[3:14] I'd like to call to order the special
meeting uh work session.
[3:18] » This meeting is being transcribed and
summarized
[3:21] » for the electric and solid waste rate
review February 12th. Would you please
[3:27] call the vote?
>> Hake here. Goose
[3:30] » yes.
>> Montani here.
[3:31] » Bradbury here. Gas
>> here.
[3:33] » Finnegan here.
>> Z
[3:35] » here. Please rise forgiance
[3:40] to the flag of the United States of
America and to the republic for which it
[3:45] stands. One nation under God,
indivisible with liberty and justice for
[3:51] all.
>> Thank [clears throat] you.
[3:55] The Ketchan city council would like to
respectfully acknowledge the traditional
[3:58] first people of this land of Ketchan,
the Thomas people.
[4:03] Moves us on to item three, which is
person to be heard. Do we have anybody
[4:06] to speak to the council tonight?
>> No, your honor.
[4:10] » Bring us item four, new business request
for a work session to receive a
[4:15] presentation on solid waste and KPU
electrical climate plan strategies and
[4:20] rate study services from Rap. Do I have
a motion? I move that city council
[4:26] recess into work session for the purpose
of receiving a presentation on solid
[4:31] waste and KPU electric financial
planning strategies and rate study
[4:35] services from Afgh and to provide
feedback and direction on the presented
[4:41] information.
Do
[4:43] » I have a second? Second.
>> It has been moved and second. Lacy
[4:47] » uh your honor and members of the
council. Uh tonight we have uh
[4:52] representatives from Ref Telis Inc.
which is the firm that staff has been
[4:57] working with over the last several
months um pursuant to council direction
[5:01] to do some financial planning for the QP
electric division and the solid waste um
[5:07] division of public works. Um we started
this process back in the fall. Uh it's
[5:13] it's been a long time in the making. We
were um a little way laid with the
[5:17] budget process, but we have been working
with Reptelis um to provide them lots
[5:22] and lots of information, historic
information on our budgets, on our
[5:26] rates, on our future needs, our capital
planning so that they can do um a nice
[5:30] dive into the financial needs of both of
those utilities. Um so tonight we have
[5:36] Bart Kreps who is our the executive vice
president of Raf Telus and also Sarah
[5:40] Neely um the um senior vice consultant
or senior consultant for Rafelis.
[5:46] They've kind of been the principal team
that we've been working with um for both
[5:49] electric and solid waste planning. Um
they did provide a highle summary
[5:54] document to the council which hopefully
you've had a moment to digest. But
[5:58] tonight they'll be going into further
detail um on on what they have found and
[6:02] and looking at both of those utilities,
what the outlook is financially for both
[6:06] of you those utilities and ways to
address some of the financial shortfalls
[6:10] as we look ahead to both operational and
capital needs. So with that, I will turn
[6:15] it over to to Bart and Sarah. Thank you
for being here. into work session.
[6:21] » Okay. So, we'll uh vote on going into
work session.
[6:25] Madam press
>> Bradberry.
[6:28] » Yes.
>> Gage,
[6:29] » yes.
>> Absent. Cous.
[6:32] » Yes.
>> Matani
[6:34] » here.
>> Gas.
[6:35] » Yes.
>> And finan.
[6:36] » Yes.
>> Thank you.
[6:38] » Thanks. Yes. Continue.
>> Sorry. Uh your honor, just um before I
[6:44] pass it over to um Bart and Sarah, I
just wanted to add as the council will
[6:48] recall when staff first identified
Rafelis,
[6:52] um they were they were affirmed that the
finance director had identified um as
[6:56] one that really specializes in this type
of work, especially for municipalities
[7:00] and looking at different utilities and
their long-term financial needs and
[7:04] planning. Um they've done this work for
municipalities all over the nation,
[7:08] including Alaska. So, um, looking at an
electric division or solid waste is is
[7:13] nothing new to them. Um, I think they
recognize now some of the unique
[7:17] challenges that Ketchacan has. Um, as we
look ahead to capital, not only in terms
[7:22] of what our our challenges are as
utilities, but what some of those bigger
[7:26] hiccups are being on an islanded
community in Southeast Alaska. So, I
[7:31] think they're I think they've been
responsive to that and are really trying
[7:34] to present um a good overview of these
two utilities going forward and also
[7:40] some solutions on how to to stabilize
and get those into a more positive
[7:44] financial position. And with that, I'll
turn it to B.
[7:47] » Excellent. Thank you so much and thanks
to all of you for having us here. It's
[7:52] it's wonderful to to be here in person
and get to visit with you. Um so, we
[7:57] have a lot of material that we're going
to walk through. Um, so kind of bear
[8:01] with us. Um, but, uh, really happy to
visit with you and kind of talk you
[8:06] through our analysis and share some of
our filmer mirror results and really
[8:09] kind of get your feedback and certainly
ask questions along the way. Wouldn't it
[8:13] have be a dialogue? Um, with that we'll
kind of get moving. Um, in terms of an
[8:20] agenda,
so we're kind of breaking this into two
[8:24] pieces. you know, this [clears throat]
study looked at, you know, both the
[8:27] electric system and the solid system.
And so, um, within both of those, we're
[8:33] going to kind of cover two main
elements. We're going to talk about kind
[8:36] of the financial planning elements,
which kind of gets into kind of the
[8:41] forecast of our revenues and expenses
and things like that. Um, and then we're
[8:46] also going to talk about some options
around rate design that gets into kind
[8:51] of how we price our services. We have a
current rate structure that we use now
[8:56] and then some options to think about um
potentially going forward. So I'm going
[9:01] to kind of shepherd us through the
electric system and then my colleague
[9:04] Sarah is going to talk about solid
waste. Um that's kind of how we'll set
[9:08] things up.
[9:12] So um
just kind of before we get going um you
[9:18] know one of the sort of basic tenants
that we use when we do a study like
[9:22] this. So um you know the electric system
kind of falls under um Ketchan public
[9:28] utilities solid is on the umbrella of
the city but we look at them both as
[9:33] utilities and effectively as enterprise
funds because they're funded with user
[9:37] charges. So it's different. They're not
funded with taxes. are funded what user
[9:40] charges. So we really look at that
through the lens of kind of like a
[9:44] business. In business you have costs and
you have revenues and you got to recover
[9:48] those costs. So that's kind of through
which the lens that we look at things
[9:52] because we want to make sure that these
utilities have the cost structure in
[9:56] place and the revenues in place to make
sure we can continue to provide safe and
[10:00] reliable services. That's what we
ultimately want to do.
[10:05] So [clears throat] dive a little bit
layer deeper into the kind of two main
[10:08] pieces. Um when you look at the um
financial planning elements more broadly
[10:13] really what we're we're doing is kind of
assessing the sufficiency of the revenue
[10:18] stream. So it's not looking at not only
where we are today but where we're going
[10:22] into the future and what the current
rates look like and how those compare
[10:26] against costs see the sufficiency of the
revenue stream to see if we need to
[10:30] actually raise revenues to be able to
address those costs. Um, when it comes
[10:34] to the rate design elements that we'll
talk about, we're going to be focusing
[10:38] on the same level of revenue, sort of
how you get the revenue, it's a little
[10:42] bit different when it comes to your
pricing structure. And what we're trying
[10:45] to do there is to offer some suggestions
to maybe optimize that to try to align
[10:50] with some of your objectives and some of
the things that we heard kind of early
[10:53] in the process that would be um
important to you.
[10:58] Okay. So [clears throat]
unpacking that a little bit more for the
[11:02] electric system. Um when we look at the
electric system financial planning, you
[11:07] know, one of the big drivers that we
notice right away because one of the
[11:10] pieces of information that we ask for
and quite frankly one of the big drivers
[11:14] of rates typically is capital capital
investment. So the electric system has a
[11:19] capital improvement plan. A lot of costs
associated with that. So part of the
[11:23] role that we have is kind of looking at
that. how are you going to finance those
[11:27] improvements that you need to the system
and that really is a big driver of
[11:31] rates. Um and we look at that um we also
think about more broadly what kind of
[11:37] financial policies that we should have
with things like what reserves do we
[11:41] need if we need to borrow money things
like debt service coverage becomes
[11:46] really important. So we'll talk about
more of that later, but we kind of look
[11:49] at um solid sound financial policies
that should go along with funding that
[11:53] capital program. Um for the electric
system on the raid design side, again,
[11:58] you know, focusing on the same financial
sufficiency, but also some of the
[12:03] feedback we had heard was really trying
to think about affordability service as
[12:07] best we can with some emphasis on the
residential customers in particular to
[12:12] see what we could offer in terms of um
options around grade design. um to try
[12:17] and address some of those objectives.
[12:22] Okay. So, we're going to get into the
financial planning elements first. And
[12:26] um
this is a nice graph. I'll kind of break
[12:31] it down to you a nice table, but what it
basically says, the financial plan,
[12:35] think of it as kind of the road map. So
it's basically coming in taking a look
[12:39] at where we are today as a utility from
a financial perspective and then laying
[12:45] out that projection of where we're going
to go. So that means we have to think
[12:48] about revenues, how those revenues would
change. That looks at kind of our
[12:53] account some information. Then we look
at our costs. We look at our operating
[12:59] expenses. We look at our capital
expenses.
