I'd like to call to order the special meeting uh work session.
» This meeting is being transcribed and summarized
» for the electric and solid waste rate review February 12th. Would you please
call the vote? >> Hake here. Goose
» yes. >> Montani here.
» Bradbury here. Gas >> here.
» Finnegan here. >> Z
» here. Please rise forgiance
to the flag of the United States of America and to the republic for which it
stands. One nation under God, indivisible with liberty and justice for
all. >> Thank [clears throat] you.
The Ketchan city council would like to respectfully acknowledge the traditional
first people of this land of Ketchan, the Thomas people.
Moves us on to item three, which is person to be heard. Do we have anybody
to speak to the council tonight? >> No, your honor.
» Bring us item four, new business request for a work session to receive a
presentation on solid waste and KPU electrical climate plan strategies and
rate study services from Rap. Do I have a motion? I move that city council
recess into work session for the purpose of receiving a presentation on solid
waste and KPU electric financial planning strategies and rate study
services from Afgh and to provide feedback and direction on the presented
information. Do
» I have a second? Second. >> It has been moved and second. Lacy
» uh your honor and members of the council. Uh tonight we have uh
representatives from Ref Telis Inc. which is the firm that staff has been
working with over the last several months um pursuant to council direction
to do some financial planning for the QP electric division and the solid waste um
division of public works. Um we started this process back in the fall. Uh it's
it's been a long time in the making. We were um a little way laid with the
budget process, but we have been working with Reptelis um to provide them lots
and lots of information, historic information on our budgets, on our
rates, on our future needs, our capital planning so that they can do um a nice
dive into the financial needs of both of those utilities. Um so tonight we have
Bart Kreps who is our the executive vice president of Raf Telus and also Sarah
Neely um the um senior vice consultant or senior consultant for Rafelis.
They've kind of been the principal team that we've been working with um for both
electric and solid waste planning. Um they did provide a highle summary
document to the council which hopefully you've had a moment to digest. But
tonight they'll be going into further detail um on on what they have found and
and looking at both of those utilities, what the outlook is financially for both
of you those utilities and ways to address some of the financial shortfalls
as we look ahead to both operational and capital needs. So with that, I will turn
it over to to Bart and Sarah. Thank you for being here. into work session.
» Okay. So, we'll uh vote on going into work session.
Madam press >> Bradberry.
» Yes. >> Gage,
» yes. >> Absent. Cous.
» Yes. >> Matani
» here. >> Gas.
» Yes. >> And finan.
» Yes. >> Thank you.
» Thanks. Yes. Continue. >> Sorry. Uh your honor, just um before I
pass it over to um Bart and Sarah, I just wanted to add as the council will
recall when staff first identified Rafelis,
um they were they were affirmed that the finance director had identified um as
one that really specializes in this type of work, especially for municipalities
and looking at different utilities and their long-term financial needs and
planning. Um they've done this work for municipalities all over the nation,
including Alaska. So, um, looking at an electric division or solid waste is is
nothing new to them. Um, I think they recognize now some of the unique
challenges that Ketchacan has. Um, as we look ahead to capital, not only in terms
of what our our challenges are as utilities, but what some of those bigger
hiccups are being on an islanded community in Southeast Alaska. So, I
think they're I think they've been responsive to that and are really trying
to present um a good overview of these two utilities going forward and also
some solutions on how to to stabilize and get those into a more positive
financial position. And with that, I'll turn it to B.
» Excellent. Thank you so much and thanks to all of you for having us here. It's
it's wonderful to to be here in person and get to visit with you. Um so, we
have a lot of material that we're going to walk through. Um, so kind of bear
with us. Um, but, uh, really happy to visit with you and kind of talk you
through our analysis and share some of our filmer mirror results and really
kind of get your feedback and certainly ask questions along the way. Wouldn't it
have be a dialogue? Um, with that we'll kind of get moving. Um, in terms of an
agenda, so we're kind of breaking this into two
pieces. you know, this [clears throat] study looked at, you know, both the
electric system and the solid system. And so, um, within both of those, we're
going to kind of cover two main elements. We're going to talk about kind
of the financial planning elements, which kind of gets into kind of the
forecast of our revenues and expenses and things like that. Um, and then we're
also going to talk about some options around rate design that gets into kind
of how we price our services. We have a current rate structure that we use now
and then some options to think about um potentially going forward. So I'm going
to kind of shepherd us through the electric system and then my colleague
Sarah is going to talk about solid waste. Um that's kind of how we'll set
things up.
So um just kind of before we get going um you
know one of the sort of basic tenants that we use when we do a study like
this. So um you know the electric system kind of falls under um Ketchan public
utilities solid is on the umbrella of the city but we look at them both as
utilities and effectively as enterprise funds because they're funded with user
charges. So it's different. They're not funded with taxes. are funded what user
charges. So we really look at that through the lens of kind of like a
business. In business you have costs and you have revenues and you got to recover
those costs. So that's kind of through which the lens that we look at things
because we want to make sure that these utilities have the cost structure in
place and the revenues in place to make sure we can continue to provide safe and
reliable services. That's what we ultimately want to do.
So [clears throat] dive a little bit layer deeper into the kind of two main
pieces. Um when you look at the um financial planning elements more broadly
really what we're we're doing is kind of assessing the sufficiency of the revenue
stream. So it's not looking at not only where we are today but where we're going
into the future and what the current rates look like and how those compare
against costs see the sufficiency of the revenue stream to see if we need to
actually raise revenues to be able to address those costs. Um, when it comes
to the rate design elements that we'll talk about, we're going to be focusing
on the same level of revenue, sort of how you get the revenue, it's a little
bit different when it comes to your pricing structure. And what we're trying
to do there is to offer some suggestions to maybe optimize that to try to align
with some of your objectives and some of the things that we heard kind of early
in the process that would be um important to you.
Okay. So [clears throat] unpacking that a little bit more for the
electric system. Um when we look at the electric system financial planning, you
know, one of the big drivers that we notice right away because one of the
pieces of information that we ask for and quite frankly one of the big drivers
of rates typically is capital capital investment. So the electric system has a
capital improvement plan. A lot of costs associated with that. So part of the
role that we have is kind of looking at that. how are you going to finance those
improvements that you need to the system and that really is a big driver of
rates. Um and we look at that um we also think about more broadly what kind of
financial policies that we should have with things like what reserves do we
need if we need to borrow money things like debt service coverage becomes
really important. So we'll talk about more of that later, but we kind of look
at um solid sound financial policies that should go along with funding that
capital program. Um for the electric system on the raid design side, again,
you know, focusing on the same financial sufficiency, but also some of the
feedback we had heard was really trying to think about affordability service as
best we can with some emphasis on the residential customers in particular to
see what we could offer in terms of um options around grade design. um to try
and address some of those objectives.
Okay. So, we're going to get into the financial planning elements first. And
um this is a nice graph. I'll kind of break
it down to you a nice table, but what it basically says, the financial plan,
think of it as kind of the road map. So it's basically coming in taking a look
at where we are today as a utility from a financial perspective and then laying
out that projection of where we're going to go. So that means we have to think
about revenues, how those revenues would change. That looks at kind of our
account some information. Then we look at our costs. We look at our operating
expenses. We look at our capital expenses.
How we're going to finance those capital expenses. And remember I mentioned those
financial policies. So when it comes to how much money we keep in the bank, debt
service covered as I mentioned, that's kind of the glue that holds the
financial plan together at the end of the day. So we have to think about all
these different elements when we're doing a forecast because we're really
big on planning and looking at what's to come. Not just where we are, but what's
to come. That's really kind of a basic tenant of how we look at things.
So I'm going to go a little bit deeper into the financial plan. kind of talk to
you about how we did the forecasting. So in terms of our operating expenses um
so what we're using as kind of a baseline for operating expenses is the
26 budget numbers that we received from staff. Um so we have made some
assumptions about um escalation of those costs going forward. It's about we've
assumed about 3% on most of the categorical costs. Um there is a big
component of our operating expenses that's related to purchase power. So in
the electric system we generate basically about 45% of our power roughly
and we purchase about 55% of the power from SEIPA and we have a contract with
SEA. It's kind of a complicated contract but effectively it kind of breaks down
as um we generally pay based on kind of an a rate per kilowatt hour based on a
firm commitment with them. Um so we've assumed that that rate actually gets set
annually but we have assumed that that would increase at about 3% going forward
for planning purposes. So and we've assumed the same sort of composition of
what we generate versus what we purchased in the basically looking at a
five-year forecast period. So that's operations at a high level. Um
so capital when I say capital costs and this is kind of things that I'm
referring to. So, we have debt service. We have existing debt on the books right
now. We have um one piece of debt on the electric system. It's effectively a
revenue bond. Um that debt actually rolls off in 2032. So, the not too
distant future, but a little bit beyond the window we're looking at, but it is
something to think about in the future. It's about a million dollars in
principal interest payments we make on that. That does roll off. But based on
the size of the capital program that I'm going to walk through, we are looking at
potentially to borrow to fund some of those projects. So again, we would also
be looking at layering on additional debt to be able to address those needs.
Um, as we look at the capital program, you know, on the electric system, we're
looking at about $115 million over the next five years in capital. There's kind
of a myriad of projects that go into that. you a really large project that's
replacement of the diesel generator that's um quite old and needs
replacement. We have replacement of substations that are in there as well
and then just ongoing kind of reinvestment in the electric
distribution system. So um pretty sizable capital improvement plan that we
have to address for the next five years.
» Yeah. So talking about that larger diesel generator and the rebuilding of
the substations, those are extremely large costly project
that's going to take some planning and we don't have any funding scenario in
place for those and those won't come to fruition until
we get some revenues uh sources whether it's going to be borrowing or you know
whatever it's going to be a long kind of for
I think it's unfair that it it affects the overall budget. I know it's a
project that we have to do, but it's an outlier
as it's a larger capital budget. It's not a maintenance budget. It's not a
minor replacement budget. And so, I know it has to be funded at some point. We
have no idea what that's going to cost us.
So, how do you factor that in when you're thinking about putting in a rate
structure to fund something that we have no idea going to be that far enough?
» Well, with the capital brewing plan, you know, we have to go with what we know
today and there's estimates of what those costs would be. And then in terms
of the financing plan of that, you know, what we'll walk through is sort of
thinking about what options are available to fund those needs. And
there's, you know, certainly generating funds internally through rates is one
option as well as borrowing. Way we like to look at that depends on the type of
asset that it is. If it's a longer lived asset,
advertising that cost over time through borrowing is is a typical way that it's
done. Um, so we think about that on the financing side. Um, and and what that
looks like and try to sort of marry those two things up. But you're right,
you need to have the revenue to be able to cover those needs, particularly if
you go out and borrow, but it has to be kind of factored in the entire package.
