of energy #69% of all city resources#, followed by owned hydroelectric power of 13,530 MWh #29%# and diesel generation #about 2%#.
Rates are low: Residential rates currently are 10.8 cents/KWh, up slightly from 9.6 cents in 2003, and affordable given that median household income levels are 107% of national average. The utility has a power cost adjustment mechanism whereby rates are adjusted to reflect increases or decreases in the cost of wholesale power or diesel fuel. The utility's financial performance has been strong, with good margins during fiscals 2006 through 2008 averaging approximately $870,000 and no direct debt. As of 2008, the utility maintained very strong liquidity at $5.7 million, or 466 days of operations, in 2008. The city also has a policy to maintain no less than $2.5 million in cash on hand, equivalent to 205 days.
Wrangell
Wrangell is located on the northern tip of Wrangell Island and has a population of 2,072. In 2008, the utility served a total of 1,565 customers, 68% of whom are residential. Revenues for 2008 were 47% residential, 49% commercial, and 4% other sales, with energy sales in kWh approximately the same.
The city's economy is based primarily on timber and forest products, fishing, seafood processing, and tourism; like Ketchikan, the city has some cruise ship activity. Unemployment is approximately 6.8%.
The utility's customer base has not significantly grown since 1999 and is slightly concentrated, with the leading 10 customers representing 20% of energy sales. The electric utility had peak demand of 4.1 MW in 2008 versus 8.5 MW in diesel capacity #the city has now owned hydro resources). In 2008, the agency's Tyee Lake provided 24,962 MWh of energy or 98% of all city resources, and diesel generation at about 2% of energy resources.
Rates are low: Residential rates, at 10.8 cents/KWh, have been fairly stable since 1999, and are affordable given that median household income levels are 105% of the national average. Wrangell, like Petersburg, has a fuel cost adjustment mechanism that covers fluctuations in wholesale power costs or diesel fuel.
The utility's financial performance had, prior to 2008, been historically good, with very strong coverage of over 8.3x. However, in 2008, given various factors such as salary increases and higher purchased power costs, net available revenues for debt service declined to negative $70,000, with coverage well below 1x at a negative 2.49x. However, liquidity in 2008 was strong at $1.1 million, or 137 days' cash. The city has discussed the idea of increasing rates to preserve its cash position, but, given the prospect of reduced firm wholesale rates in the future due to the agency's restructuring, it has decided to delay a rate increase.