[13:03] How we're going to finance those capital
expenses. And remember I mentioned those
[13:07] financial policies. So when it comes to
how much money we keep in the bank, debt
[13:12] service covered as I mentioned, that's
kind of the glue that holds the
[13:15] financial plan together at the end of
the day. So we have to think about all
[13:18] these different elements when we're
doing a forecast because we're really
[13:22] big on planning and looking at what's to
come. Not just where we are, but what's
[13:26] to come. That's really kind of a basic
tenant of how we look at things.
[13:31] So I'm going to go a little bit deeper
into the financial plan. kind of talk to
[13:35] you about how we did the forecasting.
So in terms of our operating expenses um
[13:42] so what we're using as kind of a
baseline for operating expenses is the
[13:46] 26 budget numbers that we received from
staff. Um so we have made some
[13:51] assumptions about um escalation of those
costs going forward. It's about we've
[13:56] assumed about 3% on most of the
categorical costs. Um there is a big
[14:01] component of our operating expenses
that's related to purchase power. So in
[14:06] the electric system we generate
basically about 45% of our power roughly
[14:12] and we purchase about 55% of the power
from SEIPA and we have a contract with
[14:16] SEA. It's kind of a complicated contract
but effectively it kind of breaks down
[14:21] as um we generally pay based on kind of
an a rate per kilowatt hour based on a
[14:27] firm commitment with them. Um so we've
assumed that that rate actually gets set
[14:32] annually but we have assumed that that
would increase at about 3% going forward
[14:36] for planning purposes. So and we've
assumed the same sort of composition of
[14:40] what we generate versus what we
purchased in the basically looking at a
[14:44] five-year forecast period.
So that's operations at a high level. Um
[14:50] so capital when I say capital costs and
this is kind of things that I'm
[14:54] referring to. So, we have debt service.
We have existing debt on the books right
[14:59] now. We have um one piece of debt on the
electric system. It's effectively a
[15:03] revenue bond. Um that debt actually
rolls off in 2032. So, the not too
[15:09] distant future, but a little bit beyond
the window we're looking at, but it is
[15:12] something to think about in the future.
It's about a million dollars in
[15:15] principal interest payments we make on
that. That does roll off. But based on
[15:19] the size of the capital program that I'm
going to walk through, we are looking at
[15:23] potentially to borrow to fund some of
those projects. So again, we would also
[15:27] be looking at layering on additional
debt to be able to address those needs.
[15:31] Um, as we look at the capital program,
you know, on the electric system, we're
[15:35] looking at about $115 million over the
next five years in capital. There's kind
[15:41] of a myriad of projects that go into
that. you a really large project that's
[15:45] replacement of the diesel generator
that's um quite old and needs
[15:48] replacement. We have replacement of
substations that are in there as well
[15:52] and then just ongoing kind of
reinvestment in the electric
[15:55] distribution system. So um pretty
sizable capital improvement plan that we
[16:00] have to address for the next five years.
[16:06] » Yeah. So talking about that larger
diesel generator and the rebuilding of
[16:11] the substations,
those are extremely large costly project
[16:17] that's going to take some planning and
we don't have any funding scenario in
[16:21] place for those
and those won't come to fruition until
[16:26] we get some revenues uh sources whether
it's going to be borrowing or you know
[16:31] whatever it's going to be a long kind
of for
[16:37] I think it's unfair that it it affects
the overall budget. I know it's a
[16:41] project that we have to do, but it's an
outlier
[16:45] as it's a larger capital budget. It's
not a maintenance budget. It's not a
[16:50] minor replacement budget. And so, I know
it has to be funded at some point. We
[16:55] have no idea what that's going to cost
us.
[16:58] So, how do you factor that in when
you're thinking about putting in a rate
[17:03] structure to fund something that we have
no idea going to be that far enough?
[17:08] » Well, with the capital brewing plan, you
know, we have to go with what we know
[17:11] today and there's estimates of what
those costs would be. And then in terms
[17:15] of the financing plan of that, you know,
what we'll walk through is sort of
[17:20] thinking about what options are
available to fund those needs. And
[17:24] there's, you know, certainly generating
funds internally through rates is one
[17:29] option as well as borrowing. Way we like
to look at that depends on the type of
[17:34] asset that it is.
If it's a longer lived asset,
[17:39] advertising that cost over time through
borrowing is is a typical way that it's
[17:43] done. Um, so we think about that on the
financing side. Um, and and what that
[17:49] looks like and try to sort of marry
those two things up. But you're right,
[17:51] you need to have the revenue to be able
to cover those needs, particularly if
[17:55] you go out and borrow, but it has to be
kind of factored in the entire package.
[17:59] The fact that costs in the CIP change,
you're absolutely right. It's been
[18:03] really hard to to peg those costs
because they do change and inflation has
[18:07] really hit things quite hard and a lot
of the work that we've been doing, CIPs
[18:12] keep growing. They don't go the other
way. So, they're getting more expensive
[18:16] rather than less expensive. So um the
challenge is you know we have these
[18:21] needs we need to address. You don't
address them the costs tend to go up
[18:26] down the road. So you know capital
planning is is tough to do but you know
[18:30] you have to go based on your your best
judgment and staff's come up with a
[18:33] capital improvement plan. So that's
what's kind of feeding into our models
[18:36] right now. So, kind of what I'm getting
at here, before we throw a large number,
[18:40] 40 million, $45 million, $50 million at
that project, I think we really need to
[18:45] do a needs assessment so we understand
that size. They're just guesstimating
[18:51] what we're going to need in the future.
I think uh the size, the the type of
[18:56] generation, whether it could be a
turbine or a diesel or whatever it may
[18:59] be. Um
and you know, again, sea moving out some
[19:05] infrastructure. did that lay that
project because they're they're looking
[19:10] at other alternative energy sources. I I
don't know how that pencil in regards to
[19:16] only
there just a question I had in regards
[19:19] to how we how we plan for that and not
over budget and stick a rate in early to
[19:26] help do that at the I guess the
detrimental public's paying that rate.
[19:33] Yeah, I mean it's definitely a fair
question. I think relying on staff to
[19:38] kind of look at the plan and develop the
needed projects and um to try to vet
[19:43] that is is really what you know we need
to do.
[19:46] » Thank you.
>> Um
[19:50] so just want to want to talk a little
bit about just kind of the the baseline
[19:54] on the revenue side and some of our
assumptions about um you know
[19:57] forecasting revenue. Um so we tend to
try to be conservative on the
[20:03] forecasting of revenue. Again our models
look at um of account information and
[20:08] consumption information. Um you know
catch again we don't really have the
[20:13] benefit of a tailwind of of growth. Um
so we were very cautious about that. We
[20:18] pretty much assume kind of flat growth
in the forecast going forward. Um so
[20:24] that's sort of embedded. Um and then
some of the other ancillary revenues
[20:28] that we have um for lighting and things
like that, we've also seen kind of just
[20:33] no growth. So just wanted to point that
out.
[20:37] [clears throat]
>> Okay. So this is a really important
[20:40] graphic that I want to walk through
because it it really kind ofes the
[20:45] financial plan.
So um kind of step through this.
[20:53] So the the bar parts of this chart. So
looking at the colors that we have. I
[21:00] know it's the colors coming across up
there, but just bear with me. So there's
[21:05] the the bottom of the bar chart is is
our onm expenses. Um and so that's kind
[21:11] of the darker part of the bar there. The
yellow part of the bar that's our
[21:17] purpose power costs. So these are all of
our costs kind of stacking them on
[21:21] another. Um the the blue there
represents our debt service.
[21:28] The green represents our what's called
cash finance capital. So we call that
[21:33] payo. Um basically pay as you go
capital. So it's effectively using your
[21:38] internal cash to fund capital
improvements. And then that small little
[21:43] sliver on the top that's the the pilot
payment that the electric fund makes
[21:47] back to the city. So the red line there
that represents basically the revenue
[21:54] that we can generate based on our
current rates. So you notice at 25 it's
[21:59] it's just south of about $25 million is
what we generate in electric revenues.
[22:04] And you notice that the bar is a little
bit higher than that right now. So that
[22:08] means anytime the bar is higher than
that red line, that means you have to
[22:12] eat into your reserves to fund it. So if
you look at over time, you can see those
[22:17] bars are going up because again I'd
mentioned the assumptions and the
[22:21] forecasts assume that $150 million
capital improvement plan. I I'll go
[22:25] through the details of how that's
assumed to be financed. Um but you can
[22:29] see those costs increase out over time.
the rate line again based on the current
[22:35] structure basically stays flat because
again we don't really have a
[22:40] basically means that it's not a really
tenable forecast there to leave the
[22:46] revenues where they are because we
couldn't fund that kind of program. So
[22:50] we have to sort of look at um additional
revenues to be able to do this.