The fact that costs in the CIP change, you're absolutely right. It's been
really hard to to peg those costs because they do change and inflation has
really hit things quite hard and a lot of the work that we've been doing, CIPs
keep growing. They don't go the other way. So, they're getting more expensive
rather than less expensive. So um the challenge is you know we have these
needs we need to address. You don't address them the costs tend to go up
down the road. So you know capital planning is is tough to do but you know
you have to go based on your your best judgment and staff's come up with a
capital improvement plan. So that's what's kind of feeding into our models
right now. So, kind of what I'm getting at here, before we throw a large number,
40 million, $45 million, $50 million at that project, I think we really need to
do a needs assessment so we understand that size. They're just guesstimating
what we're going to need in the future. I think uh the size, the the type of
generation, whether it could be a turbine or a diesel or whatever it may
be. Um and you know, again, sea moving out some
infrastructure. did that lay that project because they're they're looking
at other alternative energy sources. I I don't know how that pencil in regards to
only there just a question I had in regards
to how we how we plan for that and not over budget and stick a rate in early to
help do that at the I guess the detrimental public's paying that rate.
Yeah, I mean it's definitely a fair question. I think relying on staff to
kind of look at the plan and develop the needed projects and um to try to vet
that is is really what you know we need to do.
» Thank you. >> Um
so just want to want to talk a little bit about just kind of the the baseline
on the revenue side and some of our assumptions about um you know
forecasting revenue. Um so we tend to try to be conservative on the
forecasting of revenue. Again our models look at um of account information and
consumption information. Um you know catch again we don't really have the
benefit of a tailwind of of growth. Um so we were very cautious about that. We
pretty much assume kind of flat growth in the forecast going forward. Um so
that's sort of embedded. Um and then some of the other ancillary revenues
that we have um for lighting and things like that, we've also seen kind of just
no growth. So just wanted to point that out.
[clears throat] >> Okay. So this is a really important
graphic that I want to walk through because it it really kind ofes the
financial plan. So um kind of step through this.
So the the bar parts of this chart. So looking at the colors that we have. I
know it's the colors coming across up there, but just bear with me. So there's
the the bottom of the bar chart is is our onm expenses. Um and so that's kind
of the darker part of the bar there. The yellow part of the bar that's our
purpose power costs. So these are all of our costs kind of stacking them on
another. Um the the blue there represents our debt service.
The green represents our what's called cash finance capital. So we call that
payo. Um basically pay as you go capital. So it's effectively using your
internal cash to fund capital improvements. And then that small little
sliver on the top that's the the pilot payment that the electric fund makes
back to the city. So the red line there that represents basically the revenue
that we can generate based on our current rates. So you notice at 25 it's
it's just south of about $25 million is what we generate in electric revenues.
And you notice that the bar is a little bit higher than that right now. So that
means anytime the bar is higher than that red line, that means you have to
eat into your reserves to fund it. So if you look at over time, you can see those
bars are going up because again I'd mentioned the assumptions and the
forecasts assume that $150 million capital improvement plan. I I'll go
through the details of how that's assumed to be financed. Um but you can
see those costs increase out over time. the rate line again based on the current
structure basically stays flat because again we don't really have a
basically means that it's not a really tenable forecast there to leave the
revenues where they are because we couldn't fund that kind of program. So
we have to sort of look at um additional revenues to be able to do this.
So with that being said, the way we sort of
looked at this is we thought we would frame it around some various capital
planning scenarios to kind of help you sort of understand um what that might
look like. Um
so
so the first scenario that we looked at we're going to call this kind of the
capital scenario one basically as planned. So you know staff provided us
the current capital improvement and their current assumptions on funding.
So right now if you look at the chart there on the left so the there's there's
two colored bars. There's a darker color and a lighter color. The darker color
bar represents um the cash finance or the pigo capital that's being assumed in
each year to fund those projects. And over the five-year period it's about
28.8 8 million that's programmed in the CIP right now um to fund a portion of
the 115 million and then the balance is being funded um by debt. It's about $86
million in debt. Couple different pieces of debt being issued primarily in 28
2020 and 2029. Again, that's for those larger projects
we talked about the generator and the the substation replacements. Um
so one thing you'll you'll note on the PGO side is that you know we would call
this kind of a front-loaded PGO um financing plan. You can see that the PGO
in 2026 and 2027 you know inches up over $10 million or
that's just how the current CIP is is sort of sequenced. So again a first pass
was just looking at it as as planned and what does that mean? Um, and so this is,
you know, well, before I get to that piece, so if
you go back to this slide, I talked about the financial plan and
these bars being kind of above the line. The challenge is if you do that, you
have to draw down on reserves um to be able to meet that plan.
So what the left chart then represents, so currently there's about roughly $8
and a half million projected and reserved in the electric fund at the end
of 2025. Um the red line that we show on that
left chart basically is a minimum target that we have for reserve which is set at
90 days of our operating expenses, operating and maintenance expenses. So
that's three months effectively of working capital which is pretty bare
bones. We would not recommend going anything below that. But for the
purposes of what we forecasted that's, you know, kind of what we're showing as
that red line. So you'll notice if we don't do anything on rates, so not
assuming we raise rates, we basically would run out of reserves in about two
years. Um so that's not a situation that we could be in. Um the other metric that
we monitor is debt service coverage. So what debt service coverage means is the
revenue comes in, the first thing we got to pay is our operating expenses and
then what's left is kind of the net revenues after that. And so when you
borrow money from creditors, they want to make sure you got enough of a cushion
to pay them back. So there's a minimum requirements for coverage that we have
like on our current revenue bond. Um, from a policy standpoint, we like to
target coverage of at least 1.5. So that's what that red line is on on the
debt service coverage chart. You can see if we were to go out and borrow the $86
million that we had program debt and we didn't change our rates, our coverage
would deteriorate very quickly. Again, this is not a tenable situation.
So what would that mean as planned? Well, if we wanted to fund things as
planned, this is a little bit of a shocking
scenario. [clears throat] we'd have to raise rates but
rather than the band-aid approach. Um and that would allow us to basically the
red line there shows the um the revenue based on with the rate increase assumed.
So it' be a front-loaded large rate increase um and that would cover our
costs. It would allow our reserve balances to stay above our minimum
target. And you look down at the chart to the right, we basically put, you
know, forecasted to keep covered about um at that 1.5 level. That's when
everything from the $86 million would be kind of baked in the cake. So again,
that's a lot. That's a very front-loaded structure. Um but again, based on the
way the CIP is is laid out, that's what we would need.
So with that being said, we said, okay, what if we sort of relook at things? Um
and so we did a kind of a se second capital planning scenario that we'll
call the sort of phased in scenario. So the phased in scenario looks at the same
level of spending in the capital improvement plan which is 115 million.
But what we did is we effectively kind of resequenced the PGO piece in
particular to kind of smooth it out over the five-year period. So, we're still
funding uh 28.8 billion in PIGO, but it's spread more evenly over the next
five years. Um, and then on the debt financing piece, we're still effectively
borrowing the same amount. We've kind of shifted the timing of that a little bit
to 2027. So, it's more of a phased in approach.
Um, same general concept, but you know, kind of require rep prioritizing some of
the projects over the next five years. So that scenario um
basically allows us to sort of spread the increases out over the next five
years at about 12 and a half% per year. Um so that's the sort of the red line
then kind of hitting the top of the the bar chart. So basically be covering our
costs. Our reserve balances would then stay
above our minimum target that period of time. we deliver the full 115 million in
capital and our debt service coverage is constantly above.
So that's kind of the the phased in scenario. So it's taking kind of the
current plan but sort of resequencing the plan over five year period.
» Does that make sense? Stop for a second. >> Any question?
» Okay. Um the third scenario that we ran because I
know that there's been some discussion you know at the council level about um
kind of an 8% increase scenario that has been discussed. And so
the way we wanted to look at that was to say, okay, if if that was the level of
increase that we did, well, something has to give um we can't fully fund 115
million, but what could we fund for that level of increases? Um, and so what
we've done there is basically kind of adjusted the CIP [clears throat]
from a monetary standpoint down to what we could afford if we did 8% increases,
and that's about 78 79 million. Um the way that's laid out is it's it's sort of
a similar proportionality between PIGO, which is that cash financing piece, and
then the debt piece. So the PGO is lower. It's about 13.7 million over the
5year period. Again, it's distributed relatively e evenly, so it's not
frontloaded, and it's about $65 million in debt. So again, the idea you'd still
fund the large projects, but we probably have to rep prioritize exactly what we
would fund. Um, so it's a smaller capital program, but that's what we
could cover with the 8% increases. Another way to think about that would be
if the current plan CIP is 115 million, at the 8% it's about 68% of that CIP. So
it's about roughly 70% execution rate sometimes we refer to it as, but there's
a delta about 36 million that we would find.
» So this is all based off a five-year capital fun. So we just have probably
more like a 10-year uh planning stage in order to stay at
that 8% rate that we're
» this looks at five years and it would cover basically 78 million over the
5year period based on that funding mix. >> But 115 million we just project that
out. >> Well, those I mean the thing is those
projects don't go away. They just go further out.
And so again, this last graph, it just sort of illustrates the the 8% scenario,
the reserves and the coverage levels. Um, you know, based on that level of of
funding.
Okay. Um, I'm going to stop for a second.
Questions on that? I'm going to shift and talk a little bit more about rate
design, but any questions on what I've gone over so far?
So I do have >> Yeah, go ahead.
» So with these rate um the 8% annually um over five 10 years
um does that also increase the um our um reserves?
It basically keeps your reserves roughly at the 90-day mark because okay, it's
based on, you know, what that line is there that you're seeing is so three
months of our own expenses. Now, the on expenses are growing some. So, the
reserve balance go up a little bit, but they're largely about the same as as
what they are today. >> So, basically, we're just we're raising
rates in order to cover the capital. >> Okay.
Anybody else?
» Um, so I want to talk a little bit that's
sort of thinking about things just you know across the board and you know one
of the other elements of our study was looking at the actual race structure and
some you know what could we do there potentially
try to mitigate you know some of the impacts on customers. Um
so just a little bit of background about the current electric rate structure. Um
so right now we have four classes of customer. We have residential, harbor,
commercial, industrial, um residential, commercial, kind of the bulk of the
customers. Um each of the customer classes have a
fixed monthly charge um which is um discharge per month. uh a usage charge
which is based on volume and it's a per kilowatt hour charge and then our
commercial industrial customers that are larger and actually have demand meters
also have a demand charge which is a dollar per kilowatt. Um so what we did
here is we used um kind of the capital planning scenario three which is the 8%
increase of that level of revenue um and looked at a couple of options on on rate
design.