[22:55] So
with that being said, the way we sort of
[22:59] looked at this is we thought we would
frame it around some various capital
[23:03] planning scenarios to kind of help you
sort of understand um what that might
[23:08] look like. Um
[23:13] so
[23:17] so the first scenario that we looked at
we're going to call this kind of the
[23:22] capital scenario one basically as
planned. So you know staff provided us
[23:28] the current capital improvement and
their current assumptions on funding.
[23:33] So right now if you look at the chart
there on the left so the there's there's
[23:40] two colored bars. There's a darker color
and a lighter color. The darker color
[23:45] bar represents um the cash finance or
the pigo capital that's being assumed in
[23:51] each year to fund those projects. And
over the five-year period it's about
[23:56] 28.8 8 million that's programmed in the
CIP right now um to fund a portion of
[24:01] the 115 million and then the balance is
being funded um by debt. It's about $86
[24:09] million in debt. Couple different pieces
of debt being issued primarily in 28
[24:14] 2020 and 2029.
Again, that's for those larger projects
[24:19] we talked about the generator and the
the substation replacements. Um
[24:24] so one thing you'll you'll note on the
PGO side is that you know we would call
[24:30] this kind of a front-loaded PGO um
financing plan. You can see that the PGO
[24:35] in 2026 and 2027
you know inches up over $10 million or
[24:41] that's just how the current CIP is is
sort of sequenced. So again a first pass
[24:46] was just looking at it as as planned and
what does that mean? Um, and so this is,
[24:53] you know,
well, before I get to that piece, so if
[24:58] you go back to this slide,
I talked about the financial plan and
[25:04] these bars being kind of above the line.
The challenge is if you do that, you
[25:09] have to draw down on reserves um to be
able to meet that plan.
[25:16] So what the left chart then represents,
so currently there's about roughly $8
[25:22] and a half million projected and
reserved in the electric fund at the end
[25:26] of 2025.
Um the red line that we show on that
[25:31] left chart basically is a minimum target
that we have for reserve which is set at
[25:37] 90 days of our operating expenses,
operating and maintenance expenses. So
[25:41] that's three months effectively of
working capital which is pretty bare
[25:45] bones. We would not recommend going
anything below that. But for the
[25:48] purposes of what we forecasted that's,
you know, kind of what we're showing as
[25:52] that red line. So you'll notice if we
don't do anything on rates, so not
[25:57] assuming we raise rates, we basically
would run out of reserves in about two
[26:01] years. Um so that's not a situation that
we could be in. Um the other metric that
[26:06] we monitor is debt service coverage. So
what debt service coverage means is the
[26:13] revenue comes in, the first thing we got
to pay is our operating expenses and
[26:17] then what's left is kind of the net
revenues after that. And so when you
[26:22] borrow money from creditors, they want
to make sure you got enough of a cushion
[26:26] to pay them back. So there's a minimum
requirements for coverage that we have
[26:30] like on our current revenue bond. Um,
from a policy standpoint, we like to
[26:36] target coverage of at least 1.5. So
that's what that red line is on on the
[26:40] debt service coverage chart. You can see
if we were to go out and borrow the $86
[26:46] million that we had program debt and we
didn't change our rates, our coverage
[26:49] would deteriorate very quickly. Again,
this is not a tenable situation.
[26:56] So what would that mean as planned?
Well, if we wanted to fund things as
[27:01] planned,
this is a little bit of a shocking
[27:06] scenario. [clears throat]
we'd have to raise rates but
[27:10] rather than the band-aid approach. Um
and that would allow us to basically the
[27:17] red line there shows the um the revenue
based on with the rate increase assumed.
[27:23] So it' be a front-loaded large rate
increase um and that would cover our
[27:28] costs. It would allow our reserve
balances to stay above our minimum
[27:31] target. And you look down at the chart
to the right, we basically put, you
[27:36] know, forecasted to keep covered about
um at that 1.5 level. That's when
[27:41] everything from the $86 million would be
kind of baked in the cake. So again,
[27:46] that's a lot. That's a very front-loaded
structure. Um but again, based on the
[27:51] way the CIP is is laid out, that's what
we would need.
[27:56] So with that being said, we said, okay,
what if we sort of relook at things? Um
[28:03] and so we did a kind of a se second
capital planning scenario that we'll
[28:07] call the sort of phased in scenario. So
the phased in scenario looks at the same
[28:14] level of spending in the capital
improvement plan which is 115 million.
[28:19] But what we did is we effectively kind
of resequenced the PGO piece in
[28:24] particular to kind of smooth it out over
the five-year period. So, we're still
[28:30] funding uh 28.8 billion in PIGO, but
it's spread more evenly over the next
[28:35] five years. Um, and then on the debt
financing piece, we're still effectively
[28:40] borrowing the same amount. We've kind of
shifted the timing of that a little bit
[28:44] to 2027.
So, it's more of a phased in approach.
[28:48] Um, same general concept, but you know,
kind of require rep prioritizing some of
[28:54] the projects over the next five years.
So that scenario um
[29:02] basically allows us to sort of spread
the increases out over the next five
[29:06] years at about 12 and a half% per year.
Um so that's the sort of the red line
[29:12] then kind of hitting the top of the the
bar chart. So basically be covering our
[29:16] costs.
Our reserve balances would then stay
[29:20] above our minimum target that period of
time. we deliver the full 115 million in
[29:26] capital and our debt service coverage is
constantly above.
[29:30] So that's kind of the the phased in
scenario. So it's taking kind of the
[29:34] current plan but sort of resequencing
the plan over five year period.
[29:39] » Does that make sense? Stop for a second.
>> Any question?
[29:49] » Okay. Um
the third scenario that we ran because I
[29:55] know that there's been some discussion
you know at the council level about um
[30:01] kind of an 8% increase scenario that has
been discussed. And so
[30:07] the way we wanted to look at that was to
say, okay, if if that was the level of
[30:11] increase that we did, well, something
has to give um we can't fully fund 115
[30:17] million, but what could we fund for that
level of increases? Um, and so what
[30:22] we've done there is basically kind of
adjusted the CIP [clears throat]
[30:27] from a monetary standpoint down to what
we could afford if we did 8% increases,
[30:31] and that's about 78 79 million. Um the
way that's laid out is it's it's sort of
[30:38] a similar proportionality between PIGO,
which is that cash financing piece, and
[30:42] then the debt piece. So the PGO is
lower. It's about 13.7 million over the
[30:47] 5year period. Again, it's distributed
relatively e evenly, so it's not
[30:51] frontloaded, and it's about $65 million
in debt. So again, the idea you'd still
[30:57] fund the large projects, but we probably
have to rep prioritize exactly what we
[31:01] would fund. Um, so it's a smaller
capital program, but that's what we
[31:05] could cover with the 8% increases.
Another way to think about that would be
[31:11] if the current plan CIP is 115 million,
at the 8% it's about 68% of that CIP. So
[31:18] it's about roughly 70% execution rate
sometimes we refer to it as, but there's
[31:23] a delta about 36 million that we would
find.
[31:27] » So this is all based off a five-year
capital fun. So we just have probably
[31:32] more like a 10-year
uh planning stage in order to stay at
[31:38] that 8%
rate that we're
[31:41] » this looks at five years and it would
cover basically 78 million over the
[31:45] 5year period based on that funding mix.
>> But 115 million we just project that
[31:50] out.
>> Well, those I mean the thing is those
[31:51] projects don't go away. They just go
further out.
[32:01] And so again, this last graph, it just
sort of illustrates the the 8% scenario,
[32:06] the reserves and the coverage levels.
Um, you know, based on that level of of
[32:11] funding.
[32:14] Okay. Um, I'm going to stop for a
second.
[32:18] Questions on that? I'm going to shift
and talk a little bit more about rate
[32:21] design, but any questions on what I've
gone over so far?
[32:26] So I do have
>> Yeah, go ahead.
[32:29] » So with these rate um the 8% annually
um over five 10 years
[32:37] um does that also increase the um our um
reserves?
[32:44] It basically keeps your reserves roughly
at the 90-day mark because okay, it's
[32:49] based on, you know, what that line is
there that you're seeing is so three
[32:54] months of our own expenses. Now, the on
expenses are growing some. So, the
[32:57] reserve balance go up a little bit, but
they're largely about the same as as
[33:00] what they are today.
>> So, basically, we're just we're raising
[33:05] rates in order to cover the capital.
>> Okay.
[33:11] Anybody
else?
[33:19] » Um,
so I want to talk a little bit that's
[33:23] sort of thinking about things just you
know across the board and you know one
[33:28] of the other elements of our study was
looking at the actual race structure and
[33:32] some you know what could we do there
potentially
[33:35] try to mitigate you know some of the
impacts on customers. Um
[33:41] so just a little bit of background about
the current electric rate structure. Um
[33:45] so right now we have four classes of
customer. We have residential, harbor,
[33:51] commercial, industrial, um residential,
commercial, kind of the bulk of the
[33:55] customers. Um
each of the customer classes have a
[34:00] fixed monthly charge um which is um
discharge per month. uh a usage charge
[34:06] which is based on volume and it's a per
kilowatt hour charge and then our
[34:11] commercial industrial customers that are
larger and actually have demand meters
[34:15] also have a demand charge which is a
dollar per kilowatt. Um so what we did
[34:22] here is we used um kind of the capital
planning scenario three which is the 8%
[34:29] increase of that level of revenue um and
looked at a couple of options on on rate
[34:34] design.
[34:38] So the objectives that we we tried to
keep in focus with the right design was
[34:44] you know to do um
reasonable adjustments that you know
[34:49] achieved the financial sufficiency goals
tried to look at it through a lens
[34:55] trying to mitigate some effects on the
lower volume [clears throat]
[34:59] and typical to some extent residential
customers. Um so that was one of the
[35:03] lenses we looked at. Um we were looking
at kind of the balance of the fixed
[35:07] versus the volutric rev recovery um and
just really looking at options to um not
[35:14] overly complicate the structure because
I think that um sort of not the the
[35:20] sense that we wanted to get increasingly
complicated but um to try to optimize it
[35:27] um preserve the simplicity and to some
extent you know balance where we could
[35:32] but recognizing there's not a silver
bullet here. when you have to raise
[35:35] additional revenue, there's certain
things we can do. Um, but um there's
[35:41] still the need to to create the same
amount of revenue.
[35:47] So, one of the things that we did in
this in the study was really develop
[35:54] consumption profile for residential
customers. So, bear with me on this. And
[35:58] this is kind of a lot to unpack, but so
what what this chart is, and it it looks
[36:03] like a lot, but it's really not. Um it's
relatively simple at the end of the day.
[36:09] It's basically a histogram. So it's
looking at we call it a bill frequency.
[36:14] So on the x axis that basically is
levels of consumption. So and it's in
[36:20] kilowatt hours. So it starts at 100
kilowatt hours, 200 kilowatt. I think
[36:24] about monthly consumption. um and kind
of goes all the way up to, you know,
[36:29] north of 2,000 kilowatt hours. Um the y
ais are the number of bills that fall in
[36:36] those different units of consumption. So
it kind of tells you how customers are
[36:41] using power, how much power they're
using on a monthly basis. So some of the
[36:46] important things that we look at on here
because it helps in inform rate design
[36:50] for us. So the two red bars that are
highlighted, those are basically at the
[36:56] median. So the midpoint. So a typical
residential customer at the 50% mark,
[37:01] these are about 850 kilwatt hours per
month um on average. Um and that's sort
[37:08] of the midpoint. Um if you look to so
everything to the left, that's going to
[37:13] be lower. everything to the right and
you kind of have a long tail out there
[37:17] to the right because you get a you know
some customers use quite a bit more than
[37:20] that but it gets less frequent as you go
out. Does that that make sense? This is
[37:24] always kind of a hard chart but it's
something that we do look at in the in
[37:28] the rate design world because it helps
inform things. Um, and one of the things
[37:33] it really helps inform and one of the
opportunities we potentially see here,
[37:39] um, is is looking at some tiering
potentially with with residential
[37:43] customers. So
this first rate design option we looked
[37:47] at um there's a couple different
elements kind of walk you through it but
[37:52] um basically what we're trying to kind
of focus on here is
[37:58] the one for residential is kind of when
we look at the customer charge that's
[38:02] the fixed charge first it's currently
set at 8.95 you could keep it at 8.95 so
[38:08] it would change the fixed charge
residential
[38:11] however we would increase the fixed
charges is for harbor, commercial,
[38:15] industrial. Quite frankly, all of the
fixed charges here are pretty low.
[38:19] They're lower than we normally see, you
know, even residential. Um, if you look
[38:24] at kind of cost of service, um, rates
with residential, you usually have a
[38:28] fixed rate between 20 and $30 typically.
So, our fixed charges are low, but I
[38:32] think that's more of an intentional to
try to keep the impacts down in
[38:36] residential as much as possible. So um
you know not recommending we change that
[38:41] increasing the harbor industrial sum but
the bigger change here is um so right
[38:47] now the residential it's a what we call
a uniform um energy charge. So it's the
[38:53] same unit cost per kilowatt hour. What
we'd introduce here is a tier. So we
[38:58] have basically a two-tier structure and
the the tiers would be set remember I
[39:04] showed you the chart the median was
about 850 kilwatt hours per month. So we
[39:09] would set tier one at between usage
between zero and 850 kilwatt hours and
[39:14] that would actually have a lower rate
associated with it and then the rate
[39:18] would be higher above 850 kilowatt
hours. Does that make sense? So it's a
[39:23] two-tiered volutric incline block
structure is what it is. Um and then for
[39:29] kind of the non-residential classes, we
largely um have increases basically a
[39:35] little bit north of the average or
around 8% a little bit more. The focus
[39:39] is really more on residential and trying
to have some segmentation into the the
[39:43] volumetric rate.
So
[39:48] what does that do? So you know when you
when you just raise rates across the
[39:53] board, everybody gets the same
percentage increase. When you change the
[39:57] structure, you impact customers
differently based on how they use the
[40:01] system. So you have to kind of look at
the impacts a little different way. So
[40:07] you sort of break your residential
impacts down. We're showing three
[40:10] different types of residential
customers. So you have a kind of a low
[40:14] volume residential customer and that's
we're showing at 350 kilowatt hours.
[40:18] That's basically when we look at our
bill frequency that's about the 20%
[40:22] mark. about 20% of the bills less or 350
or less. Um, a typical user we're
[40:30] showing at 850 and then a high volume
user we're showing at 2,000. That's
[40:35] about the 90% mark on the bill
frequency. So, let's kind of walk
[40:39] through this and look to the sort of the
right. Um, so a low volume scenario
[40:45] currently pays for that 350 kilowatt
hours $66 per month. Um, well, that
[40:52] would only go up to $57.16
under this scenario, which is about
[40:57] a$110 increase per month or about less
than 2%.
[41:02] Um, the typical customer right now pays
using 850 kilwatt hours pays $123.36
[41:11] that would go up 267
scenario, which is about a little bit
[41:14] north of 2% up to 1260.
Remember, we have to generate the same
[41:20] amount of money. So that means the
higher volume residential customer is
[41:24] going to pay more because they'd be
getting into the second tier. So again,
[41:28] showing a 2,000 kilowatt hour customer,
which is at the 90% mark on our bill
[41:33] frequency. Um well, their bill would go
up. They're paying 27815 right now. It
[41:38] would go up to 305.88,
which is just shy of about less than
[41:43] 10%. Um whereas the other customer
classes um it's a little bit more than
[41:48] average about 8 and a half versus 8%.
Does that make sense in terms of what
[41:54] the tiering would do there?
I understand what tiered system is
[41:59] doing. Um
so let's put it in the context of gas.
[42:06] The saving to the customer as regard to
usage is whether he buys a economy car,
[42:12] he buys a huge pick and not necessarily
in the price per gallon for gas
[42:20] because you still have to cover your
cost associated with that. So, um I'm
[42:27] not sure that I understand the intent
here, but I don't know if that's in the
[42:32] best interest. uh
[clears throat] so that the the standard
[42:39] residential customer
>> is going to pay the extra cost for the
[42:44] person that gives you the best power.
So there's pros and cons clearly to
[42:51] doing this and you've kind of you know
peed on one of the cons is that you know
[42:55] again a lot of these costs are fixed. Um
and while we do have a uniform rate
[43:02] right now so if someone uses less they
do pay less but it's not a different
[43:07] unit cost. This would be introducing a
different unit cost. So it's more of an
[43:11] incentive to be really efficient um
because there is a lower unit cost if
[43:16] they use less. So, you're right. There's
pros and cons. You have to weigh, but
[43:19] the pro is that you're keeping the even
for a typical customer, they'll be
[43:24] paying
kind of a below average increase. You're
[43:28] picking up that from a person that uses
more. But yeah, it's pros and cons.
[43:32] Correct.
[43:35] » Not necessarily a question, but just
kind of a thought on that. Another thing
[43:40] I it seems it almost seems a little
counterintuitive because it's almost
[43:44] like you're as you just said you're
incentivizing the customer to use less
[43:49] power when
from the business point you want them to
[43:53] use more power. So I don't know I I
don't envy your job here. I know there's
[43:58] no easy answer but
>> it just seems a little backwards in that
[44:03] sense.
>> Yeah, it's um you're right. It it is in
[44:08] that way. Um and it kind of sometimes
efficiencies again you think
[44:15] in places that are really capacity
constrained. I mean if you're more
[44:18] efficient then you kind of push off the
need to h add more capacity which can
[44:22] have some economic benefits. Um but it
sometimes takes longer to see the
[44:28] immediate you're right you're having
someone incentivize you use less your
[44:31] product. Um so it's it's a it's a
balancing act. So the savings sometimes
[44:35] are longer term with not having to have
as much capacity in your system because
[44:39] people are using the service more
efficiently.