So the objectives that we we tried to keep in focus with the right design was
you know to do um reasonable adjustments that you know
achieved the financial sufficiency goals tried to look at it through a lens
trying to mitigate some effects on the lower volume [clears throat]
and typical to some extent residential customers. Um so that was one of the
lenses we looked at. Um we were looking at kind of the balance of the fixed
versus the volutric rev recovery um and just really looking at options to um not
overly complicate the structure because I think that um sort of not the the
sense that we wanted to get increasingly complicated but um to try to optimize it
um preserve the simplicity and to some extent you know balance where we could
but recognizing there's not a silver bullet here. when you have to raise
additional revenue, there's certain things we can do. Um, but um there's
still the need to to create the same amount of revenue.
So, one of the things that we did in this in the study was really develop
consumption profile for residential customers. So, bear with me on this. And
this is kind of a lot to unpack, but so what what this chart is, and it it looks
like a lot, but it's really not. Um it's relatively simple at the end of the day.
It's basically a histogram. So it's looking at we call it a bill frequency.
So on the x axis that basically is levels of consumption. So and it's in
kilowatt hours. So it starts at 100 kilowatt hours, 200 kilowatt. I think
about monthly consumption. um and kind of goes all the way up to, you know,
north of 2,000 kilowatt hours. Um the y ais are the number of bills that fall in
those different units of consumption. So it kind of tells you how customers are
using power, how much power they're using on a monthly basis. So some of the
important things that we look at on here because it helps in inform rate design
for us. So the two red bars that are highlighted, those are basically at the
median. So the midpoint. So a typical residential customer at the 50% mark,
these are about 850 kilwatt hours per month um on average. Um and that's sort
of the midpoint. Um if you look to so everything to the left, that's going to
be lower. everything to the right and you kind of have a long tail out there
to the right because you get a you know some customers use quite a bit more than
that but it gets less frequent as you go out. Does that that make sense? This is
always kind of a hard chart but it's something that we do look at in the in
the rate design world because it helps inform things. Um, and one of the things
it really helps inform and one of the opportunities we potentially see here,
um, is is looking at some tiering potentially with with residential
customers. So this first rate design option we looked
at um there's a couple different elements kind of walk you through it but
um basically what we're trying to kind of focus on here is
the one for residential is kind of when we look at the customer charge that's
the fixed charge first it's currently set at 8.95 you could keep it at 8.95 so
it would change the fixed charge residential
however we would increase the fixed charges is for harbor, commercial,
industrial. Quite frankly, all of the fixed charges here are pretty low.
They're lower than we normally see, you know, even residential. Um, if you look
at kind of cost of service, um, rates with residential, you usually have a
fixed rate between 20 and $30 typically. So, our fixed charges are low, but I
think that's more of an intentional to try to keep the impacts down in
residential as much as possible. So um you know not recommending we change that
increasing the harbor industrial sum but the bigger change here is um so right
now the residential it's a what we call a uniform um energy charge. So it's the
same unit cost per kilowatt hour. What we'd introduce here is a tier. So we
have basically a two-tier structure and the the tiers would be set remember I
showed you the chart the median was about 850 kilwatt hours per month. So we
would set tier one at between usage between zero and 850 kilwatt hours and
that would actually have a lower rate associated with it and then the rate
would be higher above 850 kilowatt hours. Does that make sense? So it's a
two-tiered volutric incline block structure is what it is. Um and then for
kind of the non-residential classes, we largely um have increases basically a
little bit north of the average or around 8% a little bit more. The focus
is really more on residential and trying to have some segmentation into the the
volumetric rate. So
what does that do? So you know when you when you just raise rates across the
board, everybody gets the same percentage increase. When you change the
structure, you impact customers differently based on how they use the
system. So you have to kind of look at the impacts a little different way. So
you sort of break your residential impacts down. We're showing three
different types of residential customers. So you have a kind of a low
volume residential customer and that's we're showing at 350 kilowatt hours.
That's basically when we look at our bill frequency that's about the 20%
mark. about 20% of the bills less or 350 or less. Um, a typical user we're
showing at 850 and then a high volume user we're showing at 2,000. That's
about the 90% mark on the bill frequency. So, let's kind of walk
through this and look to the sort of the right. Um, so a low volume scenario
currently pays for that 350 kilowatt hours $66 per month. Um, well, that
would only go up to $57.16 under this scenario, which is about
a$110 increase per month or about less than 2%.
Um, the typical customer right now pays using 850 kilwatt hours pays $123.36
that would go up 267 scenario, which is about a little bit
north of 2% up to 1260. Remember, we have to generate the same
amount of money. So that means the higher volume residential customer is
going to pay more because they'd be getting into the second tier. So again,
showing a 2,000 kilowatt hour customer, which is at the 90% mark on our bill
frequency. Um well, their bill would go up. They're paying 27815 right now. It
would go up to 305.88, which is just shy of about less than
10%. Um whereas the other customer classes um it's a little bit more than
average about 8 and a half versus 8%. Does that make sense in terms of what
the tiering would do there? I understand what tiered system is
doing. Um so let's put it in the context of gas.
The saving to the customer as regard to usage is whether he buys a economy car,
he buys a huge pick and not necessarily in the price per gallon for gas
because you still have to cover your cost associated with that. So, um I'm
not sure that I understand the intent here, but I don't know if that's in the
best interest. uh [clears throat] so that the the standard
residential customer >> is going to pay the extra cost for the
person that gives you the best power. So there's pros and cons clearly to
doing this and you've kind of you know peed on one of the cons is that you know
again a lot of these costs are fixed. Um and while we do have a uniform rate
right now so if someone uses less they do pay less but it's not a different
unit cost. This would be introducing a different unit cost. So it's more of an
incentive to be really efficient um because there is a lower unit cost if
they use less. So, you're right. There's pros and cons. You have to weigh, but
the pro is that you're keeping the even for a typical customer, they'll be
paying kind of a below average increase. You're
picking up that from a person that uses more. But yeah, it's pros and cons.
Correct.
» Not necessarily a question, but just kind of a thought on that. Another thing
I it seems it almost seems a little counterintuitive because it's almost
like you're as you just said you're incentivizing the customer to use less
power when from the business point you want them to
use more power. So I don't know I I don't envy your job here. I know there's
no easy answer but >> it just seems a little backwards in that
sense. >> Yeah, it's um you're right. It it is in
that way. Um and it kind of sometimes efficiencies again you think
in places that are really capacity constrained. I mean if you're more
efficient then you kind of push off the need to h add more capacity which can
have some economic benefits. Um but it sometimes takes longer to see the
immediate you're right you're having someone incentivize you use less your
product. Um so it's it's a it's a balancing act. So the savings sometimes
are longer term with not having to have as much capacity in your system because
people are using the service more efficiently.
» Do these rate studies talk about like a diesel charge and like like how does if
we have to run a generator, how does that
» So we have we have a diesel search charge right now that's already in the
ordinance um that can be used. I don't know if staff knows the last time we
actually used it, but it is in the ordinance if we have to run that.
» I think it's been >> 1819.
» Yeah. So that does exist. I didn't point it out because it but it is actually in
the race structure. So if that happens, there is a mechanism to to recover that
cost.
» So this rate structure is kind of based on the fact that we have
limited low growth. So, as we look at what the state of
Alaska is doing in regards to providing funds for heat pumps, we may have more
people jumping off of oil and going to heat pump
» if the rate doesn't go too high. [clears throat]
» Um, and plus we can attract bigger is going to be doing more and more work and
moving more and more power >> to that system. And plus, there's
» been talk about data centers and and other
» it's no longer bigger >> or Jags. [laughter]
as big as the French government.
» You're right. We we haven't assumed a lot of low growth. So, if that were to
happen, obviously that helps. Yeah. >> Um certainly that changes the calculus,
but um we just we >> our projections we try to be reasonably
conservative is what I unless we know of something specifically then, you know,
certainly could be factored in. I mean, if this is a 5-year forecast, things can
change. Certainly, if something shifts and there is additional demand coming,
well, yeah, we want to factor that in because that would help. Um, but we
haven't assumed into that. >> Yeah.
» Yeah.
» I'm wondering why we why the residential high volume user percentage increase
would be higher than per say the rest of it and not more in line with it. I
understand we're offsetting the cost, but um is is there a particular reason
why you leave that higher and have the other increases lower? Is there kind of
back information? >> Yeah, it's sort of a a byproduct of the
inclining block structure. So, you're kind of pushing more of that cost
recovery on to the higher volume user. So, that unit cost when you trip over
into the next tier is higher. So someone that's in this example that's using, you
know, 2,000 kilowatt hours a month, which is, you know, more than double the
median, they pay more and it's a higher unit cost. So that's why it's above
average increase. Um, so it's it's just part of the structure. Um, again, it's
also part of that um incentive mechanism to more efficient. If you're in the
first tier, you're going to pay less. But but that's the terms of the math.
It's just a much higher unit cost. get above that level. So that's why it's not
because again this whole is all revenue neutral. So effectively what we're doing
here it's looking at kind of the residential class as a whole and we're
making intraclass changes. So in this scenario kind of a lower volume and a
typical benefit but the higher volume pays more because you got to get the
same amount of money. So it's just that's the difference in
just doing something uh proc and Jack
» um I'm figuring that the incentive of getting people to be more conservative
is not putting taxing the system which then is where why we're where we're at
now in the need of fixing and upgrading and cost of adding.
» Yeah. I mean I think >> you're gonna have to do it anyway.
» Yeah. you know, it's um I think it's when I think about the conservation, I
think it's more of like capacity and being able to push that off. I mean, the
fact is the system needs a lot of repair placement. It's
not going to change. >> But down the road, if it's um still in
place and you have replaced those items, then you're looking at um keeping the
loads down or you know taxing the system to the point where you're back where you
were. Yeah, I mean I think if we're more
efficient then again it's just it's staving off the next increments of
capacity and having that t that's the biggest benefit
but there's [clears throat] always going to be repair and replacement of assets.
» Jack, >> thanks your honor. I was just curious
about um the distinction for the harbor. Just I I understand and appreciate the
» the types of users within the residential, but it's you I'm sure
you've been made aware of the fact that within the harbor there are a number of
folks that are on the boards and you know they consider themselves
residential in that respect. >> So I just wonder why that distinction
was made. >> So the harbor is a current we didn't it
already exists. So it's a current class of customers. So, um, whether or not
that could be folded into residential, I suppose, is an option. It's always been
kind of, um, broken out and they do actually pay a little bit higher rate if
you look at their average cost. Um, uh, you know, again, if someone was
living there full-time, I think they could look more like a residential
customer possibly. Um, I think it's probably a mix, I would imagine, in
terms of how people use, you know, so I think that's why it was designated as
its own class because it's a little bit probably for a mix. being there kind of
being full-time versus just having kind of hooking up and just having you know
they're both there. So um we didn't that already existed so we didn't establish
the Harvard class we just were looking at at the current class.