[44:44] » Do these rate studies talk about like a
diesel charge and like like how does if
[44:50] we have to run a generator, how does
that
[44:52] » So we have we have a diesel search
charge right now that's already in the
[44:56] ordinance um that can be used. I don't
know if staff knows the last time we
[45:00] actually used it, but it is in the
ordinance if we have to run that.
[45:04] » I think it's been
>> 1819.
[45:09] » Yeah. So that does exist. I didn't point
it out because it but it is actually in
[45:13] the race structure. So if that happens,
there is a mechanism to to recover that
[45:17] cost.
[45:20] » So this rate structure is kind of based
on the fact that we have
[45:26] limited low growth.
So, as we look at what the state of
[45:30] Alaska is doing in regards to providing
funds for heat pumps, we may have more
[45:36] people jumping off of oil and going to
heat pump
[45:40] » if the rate doesn't go too high.
[clears throat]
[45:42] » Um, and plus we can attract bigger is
going to be doing more and more work and
[45:47] moving more and more power
>> to that system. And plus, there's
[45:51] » been talk about data centers and and
other
[45:54] » it's no longer bigger
>> or Jags. [laughter]
[45:57] as big as the French government.
[46:01] » You're right. We we haven't assumed a
lot of low growth. So, if that were to
[46:05] happen, obviously that helps. Yeah.
>> Um certainly that changes the calculus,
[46:09] but um we just we
>> our projections we try to be reasonably
[46:15] conservative is what I unless we know of
something specifically then, you know,
[46:19] certainly could be factored in. I mean,
if this is a 5-year forecast, things can
[46:23] change. Certainly, if something shifts
and there is additional demand coming,
[46:27] well, yeah, we want to factor that in
because that would help. Um, but we
[46:31] haven't assumed into that.
>> Yeah.
[46:34] » Yeah.
[46:38] » I'm wondering why we why the residential
high volume user percentage increase
[46:45] would be higher than per say the rest of
it and not more in line with it. I
[46:49] understand we're offsetting the cost,
but um is is there a particular reason
[46:56] why you leave that higher and have the
other increases lower? Is there kind of
[47:01] back information?
>> Yeah, it's sort of a a byproduct of the
[47:05] inclining block structure. So, you're
kind of pushing more of that cost
[47:09] recovery on to the higher volume user.
So, that unit cost when you trip over
[47:14] into the next tier is higher. So someone
that's in this example that's using, you
[47:19] know, 2,000 kilowatt hours a month,
which is, you know, more than double the
[47:23] median, they pay more and it's a higher
unit cost. So that's why it's above
[47:28] average increase. Um, so it's it's just
part of the structure. Um, again, it's
[47:34] also part of that um incentive mechanism
to more efficient. If you're in the
[47:39] first tier, you're going to pay less.
But but that's the terms of the math.
[47:43] It's just a much higher unit cost. get
above that level. So that's why it's not
[47:49] because again this whole is all revenue
neutral. So effectively what we're doing
[47:55] here it's looking at kind of the
residential class as a whole and we're
[47:58] making intraclass changes. So in this
scenario kind of a lower volume and a
[48:04] typical benefit but the higher volume
pays more because you got to get the
[48:09] same amount of money.
So it's just that's the difference in
[48:13] just doing something uh proc
and Jack
[48:18] » um I'm figuring that the incentive of
getting people to be more conservative
[48:24] is not putting taxing the system which
then is where why we're where we're at
[48:30] now in the need of fixing and upgrading
and cost of adding.
[48:38] » Yeah. I mean I think
>> you're gonna have to do it anyway.
[48:41] » Yeah. you know, it's um I think it's
when I think about the conservation, I
[48:45] think it's more of like capacity and
being able to push that off. I mean, the
[48:50] fact is the system needs a lot of repair
placement. It's
[48:54] not going to change.
>> But down the road, if it's um still in
[48:58] place and you have replaced those items,
then you're looking at um keeping the
[49:04] loads down or you know taxing the system
to the point where you're back where you
[49:10] were.
Yeah, I mean I think if we're more
[49:13] efficient then again it's just it's
staving off the next increments of
[49:17] capacity and having that t that's the
biggest benefit
[49:21] but there's [clears throat] always going
to be repair and replacement of assets.
[49:27] » Jack,
>> thanks your honor. I was just curious
[49:29] about um the distinction for the harbor.
Just I I understand and appreciate the
[49:35] » the types of users within the
residential, but it's you I'm sure
[49:39] you've been made aware of the fact that
within the harbor there are a number of
[49:42] folks that are on the boards and you
know they consider themselves
[49:45] residential in that respect.
>> So I just wonder why that distinction
[49:48] was made.
>> So the harbor is a current we didn't it
[49:52] already exists. So it's a current class
of customers. So, um, whether or not
[49:56] that could be folded into residential, I
suppose, is an option. It's always been
[50:00] kind of, um, broken out and they do
actually pay a little bit higher rate if
[50:04] you look at their average cost. Um,
uh, you know, again, if someone was
[50:09] living there full-time, I think they
could look more like a residential
[50:13] customer possibly. Um, I think it's
probably a mix, I would imagine, in
[50:16] terms of how people use, you know, so I
think that's why it was designated as
[50:20] its own class because it's a little bit
probably for a mix. being there kind of
[50:25] being full-time versus just having kind
of hooking up and just having you know
[50:30] they're both there. So um we didn't that
already existed so we didn't establish
[50:35] the Harvard class we just were looking
at at the current class.
[50:39] » Thanks.
>> Yeah. Yeah. chair just
[50:45] you know we are a seasonal town
so the harbor commercial industrial has
[50:51] they something been taken into account
where they could be adjusted higher
[50:55] during the summer and lower during the
winter seasons
[50:59] » a seasonal rate um
it's something that can be done and
[51:05] looked at um it's sort of interesting um
when you look at how those customers use
[51:14] the system. So like the residential
customers um we're winter peaking
[51:19] utility is electric heat load. So the
system really peaks in winter um versus
[51:26] a lot of the industrial customers
actually peak more
[51:30] August
[51:33] and are really running. Um you
potentially could look at a seasonal
[51:38] structure there. um it may be something
we could look into. Um you don't see it
[51:43] as often with electric system, but in
seasonal communities is possible. Um so
[51:48] it might shift the calculus a little
bit. Um but but overall that class like
[51:53] the industrial class um there's not that
many customers in it. Um they're larger
[51:58] customers, but like from the total
amount of revenue that we generate, the
[52:02] biggest the bulk of the revenue comes
from residential and commercial. So um
[52:07] you know the biggest seasonality in
terms of using is in that industrial in
[52:12] terms of how they use the service but
it's not a huge class and but it's
[52:16] something we could take a look at.
>> Yeah.
[52:19] » Yeah.
>> I mean my thinking here I think
[52:22] everybody's thinking is I mean the
burden should be more on the industrial
[52:27] commercial and harbor rather than
residential. I really just made a
[52:31] statement that most of the revenue comes
from the residential class. I don't know
[52:37] we need to look at this adjustment here.
>> Yeah. So the challenge is there um
[52:45] when you look at kind of cost of service
and again we're the data we had
[52:50] available we couldn't take a extremely
deep dive into it but but we we do know
[52:54] that
um the residential customer class peaks
[53:01] the system more so we call that load
factor because they have heating load
[53:05] and so in the winter their residential
customers are actually more inefficient
[53:11] user of the service because they peak
because he load most say the commercial
[53:17] industrial class it's not as much so the
reality is um residential customers are
[53:23] subsidized to some extent from other
classes so I think it's a balancing act
[53:28] um you know I think you have to be be
careful about how much cost you
[53:33] necessarily push on some of those
customers um and again some of the
[53:36] industries are are big there's economic
development considerations I think as
[53:40] well. Um but from a cost of service
standpoint um again residential
[53:46] and it's pretty common in public systems
tends to be subsidized. So we're trying
[53:50] to balance that. That's why we didn't
show an option where it was you know a
[53:53] lot higher increases there.
>> Okay. Thank you.
[53:58] » So I see that we got an industrial rate
structure.
[54:04] You got a a standard energy cost of.1291
and then the demand and charge. So up to
[54:12] 25 kilowatt I guess that's saying
that.1291
[54:17] is that the rate for that and then if
they go over the 25 kilowatt it goes to
[54:23] $441.
>> Mhm. [clears throat]
[54:28] » Yeah. That's the current demand charge.
Yeah.
[54:30] » That's the current demand charge. Um
well it did we did show an increase to
[54:34] it of about 8%. Um but for those
customers that have demand meters that
[54:40] pay yeah they have
>> so and is that in a in a month or so if
[54:45] they go over 25 kilowatts in a month and
demand charge kicks in for the rest of
[54:50] the month
[54:55] and that 25 kilowatt you know if that's
high or low or standard
[55:01] man rate
>> um for commercial pretty standard for
[55:05] industrial is probably pretty low, but
that to have demand charges for the very
[55:09] customers is pretty common.
>> Okay.
[55:10] » Um and the reason that you do that is
because um typically commercial and
[55:16] industrial customers,
particularly industrial, they're using
[55:21] power for process um and and they're
different. So um whereas like
[55:28] residential customers, they tend to we
call it more homogeneous. they sort of
[55:31] use power similarly here particularly
because a lot of the peak load is from
[55:35] heating. So demand charges just a way to
distribute kind of capacity related
[55:43] costs more individually based on the
customer's actual heat demand. Um so you
[55:50] they're pretty common for bigger
customers. Now some systems are you know
[55:54] moving towards having demand meters on
the residential. we don't have that
[55:58] capability right now, but that's when
you start seeing some of the more unique
[56:02] structures that are coming out um
related to electric vehicles and things
[56:08] like that where you know you want to
have more precise information about um
[56:12] peak demand but um but really
[clears throat]
[56:16] generally right now it's do larger
customers have
[56:18] » Yeah, we've had that conversation and
people turned over to electric and heat.
[56:25] » Sure. And it shows that
the usage in an individual resident went
[56:32] up dramatically when they did that
>> and and it raised to a point where we
[56:37] actually had a conversation whether
there should be a demand rate after a
[56:41] certain
usage.
[56:44] » It may be something we eventually could
get to when we have the metering
[56:47] capability at that level. We just don't
have it right now.
[56:51] » Okay.
and and just just a small item, but that
[56:57] 8.95 uh monthly charge on it is really
for the lease and rent of the meter. I
[57:02] would imag
>> Yeah. I mean, basically it's, you know,
[57:07] kind of basic customer service billing
and some of the metering costs in there.
[57:12] That's really all
>> and it's not going to make a big
[57:17] different budgetary wise, but I'm seeing
that that cost is more realistically
[57:22] around $10 or more in regards to service
we're providing because we've gone from
[57:28] anog to digital only.
>> Yeah, the fixed charges here are pretty
[57:32] low.
>> They're real low. Yeah.
[57:34] » So, we need to adjust those as we go
through the more real.
[57:37] » I think going forward that would be one
thing I would probably think about.
[57:41] Again, I think the rate design options
we were looking at right now really
[57:46] mitigate residential impact. So the more
you raise that
[57:50] resilience, so it becomes a greater
portion of their bill. Um but again cost
[57:55] of service for a fix is it's usually
between about 20 30 bucks
[58:01] or really low.
>> Again, it's just it's sort of a
[58:05] philosophical, you know, do you want to
kind of do that? And there's pros and
[58:10] cons.
So, what I'm reading in here a little
[58:13] bit in regards to your presentation, and
I hear you with the council meeting,
[58:17] we've had a a concern about the impact
of rates on low income, seniors, that
[58:24] type of stuff. And so, I would imagine
the tier rate was set into place so
[58:29] those individuals could have
a lesser rate structure to support their
[58:36] lower incomes, other fixed income type.
That was great.
[58:41] » Yeah, definitely one. Thanks for
thinking about
[58:43] » Thank you.
>> Yeah, Charlie,
[58:46] » uh just one question. So, uh was there
consideration to the possibility of a
[58:53] like how you talk about the two-tier
residential system when you hit certain
[58:57] amount then it goes up more. Was that I
guess I'm curious how come that exact uh
[59:04] strategy wasn't considered on the on the
commercial industrial?
[59:08] » Yeah. So the challenge with doing that
on commercial industrial goes back to um
[59:13] so residential customers like we did
that nice build frequency and you can
[59:17] kind of see how they're using commercial
they're all over the place. So setting
[59:23] tiers is really difficult. Um and that's
honestly why sometimes you use demand
[59:29] charges because demand charges are kind
of doing the same thing at least for a
[59:33] piece of the the bill because that's
more individualized. So it
[59:38] there's all different types of
commercial customers. So setting the
[59:40] tier and you could you could get really
you could be really wrong if you did
[59:44] that incorrectly. So that's why you just
don't see it on commercial but you see
[59:48] demand charges because that's a way to
kind of get at the same thing if that
[59:53] makes sense. Um it's just a different
way of doing it.
[59:57] » Gota
[1:00:03] Okay. Um
>> [clears throat]
[1:00:06] » So
there was another option that we we did
[1:00:10] look at as well and again it's it's very
similar to
[1:00:16] but it does put a little bit more
emphasis um Mr. what you just said about
[1:00:21] the really low low volume
sensitivity to that and this is
[1:00:27] essentially a three- tier structure here
where uh we added and almost call this
[1:00:32] kind of like a of a lifeline concept
where we put in a tier at the 350 KW
[1:00:39] level which is a 20% mark and that carry
a lower and we have 350 to 850 and above
[1:00:46] 850 so it's in three tier
to everything else pretty much hold
[1:00:51] changes we recommended.
The difference in this one would be more
[1:00:57] sensitivity to the really low volume
customer. So you can see in this
[1:01:01] situation that bill actually goes down
for 350
[1:01:07] user
but the typical would come up some. It's
[1:01:10] still below the average 8%. It's about
4.6%. Um but the higher volume user
[1:01:17] would would be higher about 14%. So it's
just one more layer deeper three tiers I
[1:01:23] think. Um you know a lot of our clients
you two and three tier are pretty
[1:01:28] common. Um not really we don't see but
we just kind of put that in as another
[1:01:33] option
for consideration.
[1:01:39] And then kind of on this last slide
here, I kind of see them next to each
[1:01:46] other. Sometimes it's easy to see stuff
better.
[1:01:51] This kind of shows you the the current
bill and what it would look like across
[1:01:55] the board, what it would look like under
those two options.
[1:02:12] » [laughter]
>> Go ahead. Yeah.
[1:02:15] » Um,
kind of to piggyback on your senior
[1:02:21] citizens and, you know, low income, you
know, they typically I'm what I'm
[1:02:25] concerned about with the grades of like
the high volume versus the low volume is
[1:02:30] it's based on their house. Like is it
insulated? Is it not? Is it old? Is it
[1:02:34] not? Can they afford new windows? Can
they not? If it's a senior, have they
[1:02:38] lived in the home for, you know, 72
years of their life? And it's been
[1:02:43] probably built a hundred years ago. And
so really,
[1:02:48] I I worry that um as the older homes get
more inefficient and tends to house the
[1:02:54] senior in it versus the newer home,
we're kind of then punishing
[1:02:59] them for heating their home. And I I
just worry about what that is because as
[1:03:03] we all know, I mean, houses aren't the
best
[1:03:08] around here. And I So I worry about that
with low income and and fixed income
[1:03:13] seniors and and things like that. with
the rate structures that I'm seeing. I
[1:03:18] guess my
my hope through this rate study was to
[1:03:23] see
um relief for all residential
[1:03:28] um and more put that on the commercial
industrial side because they can pass it
[1:03:33] along to their customers where residents
can't. And I understand the residents
[1:03:37] are using more, but they're also putting
up with a lot of commercial business
[1:03:41] here um as giving up the town for the
seasonal um businesses to come in. And
[1:03:46] so I guess I guess my hope was to kind
of see a little bit more of a shift off
[1:03:50] the back of the residentials in general,
not just the low volume user options
[1:03:56] here. Um and kind of have it on somebody
who could pass it on versus not being
[1:04:02] able to pass it on.
[1:04:06] Lacy, do you know if since we've went to
a rural status whether low income
[1:04:13] household or uh
if PCE is available to them? It is
[1:04:21] so they can apply if they if they're a
low income family to get helpful break.
[1:04:26] That's correct.
>> Yeah. So there are things in place to
[1:04:29] lower their actual cost through PC. I
can elaborate a little bit
[1:04:34] » if you would.
>> So the tribe actually um has a energy
[1:04:39] efficiency program between Clinket and
Hina and KIC. Um a lot of the houses are
[1:04:46] being brought up to be um depending on
the um home and um the income home. Um
[1:04:54] they just need to apply. I know of
several that have been done recently. I
[1:04:59] know that um uh for other outside
non-native uh groups throughout the I
[1:05:06] think in the last 20 years because uh my
grandmother's house was done I want to
[1:05:11] say in 200
one they replaced all the windows. Um,
[1:05:18] we're talking about 101 year old house
that's been um, they sprayed in
[1:05:24] insulation.
Um, windows replaced.
[1:05:29] I mean, granted, I just replaced the
front windows on it myself, but um, for
[1:05:34] the most part, a lot of the those
programs are still available. Um, state
[1:05:39] programs
um, and then tribal programs that are
[1:05:43] doing it. And then they're also um
implementing a heat pump program to put
[1:05:48] in heat pumps. Um from personal
experience, I put mine in um which is I
[1:05:55] put it in in August. It got in um that
one cold snap. I just finally got the
[1:06:01] bill on that and it was um it was
about 346 I paid in electric heat versus
[1:06:12] what I would have paid in oil heat which
would have been close to $600.
[1:06:18] So I cut my costs in half and the house
still isn't I mean it's 101y old house.