» Thanks. >> Yeah. Yeah. chair just
you know we are a seasonal town so the harbor commercial industrial has
they something been taken into account where they could be adjusted higher
during the summer and lower during the winter seasons
» a seasonal rate um it's something that can be done and
looked at um it's sort of interesting um when you look at how those customers use
the system. So like the residential customers um we're winter peaking
utility is electric heat load. So the system really peaks in winter um versus
a lot of the industrial customers actually peak more
August
and are really running. Um you potentially could look at a seasonal
structure there. um it may be something we could look into. Um you don't see it
as often with electric system, but in seasonal communities is possible. Um so
it might shift the calculus a little bit. Um but but overall that class like
the industrial class um there's not that many customers in it. Um they're larger
customers, but like from the total amount of revenue that we generate, the
biggest the bulk of the revenue comes from residential and commercial. So um
you know the biggest seasonality in terms of using is in that industrial in
terms of how they use the service but it's not a huge class and but it's
something we could take a look at. >> Yeah.
» Yeah. >> I mean my thinking here I think
everybody's thinking is I mean the burden should be more on the industrial
commercial and harbor rather than residential. I really just made a
statement that most of the revenue comes from the residential class. I don't know
we need to look at this adjustment here. >> Yeah. So the challenge is there um
when you look at kind of cost of service and again we're the data we had
available we couldn't take a extremely deep dive into it but but we we do know
that um the residential customer class peaks
the system more so we call that load factor because they have heating load
and so in the winter their residential customers are actually more inefficient
user of the service because they peak because he load most say the commercial
industrial class it's not as much so the reality is um residential customers are
subsidized to some extent from other classes so I think it's a balancing act
um you know I think you have to be be careful about how much cost you
necessarily push on some of those customers um and again some of the
industries are are big there's economic development considerations I think as
well. Um but from a cost of service standpoint um again residential
and it's pretty common in public systems tends to be subsidized. So we're trying
to balance that. That's why we didn't show an option where it was you know a
lot higher increases there. >> Okay. Thank you.
» So I see that we got an industrial rate structure.
You got a a standard energy cost of.1291 and then the demand and charge. So up to
25 kilowatt I guess that's saying that.1291
is that the rate for that and then if they go over the 25 kilowatt it goes to
$441. >> Mhm. [clears throat]
» Yeah. That's the current demand charge. Yeah.
» That's the current demand charge. Um well it did we did show an increase to
it of about 8%. Um but for those customers that have demand meters that
pay yeah they have >> so and is that in a in a month or so if
they go over 25 kilowatts in a month and demand charge kicks in for the rest of
the month
and that 25 kilowatt you know if that's high or low or standard
man rate >> um for commercial pretty standard for
industrial is probably pretty low, but that to have demand charges for the very
customers is pretty common. >> Okay.
» Um and the reason that you do that is because um typically commercial and
industrial customers, particularly industrial, they're using
power for process um and and they're different. So um whereas like
residential customers, they tend to we call it more homogeneous. they sort of
use power similarly here particularly because a lot of the peak load is from
heating. So demand charges just a way to distribute kind of capacity related
costs more individually based on the customer's actual heat demand. Um so you
they're pretty common for bigger customers. Now some systems are you know
moving towards having demand meters on the residential. we don't have that
capability right now, but that's when you start seeing some of the more unique
structures that are coming out um related to electric vehicles and things
like that where you know you want to have more precise information about um
peak demand but um but really [clears throat]
generally right now it's do larger customers have
» Yeah, we've had that conversation and people turned over to electric and heat.
» Sure. And it shows that the usage in an individual resident went
up dramatically when they did that >> and and it raised to a point where we
actually had a conversation whether there should be a demand rate after a
certain usage.
» It may be something we eventually could get to when we have the metering
capability at that level. We just don't have it right now.
» Okay. and and just just a small item, but that
8.95 uh monthly charge on it is really for the lease and rent of the meter. I
would imag >> Yeah. I mean, basically it's, you know,
kind of basic customer service billing and some of the metering costs in there.
That's really all >> and it's not going to make a big
different budgetary wise, but I'm seeing that that cost is more realistically
around $10 or more in regards to service we're providing because we've gone from
anog to digital only. >> Yeah, the fixed charges here are pretty
low. >> They're real low. Yeah.
» So, we need to adjust those as we go through the more real.
» I think going forward that would be one thing I would probably think about.
Again, I think the rate design options we were looking at right now really
mitigate residential impact. So the more you raise that
resilience, so it becomes a greater portion of their bill. Um but again cost
of service for a fix is it's usually between about 20 30 bucks
or really low. >> Again, it's just it's sort of a
philosophical, you know, do you want to kind of do that? And there's pros and
cons. So, what I'm reading in here a little
bit in regards to your presentation, and I hear you with the council meeting,
we've had a a concern about the impact of rates on low income, seniors, that
type of stuff. And so, I would imagine the tier rate was set into place so
those individuals could have a lesser rate structure to support their
lower incomes, other fixed income type. That was great.
» Yeah, definitely one. Thanks for thinking about
» Thank you. >> Yeah, Charlie,
» uh just one question. So, uh was there consideration to the possibility of a
like how you talk about the two-tier residential system when you hit certain
amount then it goes up more. Was that I guess I'm curious how come that exact uh
strategy wasn't considered on the on the commercial industrial?
» Yeah. So the challenge with doing that on commercial industrial goes back to um
so residential customers like we did that nice build frequency and you can
kind of see how they're using commercial they're all over the place. So setting
tiers is really difficult. Um and that's honestly why sometimes you use demand
charges because demand charges are kind of doing the same thing at least for a
piece of the the bill because that's more individualized. So it
there's all different types of commercial customers. So setting the
tier and you could you could get really you could be really wrong if you did
that incorrectly. So that's why you just don't see it on commercial but you see
demand charges because that's a way to kind of get at the same thing if that
makes sense. Um it's just a different way of doing it.
» Gota
Okay. Um >> [clears throat]
» So there was another option that we we did
look at as well and again it's it's very similar to
but it does put a little bit more emphasis um Mr. what you just said about
the really low low volume sensitivity to that and this is
essentially a three- tier structure here where uh we added and almost call this
kind of like a of a lifeline concept where we put in a tier at the 350 KW
level which is a 20% mark and that carry a lower and we have 350 to 850 and above
850 so it's in three tier to everything else pretty much hold
changes we recommended. The difference in this one would be more
sensitivity to the really low volume customer. So you can see in this
situation that bill actually goes down for 350
user but the typical would come up some. It's
still below the average 8%. It's about 4.6%. Um but the higher volume user
would would be higher about 14%. So it's just one more layer deeper three tiers I
think. Um you know a lot of our clients you two and three tier are pretty
common. Um not really we don't see but we just kind of put that in as another
option for consideration.
And then kind of on this last slide here, I kind of see them next to each
other. Sometimes it's easy to see stuff better.
This kind of shows you the the current bill and what it would look like across
the board, what it would look like under those two options.
» [laughter] >> Go ahead. Yeah.
» Um, kind of to piggyback on your senior
citizens and, you know, low income, you know, they typically I'm what I'm
concerned about with the grades of like the high volume versus the low volume is
it's based on their house. Like is it insulated? Is it not? Is it old? Is it
not? Can they afford new windows? Can they not? If it's a senior, have they
lived in the home for, you know, 72 years of their life? And it's been
probably built a hundred years ago. And so really,
I I worry that um as the older homes get more inefficient and tends to house the
senior in it versus the newer home, we're kind of then punishing
them for heating their home. And I I just worry about what that is because as
we all know, I mean, houses aren't the best
around here. And I So I worry about that with low income and and fixed income
seniors and and things like that. with the rate structures that I'm seeing. I
guess my my hope through this rate study was to
see um relief for all residential
um and more put that on the commercial industrial side because they can pass it
along to their customers where residents can't. And I understand the residents
are using more, but they're also putting up with a lot of commercial business
here um as giving up the town for the seasonal um businesses to come in. And
so I guess I guess my hope was to kind of see a little bit more of a shift off
the back of the residentials in general, not just the low volume user options
here. Um and kind of have it on somebody who could pass it on versus not being
able to pass it on.
Lacy, do you know if since we've went to a rural status whether low income
household or uh if PCE is available to them? It is
so they can apply if they if they're a low income family to get helpful break.
That's correct. >> Yeah. So there are things in place to
lower their actual cost through PC. I can elaborate a little bit
» if you would. >> So the tribe actually um has a energy
efficiency program between Clinket and Hina and KIC. Um a lot of the houses are
being brought up to be um depending on the um home and um the income home. Um
they just need to apply. I know of several that have been done recently. I
know that um uh for other outside non-native uh groups throughout the I
think in the last 20 years because uh my grandmother's house was done I want to
say in 200 one they replaced all the windows. Um,
we're talking about 101 year old house that's been um, they sprayed in
insulation. Um, windows replaced.
I mean, granted, I just replaced the front windows on it myself, but um, for
the most part, a lot of the those programs are still available. Um, state
programs um, and then tribal programs that are
doing it. And then they're also um implementing a heat pump program to put
in heat pumps. Um from personal experience, I put mine in um which is I
put it in in August. It got in um that one cold snap. I just finally got the
bill on that and it was um it was about 346 I paid in electric heat versus
what I would have paid in oil heat which would have been close to $600.
So I cut my costs in half and the house still isn't I mean it's 101y old house.
Um it's it's a lot more insulated with new but there are a lot there's a lot of
programs still out there. >> Yeah. When we talk about low income it's
a cost of energy that includes [clears throat] heating.
» Yeah. >> Yeah.
» And then there's also the energy assistance like people apply.
» So there are options for >> Yes.