[1:06:25] Um it's it's a lot more insulated with
new but there are a lot there's a lot of
[1:06:29] programs still out there.
>> Yeah. When we talk about low income it's
[1:06:32] a cost of energy that includes
[clears throat] heating.
[1:06:35] » Yeah.
>> Yeah.
[1:06:37] » And then there's also the energy
assistance like people apply.
[1:06:41] » So there are options for
>> Yes.
[1:06:45] » Uh
is this kind of a time to brainstorm or
[1:06:50] am I jumping the gun? I mean to Okay.
Well, what Abby said kind of segueed
[1:06:56] into something I was thinking about
earlier and it's funny when Jay asked
[1:06:59] about a seasonal rate because uh and as
you said, I think that's probably not
[1:07:04] something you see too often, but given
our unique extreme seasonal nature. Uh
[1:07:11] it got me thinking a little
even on the residential side. I mean,
[1:07:17] everyone knows I we don't want to raise
rates at all, but obviously we've got to
[1:07:21] do something. So, I'm just wondering
even on the residential side if we did a
[1:07:27] seasonal increase [clears throat] in the
summer, which I understand is not the
[1:07:31] peak season for electric use
residentially, but I'm curious how many
[1:07:36] more uh you know, if you think about all
the bunk houses that have gone up with
[1:07:42] that are empty in the winter, full in
the summer. I mean, I think there could
[1:07:46] be a somewhat significant uh opportunity
there maybe to and granted it's going to
[1:07:52] be just like what people tell us about
Madison. You go down to Madison and the
[1:07:55] locals pay it too. The locals are going
to have to pay it too, but it's just
[1:07:59] something that I think maybe we ought to
look into a little. And I'm curious too
[1:08:03] if obviously no one has this on hand,
but how many more uh residential
[1:08:08] meters are up during the summer
[clears throat] when all those seasonal
[1:08:12] people are here?
because I think there'd be some some
[1:08:16] money to have there.
>> Yeah. U on on Riley's thought there, uh
[1:08:22] I forget the term you used. Was it a was
it a use charge for industrial? It was
[1:08:26] the charge that was used to kind of
counter since a tiered structure isn't
[1:08:29] really [clears throat] demand charge. So
I wonder if something like something
[1:08:33] like the bunk houses in particular,
which are associated with industry,
[1:08:36] that's where the demand charge might
come in really handy because the demand
[1:08:39] is really going to be placed in the
summertime. So you know if that demand
[1:08:42] charge is in place when that bunk house
is you know unoccupied in the winter
[1:08:45] obviously it's not consuming that power
summertime when it's occupied again that
[1:08:49] demand charges in place and we recoup
some of the revenue in that way just
[1:08:53] thought
>> on that note who then pays for the
[1:08:57] demand meters to go in that we don't
have currently so are we increasing our
[1:09:02] costs of maintenance and and things or
is that passed on
[1:09:07] you know to the customer I don't know
this first time I'm hearing about the
[1:09:10] demand thing. So, I'm truly don't know.
>> Go ahead. Go ahead,
[1:09:13] » your honor. And I'm I'm gonna rely on
Raph Talis and maybe even our electric
[1:09:17] division manager. So, as Bart mentioned,
we don't have the capabilities to do
[1:09:21] demand metering right now. So, I don't
if we're looking at something on the
[1:09:25] residential side or commercial side, I
don't think we're going to have the
[1:09:29] metering capability. I think you'd have
to put a fee structure in place like the
[1:09:34] demand charge that we have for
industrial and commercial. It would
[1:09:37] obviously be a much lesser threshold,
not 25 kilowatts, it would be a thousand
[1:09:42] or something something much lower to
essentially achieve the same thing if
[1:09:46] you're wanting to target um residents or
businesses that really seem to have more
[1:09:52] activity um in the summer season because
they're associated with industry. I
[1:09:57] think that's might be how you
>> Yeah, I think honestly the seasonal
[1:10:02] option as far as what we could actually
feasibly do because again not every
[1:10:06] customer has so that probably something
we could look at see how that might
[1:10:10] shift things a little bit um because we
have the monthly data to be able to look
[1:10:14] at that but the demands you catch up
with technology to be able to do it just
[1:10:18] don't have that
>> and and I'm not too thrilled about doing
[1:10:24] increased seating charge I think we want
to be business business friendly. We're
[1:10:28] going to get more revenue because the
plates are occupied and our use power
[1:10:33] and I think that is the general intent
of what we wanted to do. Um
[1:10:41] and quite frankly some of the guys if we
rate it too high we're going to force
[1:10:44] them into efficiencies and we'll
probably get less bucks.
[1:10:47] » That's the again it's power and bigger
customers. It's a balancing act. You
[1:10:53] know, you have to be a little bit
careful there, I think, because
[1:10:58] » I know when some of the canries had
diesel generation, if we had raised our
[1:11:04] power to an extent to where it probably
cheaper for them to their own power,
[1:11:08] they'd kill off
>> horses. That's right.
[1:11:10] » Abby, did you have a question?
[1:11:16] » Not um trying to figure out the best way
to
[1:11:20] give me a moment. I just want to phrase
that correctly.
[1:11:26] » All right.
>> Um Okay. Well, I guess um the sake of
[1:11:30] time, maybe we'll keep the train moving.
That's okay.
[1:11:33] » Yeah, that's good.
>> All right. So, we're going to shift
[1:11:37] gears and and talk solid ways now. That
looks okay. Yep.
[1:11:42] Can
>> we take a small for?
[1:11:44] » Sure. Yeah.
[1:18:42] Everybody back? We are.
>> Oh, no.
[1:18:47] [laughter]
[1:18:50] » We'll come back to work and we're going
to continue on with the discussion in
[1:18:53] regard to [clears throat]
thank you guys for your big
[1:18:58] Yeah, good. To get on to the solid
weight side of things, want to start
[1:19:02] with kind of giving a service overview.
Um, we know you probably are familiar
[1:19:08] with the system, but there's really
three key components to the solid waste
[1:19:13] structure. We had the reser mic a little
bit.
[1:19:17] [laughter]
>> Is this better?
[1:19:19] » You can bring it closer to you.
>> Thank you.
[1:19:22] » Sorry, my seat's really high. [laughter]
>> So, we have three key components. So we
[1:19:27] have the residential collection. We have
commercial collection which includes um
[1:19:32] rental dumpsters. We have our disposal
operations which is really our landfill
[1:19:37] which only with the engineering report
because we have about 25 lers of
[1:19:43] remaining life left and we only accept
non-putressful waste at this landfill.
[1:19:48] Everything else is sent via our long
haul contract um down to the state of
[1:19:54] Washington. So overall, the solid waste
stemmed pet does offer a really high
[1:19:59] level of service to your customers
throughout the year.
[1:20:04] And with that being said, so this also
breaks down slide breaks down what our
[1:20:08] existing rate structure is. So we have
our residential rates which are really
[1:20:13] driven by the collection rate per month
as well as our area wide disposal fees.
[1:20:19] The solid waste credit has to do with
our multif family customers which backs
[1:20:23] off of which backs off their residential
um bill. Then we have our business
[1:20:28] collection services which has is for our
commercial customers. There's a flat
[1:20:34] rate minimum charge in monthly container
rentals but otherwise the fee is charged
[1:20:40] by the amount of waste generated at the
curb. Um and then on the disposal side
[1:20:46] we have our tipping fees. Um and then
for both our we admit some minimum
[1:20:51] charges suffered household hazard
displaced. Um but it's a pretty robust
[1:20:57] offering and um and the rate structure
that follows
[1:21:04] with that with that rate structure and
with the background of our high level of
[1:21:07] service. It's important to note that
we've all heard that inflation has been
[1:21:11] increasing at rapid rates and we we keep
hearing that every time we turn this but
[1:21:17] it's important to note that CPI while it
has increased so much the consumer price
[1:21:23] index the garbage and trash collection
index which is a component of CPI which
[1:21:28] measures what our what the garbage and
trash bills are doing across the United
[1:21:33] States which components in components in
this include are driving it are what are
[1:21:38] our labor costs doing to service our
garbage and trash like with our with our
[1:21:42] drivers um with like the CDL licenses
with the vehicle cost um kind of driven
[1:21:48] by the NR index this the garbage and
trash collection index is actually go is
[1:21:55] actually higher um and increasing at a
higher rate than what CPI is. So the
[1:22:00] chart on the left hand side of the
screen or on your sheet uh breaks that
[1:22:05] down. So the blue line is that CPI that
I was talking about, but the red line is
[1:22:10] showing where the garbage how the
garbage dispatch index is is averaging
[1:22:14] about 12% higher. And you can see that
that's really driven back from really
[1:22:18] starts to separate from 2018 and it's
only continuing to grow now that we're
[1:22:23] in 2025 2026.