» Uh is this kind of a time to brainstorm or
am I jumping the gun? I mean to Okay. Well, what Abby said kind of segueed
into something I was thinking about earlier and it's funny when Jay asked
about a seasonal rate because uh and as you said, I think that's probably not
something you see too often, but given our unique extreme seasonal nature. Uh
it got me thinking a little even on the residential side. I mean,
everyone knows I we don't want to raise rates at all, but obviously we've got to
do something. So, I'm just wondering even on the residential side if we did a
seasonal increase [clears throat] in the summer, which I understand is not the
peak season for electric use residentially, but I'm curious how many
more uh you know, if you think about all the bunk houses that have gone up with
that are empty in the winter, full in the summer. I mean, I think there could
be a somewhat significant uh opportunity there maybe to and granted it's going to
be just like what people tell us about Madison. You go down to Madison and the
locals pay it too. The locals are going to have to pay it too, but it's just
something that I think maybe we ought to look into a little. And I'm curious too
if obviously no one has this on hand, but how many more uh residential
meters are up during the summer [clears throat] when all those seasonal
people are here? because I think there'd be some some
money to have there. >> Yeah. U on on Riley's thought there, uh
I forget the term you used. Was it a was it a use charge for industrial? It was
the charge that was used to kind of counter since a tiered structure isn't
really [clears throat] demand charge. So I wonder if something like something
like the bunk houses in particular, which are associated with industry,
that's where the demand charge might come in really handy because the demand
is really going to be placed in the summertime. So you know if that demand
charge is in place when that bunk house is you know unoccupied in the winter
obviously it's not consuming that power summertime when it's occupied again that
demand charges in place and we recoup some of the revenue in that way just
thought >> on that note who then pays for the
demand meters to go in that we don't have currently so are we increasing our
costs of maintenance and and things or is that passed on
you know to the customer I don't know this first time I'm hearing about the
demand thing. So, I'm truly don't know. >> Go ahead. Go ahead,
» your honor. And I'm I'm gonna rely on Raph Talis and maybe even our electric
division manager. So, as Bart mentioned, we don't have the capabilities to do
demand metering right now. So, I don't if we're looking at something on the
residential side or commercial side, I don't think we're going to have the
metering capability. I think you'd have to put a fee structure in place like the
demand charge that we have for industrial and commercial. It would
obviously be a much lesser threshold, not 25 kilowatts, it would be a thousand
or something something much lower to essentially achieve the same thing if
you're wanting to target um residents or businesses that really seem to have more
activity um in the summer season because they're associated with industry. I
think that's might be how you >> Yeah, I think honestly the seasonal
option as far as what we could actually feasibly do because again not every
customer has so that probably something we could look at see how that might
shift things a little bit um because we have the monthly data to be able to look
at that but the demands you catch up with technology to be able to do it just
don't have that >> and and I'm not too thrilled about doing
increased seating charge I think we want to be business business friendly. We're
going to get more revenue because the plates are occupied and our use power
and I think that is the general intent of what we wanted to do. Um
and quite frankly some of the guys if we rate it too high we're going to force
them into efficiencies and we'll probably get less bucks.
» That's the again it's power and bigger customers. It's a balancing act. You
know, you have to be a little bit careful there, I think, because
» I know when some of the canries had diesel generation, if we had raised our
power to an extent to where it probably cheaper for them to their own power,
they'd kill off >> horses. That's right.
» Abby, did you have a question?
» Not um trying to figure out the best way to
give me a moment. I just want to phrase that correctly.
» All right. >> Um Okay. Well, I guess um the sake of
time, maybe we'll keep the train moving. That's okay.
» Yeah, that's good. >> All right. So, we're going to shift
gears and and talk solid ways now. That looks okay. Yep.
Can >> we take a small for?
» Sure. Yeah.
Everybody back? We are. >> Oh, no.
[laughter]
» We'll come back to work and we're going to continue on with the discussion in
regard to [clears throat] thank you guys for your big
Yeah, good. To get on to the solid weight side of things, want to start
with kind of giving a service overview. Um, we know you probably are familiar
with the system, but there's really three key components to the solid waste
structure. We had the reser mic a little bit.
[laughter] >> Is this better?
» You can bring it closer to you. >> Thank you.
» Sorry, my seat's really high. [laughter] >> So, we have three key components. So we
have the residential collection. We have commercial collection which includes um
rental dumpsters. We have our disposal operations which is really our landfill
which only with the engineering report because we have about 25 lers of
remaining life left and we only accept non-putressful waste at this landfill.
Everything else is sent via our long haul contract um down to the state of
Washington. So overall, the solid waste stemmed pet does offer a really high
level of service to your customers throughout the year.
And with that being said, so this also breaks down slide breaks down what our
existing rate structure is. So we have our residential rates which are really
driven by the collection rate per month as well as our area wide disposal fees.
The solid waste credit has to do with our multif family customers which backs
off of which backs off their residential um bill. Then we have our business
collection services which has is for our commercial customers. There's a flat
rate minimum charge in monthly container rentals but otherwise the fee is charged
by the amount of waste generated at the curb. Um and then on the disposal side
we have our tipping fees. Um and then for both our we admit some minimum
charges suffered household hazard displaced. Um but it's a pretty robust
offering and um and the rate structure that follows
with that with that rate structure and with the background of our high level of
service. It's important to note that we've all heard that inflation has been
increasing at rapid rates and we we keep hearing that every time we turn this but
it's important to note that CPI while it has increased so much the consumer price
index the garbage and trash collection index which is a component of CPI which
measures what our what the garbage and trash bills are doing across the United
States which components in components in this include are driving it are what are
our labor costs doing to service our garbage and trash like with our with our
drivers um with like the CDL licenses with the vehicle cost um kind of driven
by the NR index this the garbage and trash collection index is actually go is
actually higher um and increasing at a higher rate than what CPI is. So the
chart on the left hand side of the screen or on your sheet uh breaks that
down. So the blue line is that CPI that I was talking about, but the red line is
showing where the garbage how the garbage dispatch index is is averaging
about 12% higher. And you can see that that's really driven back from really
starts to separate from 2018 and it's only continuing to grow now that we're
in 2025 2026. And historically, we've seen that that
CPI is normally about a year year or two ahead of where the garbage and trash
collection is because it's a it's a comp it's really a circular effect. But so
where we're starting to hear like news saying like, okay, inflation might be
slowing, the garbage to trash index is still a couple years behind that. So
we're going to see that tren that red line, it's going to continue to trend
upwards before it starts to even out. like we can see, okay, the blue line
starts to even starts to kind of like take a little bit of a curve. That
garbage and trash index is really projected to continue that um that
incline for at least a couple more years before we might see it flat out. And so
why is that important? So if you look at the right hand side and it's we're
showing a historical specifically residential customer collection bill um
in comparison to if what has been adopted in comparison to what if we
adopt what if we had increased our rates by inflation. And so we started this um
back in 2020, there was an increase between um 22 and 23. Um but heading
into 2026 that $1160, we're really about $3 behind where we
would be if we've been increasing our rates by inflation. And so and that's
really important because our cost of services continue to grow. And we're
going to get into that a little bit more as I talk about the financial plan.
And so looking at our financial plan in the elements kind of like Bart talked
about um they had the the road map on electric side. Um this is just another
way to look at it is our our whole process of building this model. It's a
very data driven process. So your staff was really helpful in working with us to
get all this data. We're very grateful to them. We went through the process of
looking at historical building statistics and different historical
financial data. They looked at your current budget and financial plan, your
capital improvement plan, and what those cycles looks like, all with the goal of
reaching revenue sufficiency. And so I'll talk about that as we continue on,
but the goal is really to kind of keep our balance be balanced, right? So we
have our green we have our green blocks which is our revenues and for the solid
waste system that's purely driven by our collection charges and our t and our
really our disposal or tipping fees and we have some um small portion of
miscellaneous fees. Really our two key charges are going to be the collection
and the disposal uh tipping fees. And then on the opposite side with our red
boxes we're looking at what our revenue requirements are. What do our what do
our green boxes need to do to balance out the red? And so on the red on the
red bars, we have our operating expenses. We have our capital
improvement, which includes our our equipment, our um our vehicles, and then
we also have our reserves and our landfill closure. Like I mentioned
previously, there's only about estimated about 25 years of your landfills
remaining capac life remaining capacity left. And so it's important to kind of
look at okay outside of what our reserve policies are or making sure that we have
enough to cover our operations and maintenance expenses in like in any kind
of rain day activities that we also have enough money set aside for our landfill
closure because eventually we won't be able to accept anything at the landfill
and there will be no source of revenue to come in um that will be able to help
offset those costs because even when we close the landfill there's still a cost
of of maintaining that property and and continuing the closure um closure method
as far as what the DBQ uh requires. So with that in mind with our getting
into our red boxes on our on and m the operating expenses. So, we used a
combination of the 2025 and 2026 budget as our baseline for the model. And we
talked about costs increasing with the garbage uh the garbage trash mix and
CPI. Well, for the 2025 budget, that was a 12% increase over our 2024 cost. And
so, the chart on the right hand side shows you a bit of a breakdown of what
the operating expenses are for uh for the solid waste fund. And the largest
component is your contractual services. And it's about 37% about 37% of that is
of the entire budget is related to the contract services. And that is mainly
driven by your longhaul contract sending the waste down and out of state. This is
now followed by labor at 32%. So our and then our inner fund transfers which is
like which is our billing which is like our financial admin really like our o
some of overhead costs and then some minor capital outlay. And so for the
forecast period what we did was we took the budget and when we were working we
modeled our contract and contractual services based off of our projection of
tonnages that were coming in as well as the contract rates that are um that are
currently in effect. But then we used a range of escalation factors um for the
for the majority between three to five percent um based off of different CPI
indices looking at on a line item detail looking at what what our costs can be.
It is important to note for later we do know that there is a cola increase that
has been um budgeted that this um our plan does include that. So that's a
little bit um it's a little bit higher than the our the range of the 3 to 5%.
Um but overall our growth is projected about 4.7%
and our operating expenses from um from this year across to 2030.
Continuing on like with our red bars, um the next thing that we were looking at
on our revenue requirements was our capital improvement. We keep talking
about hook costs have gone up. The construction cost and that's the same
thing since 2020. Um the industy has gone up about 21%. And you've seen that
on the electric side. We're seeing it in water. We're also seeing it in solid
waste. And so the solid waste capital improvement plan is really made up of
our transfer station equipment replacements. We have some vehicles um
that are getting that need to be replaced. It's about over the forecast
period it's a little over $4 million um is what we're looking at um over the
next couple years as on the aggregate which averages about about $725,000
per year. And it's important to note that all of these projects are assumed
to be cash funded or as we talked on the electric side that pay go that pay as
you go capital. So everything on solid waste we assume to be cash funded and
there's no outstanding debt on the solid waste side. Um so we so we did not look
at any [clears throat] coverage requirements as far as when we're once
we get into the reserves we're talking about those red revenue requirements.
And so looking at so now we've talked about a little bit of on the at least
the first couple of boxes on our red side for our balance means the revenue
requirements. Now we're looking at what our existing revenue are and looking at
how are we going to balance this all out. And so what we did was um to
project what our existing revenues were. We took our billings the billing
statistics um from our landfill tonnage reports um the the tonnage reports that
go that where the waste is getting now hauled um down south. And then we looked
at like our customer billing monthly reports and we calculated what your
existing revenues are and then it was a combination between that as well as what
your financial statements are. And so what you can see on the right hand side
in that financial plan, it breaks down what the what the bar what what the
system looks like if we didn't raise any increase didn't raise our rates and if
we just let things let things lie. And so the bars the dark navy greenish bars
I should say um represent our on& and m expenses. So, we talked about how there
was a pretty big increase between 24 and 25 that that's averaging growth about
4.7%. Um, is those dark navy bars. The blue
bar, the like those bright kind of electric blue bars is our pay cut. So,
that was the pay as you go capital. That's the capital we just talked about
averaging about $700,000 um per year over $4 million over the
forecast. And then we have those gray bars which is our transfer um or
transfers to reserves. So that goes into um that goes into our reserves to make
sure that we are keeping a 180 180day reserve um OM reserve and then also um
making deposits for our landfill closure um liability where we're target we're
trying to make sure that we have enough cash balances set aside to target what
that our ending closure and postclosure care liabilities are. And so from that
you can see that our existing revenues do not cover the uh the need for the
capital and transfers throughout the forecast period. And overall that
shortfall average is about $500,000 a year. And it's also important to note
similar on the electric side, we do not assume any um any customer growth to be
conservative for the system.
And so what does that what do we do with that? And so we looked at when we're
talking to to to staff and the routine talked about we need to make sure that
we know the existing revenues aren't going to cover. We talked a little bit
about how that we need to have financial policies and targets in place. And so I
mentioned that 180 days of cash on hand that that's one of that's the target
that's one of our targets to make sure that we have about six months of of cash
set aside in case there's in case something happens in case there's issues
at the transfer station, the landfill, long haul contracts, something something
goes wrong, anything like that. We want to make sure that we're able to have
that liquidity to cover because there would be nothing worse than having trash
on the side of the road in high season and that would affect not only residents
but also the the tourists coming into place. We also then I mentioned the
closure liability target. we only have about 25 years left of our landfill um
of our landfill. And so the closure liability target is really is the cash
balance is equal to that calculated closure and postclosure care liability
um for the current period. So right now it's about a million dollars is what it
would take to if we had to shut down the landfill tomorrow. Obviously that that
will grow with inflation over time, but one of the things we had talked about
was setting aside a closure liability fund separate. And so where the Soliv
Fund would then make deposits to to the closure uh to the closure liability fund
and where that that would be restricted um to make sure that we have enough
money that's set aside um for for that impending closure and what what that'll
look like when there's no revenue coming into that system anymore. And so those
were our reserve targets. The revenue sufficiency again we're trying to hit
we're trying to hit that balance. We want to make sure that our revenue is
sufficient to cover our expenses on an annualized basis. We talked about what
the short of a shortfall of about $500,000 per year over the forecast
period. So we're we're looking we need to make sure that we're we're recouping
those expenses. And then the third component being we talked about the
capital um solid waste fund does not have any existing debt and we and the
goal was expressed that the that we should fund everything through um
through payown for that. And so if we take all that together and we take the
balance beam what would it take to get to a revenue sufficient point targeting
180 days we get to the financial plan the reserve balances that are in front
of you now. So the rate increases are necessary to meet the financial targets.
So we'll talk about bills next, but what this means is we would need an increase
of 5 and a half% on the disposal side year-over-year from um starting April 1
on 2026 and then following January 1st um a year after through 2030. And then
for the collection component, we would want to have a nine and a half percent
increase followed by 3% thereafter. And the nine and a half increase part of
that is has to do with we know that there was a large disposal a large
substantial disposal increase that has just occurred fairly recently. Whereas
the collection um the collection rates have lagged have lagged behind um for
lack of a better term. we hadn't kept pace with at the same rate as we had for
the disposal. And so with that plan on the right hand side, you can see that we
meet our reserve targets in all years of the forecast, which is that 180 days, as
well as we're meeting our PL our landfill closure liability target.
And so with the proposed rate increases that I just mentioned, that five and a
half percent on disposal, that nine and a half followed by 3% on the collection
side, um it this shows what a sample bill would be. So the first um the first
section talks about the landfield tipping fee. That would be about a 12 uh
$12.82 increase um over the next year. Um our
residential access fee is about $1.50 per month. And then as far as the
collection rate um increase, it's a$121 um per month with that nine and a half
percent. And if we take the blended what a typical residential bill would look
like, which would be our collection rate plus that residential access fee, it
would it would be about $42.80, which would equate to about a $2.71
um cent per month increase. So, I've talked talked pretty quickly um
so far, but I do want to take a quick pause and see if anybody has any
questions at this point.
» So, one of the things that wastes do, they also subsidize any type of
recycling. They don't have any um revenue structures to support
recycling. And I think that in the upcoming
fees that we going to probably end up having to start to charge
something for commercial car should probably take something in
consideration that the other thing I think that we need to considering rate
is um
we have uh customer
virtual customers especially that need everyday services compared to uh weekly
service or bi-weekly services. And there should be a rate structure that makes
for that because in some cases they're using every square footage for
commercial space and they don't allow enough space to accumulate garbage. So,
we're having to go to that particular facility every day, which is more
manpower uh that we're expending than we would for a weekly or bi-weekly
inspection. Um, so those are some of the concerns
that I have in regards to what we're doing with the rate structure that we
have to look at it, make sure that we're charging equitably. I know in a lot of
places they also have charges for carry out. If you're at a long distance from
the the truck, then it's add manpower to do that that time and it should be
compensated for um
we all know what we had to pay for a new hook truck this year was $325,000
for a vehicle. Garbage trucks are over 200,000.
I remember when I used my garbage truck for $65,000.
So, >> I'd love to tell you it's going down,
but we were seeing some invoices like close to $4 to $500,000
in some areas. >> And one of the things I don't see in
here, I see closure money, but I don't see when we close this landfill, we got
to replace it. And there's no capital
fund that we're paying into for the potential of maybe we get away from a
landfill completely and we ship everything using an ampad compactor
or we have to relocate the existing landfill so that we could continue to
dispose of our um you know demolition waste uh
at a cheaper price than it would cost us of course to send it off island. And by
that time the technology be may be such that we're incinerating or whatever it
may be going to be in 25 years or we get into an agreement throughout Southeast
Alaska that is a combined effort of all the communities for
soloutheast Alaska that could be a cheaper option.
But I think that um when this landfill closes out, we're going to have to have
some funds available to move to the next step, whatever be. And I don't know how
we structure that inventory rate or what we can estimate that cost at, but it's a
real cost that's going to come to the city at some point.
» Yes, Abby. In this proposed rate increase, did I totally miss like the
commercial side of the increase or are we strictly only looking at
residential income? >> No, there's commercial in here.
» It's um we just showed a residential bill impact just um to look at what that
would look like. Um the commercial bill is varied uh based off of the the waste
generation. Um so the increase the collection increase would be to across
the board to all both residential and commercial customers. Um the Timmy fee
again across the board. Um but just for the purposes of the presentation we just
showed a sample residential bill but we could calculate um what a commercial
bill impact would look like. Um so you could see it too
» to follow up your honor. >> Yes.
» So just to make sure I'm understanding. So on page 33, all those rates are
existingly structured. According to your proposed rate increase, the collection
side of this, you're saying 9.5% increase for every single item that's
here, right? And then on the disposal side, you're saying
5.5% for all the options. Okay. Thank you.
So we have our contract already has a built-in multiplier for escalating every
year. Is that correct? >> Yep.
» And then unlike the lower 48, we put everything on a bargain that
» which keeps filling up.
Any
questions?
And so you said that we're going to have to do 9 and a half% and we could change
that to eight. But then how many years out did that project?
» 9 and a half% to 3%. Uh >> that was on the collection. You said we
had to start at >> nine and a half. Yes.
» Yeah. >> That would be the suggestion for the
first year. >> That would be the suggestion for the
first year and then we're going to move to eight%. moved to 3%.
» 3%. Okay. >> Uh 3% um from 2027 to 2030.
» It's not coming. >> Yes. Abby,
» did we look again at the, you know, looking at different proposed increases
on residents versus commercial instead of just one flat rate across everyone,
every category? Just didn't know the other option. We had options. So, I just
didn't know >> there are any other options.
» So, we do have some other options. Um, maybe if I get into the RA design that
kind of will might address some of the things that came up as far as
seasonality in some of those commercial versus residential. Um, so some of the
things that we looked at with the staff was we definitely heard we definitely
understand that it's very highly seasonal a highly seasonal area and so
and you're not alone in that. A lot of the municipalities on the coast, whether
it's in southeast Alaska or whether it's even down in Texas, face those same face
those same concerns, especially when it comes to waste generation because at the
end of the day, the tourist leap when you have a lot a good portion of waste
that's still there. And so something that we talked about was was addressing
Mr. something that you had said was there
are businesses in areas where there's a high level of service where where your
your staff is going out seven days a week and more than that more than going
out seven days a week they it's a highly manual process and where they can't get
their trucks in certain areas and they they aren't able to to pick up pick up
the cans and the trash in the same way that they would do a residential
customer. And so something that we looked at was a backdoor collection. Um
a back door collection which would be an additional fee on top of a commercial
customer's monthly bill. And so that would be [clears throat] something
that's charged from in from April to October which is designed to recover the
cost of a service that you're already providing. um but would be a revenue
generating uh what would turn into a more of a revenue generating um so
revenue generating fee I should say and so and so that's something that would
and I'm going to jump ahead just quickly um one slide is just to show you what we
were calculating with that and so the goal is we're just trying to reflect the
cost of providing the service that you're already doing like I mentioned
before you guys are providing a high level of service to all your customers,
but um but commercial especially especially when it comes time to the
with the seasonality. And so we need to be able to cover the cost of staffing
which also includes temporary labor. And so how do we this the overall system has
to be designed to to maintain this level of service. And so what we did was we
calculated a backward fee which is on the right hand side um of and we're
trying to get to a monthly unit cost um for this service. And so what we did was
we took uh we took a a labor rate which is a combination of a fully burned and
hourly rate with an overhead allowance and then we were making calculation of
what's the average time to just service a single cart in this area. And so if
somebody has to go out and they have to they leave the truck they go out they
pick up the can and they have to take the truck to the excuse me take the can
to the truck. We estimated be about 60 about 60 seconds to do this. And so and
just for just for reference for a regular if you were trying to pick up
like on average just a residential customer that could take anywhere
between 3 to 5 seconds to dump a to dump a can. So 60 seconds and is takes a long
time, right? It's a big difference there and to provide this service. And so we
were estimating the total cost like per pickup is about 50 cents um per per tip
of the can. And so what we then did working with staff what we had looked at
was how many pickups do you have in these in these areas from April to
October and in your high season where you're having seven days a week service
because the service will drop off as we get into
» into the slower months. uh we average about 17 and 3/4 pickups or trips per
month. And so what that equates to is a monthly unit cost of $9.76.
And so we were working with staff. We were we would propose that there is this
alternative collection rate for this backdoor fee service to reflect that
cost of providing this service in those seasonal months that would be targeted
at those commercial customers where this service is provided. Um and so that was
one thing that we did look at um to protect our uh to more accurately
allocate the cost of providing that high level of service.
The other thing that you got to realize too is we have no
um volume control uh in the residential
area. The guy gets the same garbage bill whether he had one can or four cans
and there so that the guy that's using four cans is getting the real deal. The
guy had one can is paying the standard range.
You may want to think about whether or not we're going to go to a per can
charge rather than just a per unit charge.
» Didn't we used to go didn't we used to have a unit per unit charge?
» We have a per can charge for commercial R not
» but not local. We don't charge per can at gas. No, never we never done a can
» and we use 90 gallon cans I think is what they are now but the average can
rate for residential are 32 gallon basis and that's what the national standards
they but u you know we're receiving those
that waste that's costing us money uh landfill volume is where it's at. How
much can you pack into a cubic yard of land to That's where you make your
revenue. If you're you waiting your space and you're only getting 400 lb to
a cubic yard, you're waiting that landfill. If you use a compactor and get
it to 900 to a,000, then you extend a life to your landfill. You're not going
to have it. So, the volume coming in should cover the cost of compacting it
and extending your life in your land. Yes. U if we were to go to like a a
charge by the can, who would be responsible for collecting and reporting
that data? Would that be on the collections team or
» Yeah. Well, the thing is is that we're we provide the cans to the house right
now and they're expensive can you because we got to ship them up by volume
and all. So, we pay a lot for cans. So, we know exactly how many cans are out
there and they all have serial numbers and we can know which which can is
which. But that would be a standard thing that we'd put in. The collector
knows exactly how much he's picking up at the house. And if somebody or another
can they come city, we put it on their in their buildings.
So as you know, if they only use one can, they only get bill for one can. If
they got two cans in there and they don't fill one,
they they shouldn't get a charge for that, right?
A lot of community, we can't do it here because it's very popular stuff. They go
to a blue bag. You get a standard can 90 gallon can and any extra garbage filter
in a blue bag and you get charged by the bag and you pay you pay for the bag up
front.
Yeah. I hesitate to even bring this up because I don't want to say something
that would [laughter] be critical of our charging
system and I know the whole point of all this is to collect more money. But on
kind of that same line of thinking and correct me if I'm wrong, but my
understanding is uh if you are in an efficiency apartment at a complex that
has say more than 10 units and there's two dumpsters outside
uh and you're one person in an efficiency apartment presumably using a
very minimal amount of garbage. Your garbage bill is the same as a household
full of eight people with three cans outside that are only getting charged
one. So, >> uh, like I said, I don't want to bring
up too many gripes here or anything, but there are plenty of areas to improve
upon. >> Yeah.
» And I hate to say that cuz the answer is always since the '9s.
» The [laughter] answer the answer is just like the water rates, it always ends up
with everybody paying more. So, that's why I hate to even bring it up, but I
just wanted to throw that in there. >> We used to have a 35gallon can I think
that they could do something with. No, those are those are two stories, but I
think like we do something special at the towers because it's a centralized
collection with a compactor which is different. It might have a different
rate per unit there, too. So,
[laughter]
» just covering your cost. We don't we're not looking to bank a whole bunch of
money. We just want to cover cost. That's all we need to do. And so and and
solid weights are pretty fixed. You don't
no other way to get rid of gar. >> Well, and like you said, we have to also
consider 25 years is going to come fast. >> It is.
» And we have to have a plan and we have to have the capital to you don't. So
[laughter] >> some of us will Jen will be here.
» I'll be here. [laughter] My family's got longevity.
» So, u but yeah, these rates are realistic. I I
» I worked for a land pill for no year understanding
costs. >> So, I would just say the other other
things that we did look at was having specific rates for your high usage
customers um to really target that higher level of waste generation. Um for
example, like the pork Um so right now um I believe the city it's not just one
fee for the port it gets charged your commercial rate and so versus and that's
and so in some areas where they have high level of seasonality or they have
these large large users like whether like in other like large cruise ship
terminals um I know that the cruise ships can't can't drop their waste off
here necess all their waste in the ship necessarily but they generate a lot of
waste in general. general on on shore and the commercial businesses do. This
is something that other municipalities have looked at um both in the area as
well um as in the lower 48 on the coast. Um we we talked about um that with city
staff. The other thing being on the disposal rate, we would suggest that
because your fees are so highly connected to your long haul contract
that at a minimum there should be a pass through provision on your disposal rate.
um that's tied again at minimum of the increase in your contracted rate. And so
anything so that would be an automatic pass through and then there um if for
[clears throat] anything again large increases in overall costs with
inflation um anything like that on the disposal side that that would be an
additional rate but at minimum you would have that pass through of what that
contracted cost is and again as a reminder that's about 40% of your
overall budget is that long haul contract uh which which encompasses a
large portion of the overall And then as mentioned again previously,
we would recommend a separate landfill closure fund um to make sure that your
cash balances are being set aside to target that calculated closure and
postclosure care liability to avoid any rate shock for future customers. Um
that's something that we would recommend having levelized levelized annual
deposits um over there. We know that in 25 years and in this between now and
then, you'll be thinking of other possible routes to go down for what to
do when the landfill closes. But in the meantime, we would recommend having a
separate landfill closure fund and having those funds restricted. Um that
way you don't burden future rateayers for assistant that they did not.
» There are some fees that aren't or services that provide are here. We do
construction and demolition pickup. And I assume that the rates were applied
to the cord evil. >> Yep.
» Yes. And >> I'm in the blind spot tonight. Don't
worry. Um, can somebody remind me how much it costs to buy one of the bear
cans?
» Is it 180? Yeah, >> like a can or
» new ones are really nice. I finally got [clears throat] one.
» Good evening. >> Can't remember your report.
» Honorable mayor and council members, Seth Brachie, public works director and
engineering manager. Uh, thank you for the question, Council Member Bradberry.
So, our new uh bear resistant bear resistant cans are um we have 210 of
them on the way right now and they run about uh $350 a can. Um, we don't sell
them to the customer. We rent them out uh very similar to how we do uh all of
our other cans. So, you we have a $10 a month bear can fee and that covers the
cost. We have a payback period for the can to cover our cost there. So,
[clears throat] >> so
if you have a $10, so after three and a half years of having that bare can, then
that rental fee goes away and it just goes into the regular
collection fees or will it remain forever?
» Um, so it's >> because you just said it. Yeah,
» remember. So, yeah, that's what we we figured it on a three-year return
period. Um, we need about we have about 3,500
cans in out in the residential system and we've only bought about 260
bear can so far. So, um, it's not our anticipation to have every house have a
bear can. That's not the plan at all. So, but back to the return period. Um,
you know, I think these we want to see how they last. Um, we anticipate some
bear bites and some damage that way. Uh, and then we can adjust from there if we
need to. >> So, you're testing them out in a good
spot, huh? >> They're in, uh, so far they're going
right to the hot spots, right in the danger zone. [laughter]
» Yeah. So, just to follow up on that, maybe I misunderstood. So, it's $10 a
month rental fee to pay these things off. Is it So, if you're in a if you're
a problem person whose garbage gets
into by the bears all the time. You someone from the city contacts them,
sets this up, says, "We have these new cans. We'd like you to try and their
bill goes up $10." And I guess the answer I was looking for, I didn't quite
hear was after the three-year period, does your fee go back down $10 or how?
Just out of curiosity so I understand how it works.
» Thank you, Council Member Gas. to clarify, as long as you have a bear can,
you'll pay the bear can rental fee. >> Okay?
» So, we have to make sure we cover our cost, have replacement cans
there. >> So, if you get a new bear can, you're
going to see $10 a month more than if you have the old can.
» So, a key component of that is we have a lot of customers that do a good job of
keeping their garbage taken care of. They either keep the bag inside and
don't put it out until the morning of their collection or they have a garage
or they have some sort of enclosure that they've spent money to build. Um, so we
didn't want to punish those customers because they're doing what the catch can
municipal code says they're supposed to and that's a good thing.
But for some folks, they're just they don't have a garage or they don't have a
place to store it. So, we want to be able to offer this as an option rather
than just saying, you know, this is uh you know, we're here all the time
because bears have been hitting your can repeatedly. You know, we want to have an
option there for customers to go to that was still reasonable for cost.
» But so, just to ask again, if you have the new can, it's $10 a month more than
the people who don't. Is that correct? >> Correct.
» Okay. Thanks. And and the other option is there is an
ordinance in place where they can be fined for not taking care of the
garbage. >> I think it's 200 bucks or something like
that. >> At least you do that. We don't
» Yeah, we don't >> we still have it, but we can
» don't find anything. [clears throat] >> Um and then do we have any recovery
costs associated with our regular cans? >> So that's built into the rate currently.
Um, you know, one thing, so we we've done a pilot program with these beer
cans, and uh, our residents have commented they're happy to pay that $10
fee if it means they're not out picking up the garbage off the street or from
from the wooded area next to their house. That's one of the worst things
» Yeah. >> to do. [laughter]
» If you asked, there'd be some neighbors that'd be willing to pay that $10
[laughter] >> for them. Yeah.
Thank you, Seth. Any other questions?
Any followups? [clears throat]
» That concludes your presentation. >> Yes, I believe it does.
Time to wrap up. Thank you so much. I know a lot to get through. Appreciate
your patience. >> Yeah. And I I think everybody's going to
do some reading on this and research as we go through this. Um and at some point
we will be asking the council how beneficial is this because we still have
water and sewer rates that we have to get through maybe harbor rates and
whatever other rate structures we're looking at.
» So your honor on the subject of water water and wastewater rates. Um that's
something that we won't tackle until probably later in the year if at all. Um
again because it's highly dependent on getting our commercial water meters
installed and that up and running and having the data to support a new grade.
» Yeah. But that's down the road we're going to have to take.
» It is. Yeah, absolutely. I mean there's we have we have a slew of great needs,
but we're starting with with electric and solid waste.
» I appreciate it. >> Yeah. Just one question about where we
are in this process with Raphelis and I appreciate the presentation that you've
given and being here in person that really helps a lot just for discussion.
uh if if we're in a position now where the council is going to discuss some of
the uh some of the findings that have been presented to us, do we have the
opportunity to give feedback to Raph Talis and continue the discussion about
how best to structure these rates or this is sort of what we're working with
at this point? >> No, I think we relay our concerns and uh
suggestions to the manager's office, the manager can work with him to get us
answers back on that. >> Great. Thank you.
» Anything else? I appreciate it. This is really good information and I appreciate
the breakdown. Thank you.
» So with that, do I have a motion to come out of uh the work that regular session?
» I move the city council reconvene into a special meeting.
» Second. >> Been seconded. Madam clerk, would you
please call the role? >> Yes.
» Yes. >> Binigan.
» Yes. >> Bradbury.
» Yes. Gage, >> yes.
» Cuz >> yes.
» Matani, >> yes.
» All right. >> All right. Is there any other business
before us? Any comment, question? >> Yes.
» What do you have? I'm sorry. I don't know. Uh I didn't quite realize we were
jumping out of things. Uh so we have these recommendations, these
various plans. uh given that this was a lot of input or
a lot of energy that went into this and everything. I mean I guess I'm asking
you what what what is our next step? I mean but we got to discuss which
scenarios we want to look at doing. >> This meeting is being transcribed and
summarized. >> I guess I don't want to just I don't
want to just break and call it a day and then forget about this. So what's kind
of our way forward here? Well, I think what we were going to want to do is have
staff boil this down and bring it back to us with a rate structure for the next
five to 10 years that we can look at and then the council will have to decide
what action they want to take to move forward with that. That be appropriately
» we can do that. I mean I I think your honor um there was some good things that
were mentioned tonight that I think staff would like to talk with with refus
to see if there's yet even more possibilities. There always are. Um, so
it might warrant a future discussion and presentation. I mean, the the end goal
here, of course, is to come up with a rate structure that we can memorialize
in an ordinance, and we're not there yet. Um, I don't think there's consensus
on what that rate structure looks like to achieve the the revenue increases
that we need for both of those utilities. So, I I for me, I think we'd
like to talk more with Raph Telus and do a little bit more brainstorming based on
some of the things that we heard tonight. I think if there's additional
thoughts or considerations that council members have, you can relay those to
myself or Sean and we can continue to have dialogue with Rafelis.
» I would like to have further conversations on how we manage the big
electrical project and how they fit into our capital plan because I don't want to
overbudget. I don't want to overrate in regards to not knowing what the exact
need assessment is on that. So >> maybe the action would be before we put
them into capital program, we do a needs assessment. Oh, absolutely. Yeah. Yeah,
there's definitely some preliminary work, but I think for the purposes of um
you know, the capital improvement program that we have, which is a
five-year horizon, which is what we gave Raphelis, so they're just working off of
that. But I I totally agree and now that we have a new electric division manager
to reassess those priorities and shift things around. Um, but again, even
though we come up with maybe a five-year horizon,
perhaps we're only doing those rate increases year-over-year. So, it gives
us time to recalibrate as the big capital improvement programs shift.
» I'm sure that our new utility manager as he gets his feet on the ground is going
to have other suggestions in regards to capital investment and how we do those.
So, I appreciate all that. Yes, Abby.
» I briefly mentioned it earlier about the electric, but uh or to the mayor of
electric. Um I guess for me and any of the rates
increases that we're doing is we have an opportunity to provide relief to our
residents. Um even though we need to have a gain, we're asking a lot of our
citizens. We hear it. You know, they've come to the podium and talked about all
the concerns and the costs. We're increasing sales tax, increasing the
cap, increase, you know, property tax, mail rates, you know, all these things
are starting to add up and just the cost of living here. And I really want us to
consider that. And this now that we're actually planning long term instead of
just putting out a fire today. I'm really looking at how can we positively
impact our residents even though they're the bigger biggest users. Totally
understand that both solid waste and this. How can we positively impact them
as a way of giving like you know a thank you for allowing us to continue to make
as much revenue as we do off of, you know, technically their front front
door. And so I really would like to to hopefully see something more
even or more in favor of the resident side. I understand commercial we need to
support economic growth and things like that, but we're also hearing our
citizens say enough is enough. Um so commercial growth maybe doesn't go
handinhand with what our citizens are wanting. But also you mentioned the
average rate for electricity you know is 17 cents and you know under these
proposed rates you know they're at 12 cents when our citizens are at 16 14 or
16 depending on what tier you know maybe we need to look at flipping that um
to really incentivize you know our citizens you this is a great place to
stay keep our resident number instead of downfall trajectory that we're in for
customers. But that's just something that in all the rate studies that we do
in the future and whatnot, I really would like to look at that opportunity
because we do have it here in front of us as we're planning in the long term.
» Thank you. Any other comments?
We'll move on to mayor and council comments.
Abby, >> none.
» Jan Lee. Yeah, I just have I really appreciate
this. This gives more clarity to a few things. I think um one of the things I'd
like to see uh in the future and I think council um we all need to consider the
next we have to think nine generations up
in the back of our minds. we have to consider the people, the generations
that'll be here in the future and um having a plan in place and I mean and
making sure that the community also understands that you know that
as much as I wish things would go back to what they were in the 80s and 70s and
60s um cost of everything is it will continue to go up. It's there's no um
going backwards in a lot of ways. Um, but I I was I found this to be very even
with that 5% increase, I thought, you know, I was like, I could do a dollar,
you know. I mean there's I mean there's some things that I think um
can happen and flip the script when it comes to our um commercial and and um
even our seasonal commercials that come here that do impact our our
infrastructures um and they put a lot of attacks our systems majorly and and how
do we capitalize on that because that's the only way we're going to um even out
the um cost on the if those of us who live here, you are out. Thank you.
Appreciate it. >> Yeah.
Got two comments. One, thanks folks for coming. And second, uh
the uh the landfill 25 years that's tomorrow.
» Yeah. And we can sit here and talk about it. But if we don't start thinking now,
there may not be a place. And you might even some of you may remember Tom Coin's
place on Gina. I don't know whether it's viable or not, but he had a place. But
if we don't start thinking now, any land that's available isn't going to be
available. >> So maybe not this year, we'll let Lacy
get gone for a couple years, [laughter] but keep it in the back of your mind.
Um, the other one is on the electrical. Um, rates are going to be rates. And
like I said earlier, I don't want this town going out of power. I've lived here
long enough that I know when the power goes out, it can be gone for three or
four days. And if we stick our head in the sand and
we don't appropriately look at the generator and the transformer that we're
talking about at the right time, they'll go out on us
and I'll guarantee you how many years it takes to replace one. You could order it
and have the money and it's going to take you three two years to get one. So,
as we do rates, keep in mind that's got to be there at some point in time.
That's all. Thank you Jay.
» Thank you your honor. Thank you for your presentation. It opens up a lot of
possibilities and opens up a area where we can protect our residents. I mean I
still believe that the commercial, the harbor and the industrial need to pay
more so that we have relief for our long-term and yearround residents.
Away from this uh we had the ports and harbors meeting yesterday. There was a
resolution that is forthcoming but however that's at a
meeting when we come back from AML in Juno.
The resolution is and was that we approach our
state representatives uh Senator Steedman and Representative Binham.
Talk to them about the fish tax that is going into to the state that needs to
find its way back. They've given us the harbors. However, they has have not
given us any maintenance uh subsidies. They want us to bring that uh to our
representatives and see what we can do about it and also bring
through the corporate relations committee to the bureau to see why the
bureau is getting 280,000. We we are getting 219,000.
That was not the case up to two years ago. So we want to find out whether it
is a bookkeeping mistake or what happened there so that we get enough of
our tax revenue because all our commercial fishing all our fishermanmen
all our process processes are in the city. That's all I got. Thank you.
» Thank you Jay Jack. >> Thank you your honor. I'm going to echo
a couple of things that council member Cous uh mentioned and just um add one
additional thought there. First is again I appreciate the presentation. I don't
think we'd ever have been able to develop these kind of nuanced findings
on our own. So, uh, really appreciate that work and seeing a couple of
different options for each of these funds. Second, on the notion of the
landfill, u, Mr. C spoke to the question of where we might put an additional
landfill in the need of one, and the mayor spoke earlier about the fact that
we don't really have any funds set up in that regard. So, I think that's
something that's going to be just as important if we think about where we
might put a future landfill. We're going to have to start saving for that now.
whether it's a you know a penny on the dollar that putting [clears throat]
aside going forward that's uh it's not going to be a small uh expenditure and
the sooner we start saving for that the better and I don't know if that's
something that can be factored into the great considerations that you're making
uh but I would certainly be keeping that in mind. Thank you.
» Thank you. I think uh the presentation is worthwhile. I think it
we've we've been working on this for years and trying to figure out how to
make it equitable and beneficial and not create great shock and yet cover the
needed costs that we have with the operations and capital budgets that are
our our our [clears throat] finance division and
managers have talked to us over a long period of time about how we do this and
uh we up and catch up to June, but incremental raises I think are the way
to do it rather than all solid
and I but the information that they ret like said there's some items that they
want to flush out before they bring it back to us in regards to how we move
forward
change or structure and how we're going to do that and Ley, if you could kind of
give us a an idea how this process should move forward in a timely manner
because there are some steps we need to do before we get there. I appreciate
that. >> I guess right
[laughter] last uh I echo what everybody said. I
appreciate the time. Also appreciate that you guys came here in person. That
I think says a lot. So thank you for that. be interesting to see what we end
up coming up with. It's good to have some options. So, so, uh, yeah, it'll be
interesting going forward. Uh, on a slightly different topic, but Dick
mentioned the possibility of, uh, a landfill like Ravina someday. So, that's
how I'm going to tie this in. Uh my understanding is on the uh contest for
the tunnel proposal that's been made by Assemblyman Dial uh that it's been
brought to my attention that it would be helpful to have as many uh letters of
support to that group from presumably members of the community and such. Uh,
so I was going to follow up with you, mayor, to make sure that it's
appropriate if if we do it, not, you know, as long as we state that we're
just a citizen or whatever. But, uh, I would encourage anybody who maybe would
be interested in some better access to Gina to submit your letters. I think I
saw we have till the 23rd. So, um I think it'd be pretty cool if a whole lot
of people did that and really shined a bright light on us cuz uh my
understanding is it would be a free thing that uh this company is doing as
an advertisement type thing and it could really open things up for more
development over there. So, anyway, with your permission, I'd like to submit a
letter and absolutely encourage others to do the same.
» Sounds good. Anything else? Ajourn
hearing