And historically, we've seen that that
[1:22:28] CPI is normally about a year year or two
ahead of where the garbage and trash
[1:22:33] collection is because it's a it's a comp
it's really a circular effect. But so
[1:22:39] where we're starting to hear like news
saying like, okay, inflation might be
[1:22:42] slowing, the garbage to trash index is
still a couple years behind that. So
[1:22:46] we're going to see that tren that red
line, it's going to continue to trend
[1:22:50] upwards before it starts to even out.
like we can see, okay, the blue line
[1:22:56] starts to even starts to kind of like
take a little bit of a curve. That
[1:23:00] garbage and trash index is really
projected to continue that um that
[1:23:04] incline for at least a couple more years
before we might see it flat out. And so
[1:23:10] why is that important? So if you look at
the right hand side and it's we're
[1:23:14] showing a historical specifically
residential customer collection bill um
[1:23:20] in comparison to if what has been
adopted in comparison to what if we
[1:23:26] adopt what if we had increased our rates
by inflation. And so we started this um
[1:23:32] back in 2020, there was an increase
between um 22 and 23. Um but heading
[1:23:39] into 2026 that $1160,
we're really about $3 behind where we
[1:23:45] would be if we've been increasing our
rates by inflation. And so and that's
[1:23:51] really important because our cost of
services continue to grow. And we're
[1:23:55] going to get into that a little bit more
as I talk about the financial plan.
[1:24:01] And so looking at our financial plan in
the elements kind of like Bart talked
[1:24:05] about um they had the the road map on
electric side. Um this is just another
[1:24:10] way to look at it is our our whole
process of building this model. It's a
[1:24:14] very data driven process. So your staff
was really helpful in working with us to
[1:24:19] get all this data. We're very grateful
to them. We went through the process of
[1:24:22] looking at historical building
statistics and different historical
[1:24:26] financial data. They looked at your
current budget and financial plan, your
[1:24:30] capital improvement plan, and what those
cycles looks like, all with the goal of
[1:24:34] reaching revenue sufficiency. And so
I'll talk about that as we continue on,
[1:24:39] but the goal is really to kind of keep
our balance be balanced, right? So we
[1:24:44] have our green we have our green blocks
which is our revenues and for the solid
[1:24:50] waste system that's purely driven by our
collection charges and our t and our
[1:24:55] really our disposal or tipping fees and
we have some um small portion of
[1:25:00] miscellaneous fees. Really our two key
charges are going to be the collection
[1:25:03] and the disposal uh tipping fees. And
then on the opposite side with our red
[1:25:09] boxes we're looking at what our revenue
requirements are. What do our what do
[1:25:13] our green boxes need to do to balance
out the red? And so on the red on the
[1:25:17] red bars, we have our operating
expenses. We have our capital
[1:25:20] improvement, which includes our our
equipment, our um our vehicles, and then
[1:25:27] we also have our reserves and our
landfill closure. Like I mentioned
[1:25:31] previously, there's only about estimated
about 25 years of your landfills
[1:25:38] remaining capac life remaining capacity
left. And so it's important to kind of
[1:25:42] look at okay outside of what our reserve
policies are or making sure that we have
[1:25:48] enough to cover our operations and
maintenance expenses in like in any kind
[1:25:52] of rain day activities that we also have
enough money set aside for our landfill
[1:25:57] closure because eventually we won't be
able to accept anything at the landfill
[1:26:01] and there will be no source of revenue
to come in um that will be able to help
[1:26:05] offset those costs because even when we
close the landfill there's still a cost
[1:26:09] of of maintaining that property and and
continuing the closure um closure method
[1:26:17] as far as what the DBQ uh requires.
So with that in mind with our getting
[1:26:25] into our red boxes on our on and m the
operating expenses. So, we used a
[1:26:29] combination of the 2025 and 2026 budget
as our baseline for the model. And we
[1:26:36] talked about costs increasing with the
garbage uh the garbage trash mix and
[1:26:40] CPI. Well, for the 2025 budget, that was
a 12% increase over our 2024 cost. And
[1:26:48] so, the chart on the right hand side
shows you a bit of a breakdown of what
[1:26:52] the operating expenses are for uh for
the solid waste fund. And the largest
[1:26:57] component is your contractual services.
And it's about 37% about 37% of that is
[1:27:05] of the entire budget is related to the
contract services. And that is mainly
[1:27:10] driven by your longhaul contract sending
the waste down and out of state. This is
[1:27:16] now followed by labor at 32%. So our and
then our inner fund transfers which is
[1:27:22] like which is our billing which is like
our financial admin really like our o
[1:27:26] some of overhead costs and then some
minor capital outlay. And so for the
[1:27:32] forecast period what we did was we took
the budget and when we were working we
[1:27:37] modeled our contract and contractual
services based off of our projection of
[1:27:42] tonnages that were coming in as well as
the contract rates that are um that are
[1:27:47] currently in effect. But then we used a
range of escalation factors um for the
[1:27:54] for the majority between three to five
percent um based off of different CPI
[1:27:59] indices looking at on a line item detail
looking at what what our costs can be.
[1:28:04] It is important to note for later we do
know that there is a cola increase that
[1:28:08] has been um budgeted that this um our
plan does include that. So that's a
[1:28:14] little bit um it's a little bit higher
than the our the range of the 3 to 5%.
[1:28:19] Um but overall our growth is projected
about 4.7%
[1:28:24] and our operating expenses from um from
this year across to 2030.
[1:28:32] Continuing on like with our red bars, um
the next thing that we were looking at
[1:28:38] on our revenue requirements was our
capital improvement. We keep talking
[1:28:43] about hook costs have gone up. The
construction cost and that's the same
[1:28:46] thing since 2020. Um the industy has
gone up about 21%. And you've seen that
[1:28:52] on the electric side. We're seeing it in
water. We're also seeing it in solid
[1:28:56] waste. And so the solid waste capital
improvement plan is really made up of
[1:29:02] our transfer station equipment
replacements. We have some vehicles um
[1:29:06] that are getting that need to be
replaced. It's about over the forecast
[1:29:11] period it's a little over $4 million um
is what we're looking at um over the
[1:29:16] next couple years as on the aggregate
which averages about about $725,000
[1:29:24] per year. And it's important to note
that all of these projects are assumed
[1:29:28] to be cash funded or as we talked on the
electric side that pay go that pay as
[1:29:32] you go capital. So everything on solid
waste we assume to be cash funded and
[1:29:37] there's no outstanding debt on the solid
waste side. Um so we so we did not look
[1:29:41] at any [clears throat] coverage
requirements as far as when we're once
[1:29:45] we get into the reserves we're talking
about those red revenue requirements.
[1:29:54] And so looking at so now we've talked
about a little bit of on the at least
[1:29:58] the first couple of boxes on our red
side for our balance means the revenue
[1:30:02] requirements. Now we're looking at what
our existing revenue are and looking at
[1:30:06] how are we going to balance this all
out. And so what we did was um to
[1:30:12] project what our existing revenues were.
We took our billings the billing
[1:30:16] statistics um from our landfill tonnage
reports um the the tonnage reports that
[1:30:21] go that where the waste is getting now
hauled um down south. And then we looked
[1:30:26] at like our customer billing monthly
reports and we calculated what your
[1:30:31] existing revenues are and then it was a
combination between that as well as what
[1:30:36] your financial statements are. And so
what you can see on the right hand side
[1:30:42] in that financial plan, it breaks down
what the what the bar what what the
[1:30:47] system looks like if we didn't raise any
increase didn't raise our rates and if
[1:30:52] we just let things let things lie. And
so the bars the dark navy greenish bars
[1:30:58] I should say um represent our on& and m
expenses. So, we talked about how there
[1:31:03] was a pretty big increase between 24 and
25 that that's averaging growth about
[1:31:08] 4.7%.
Um, is those dark navy bars. The blue
[1:31:12] bar, the like those bright kind of
electric blue bars is our pay cut. So,
[1:31:16] that was the pay as you go capital.
That's the capital we just talked about
[1:31:20] averaging about $700,000
um per year over $4 million over the
[1:31:26] forecast. And then we have those gray
bars which is our transfer um or
[1:31:31] transfers to reserves. So that goes into
um that goes into our reserves to make
[1:31:36] sure that we are keeping a 180 180day
reserve um OM reserve and then also um
[1:31:43] making deposits for our landfill closure
um liability where we're target we're
[1:31:48] trying to make sure that we have enough
cash balances set aside to target what
[1:31:52] that our ending closure and postclosure
care liabilities are. And so from that
[1:31:58] you can see that our existing revenues
do not cover the uh the need for the
[1:32:04] capital and transfers throughout the
forecast period. And overall that
[1:32:08] shortfall average is about $500,000 a
year. And it's also important to note
[1:32:12] similar on the electric side, we do not
assume any um any customer growth to be
[1:32:17] conservative for the system.
[1:32:21] And so what does that what do we do with
that? And so we looked at when we're
[1:32:27] talking to to to staff and the routine
talked about we need to make sure that
[1:32:33] we know the existing revenues aren't
going to cover. We talked a little bit
[1:32:35] about how that we need to have financial
policies and targets in place. And so I
[1:32:40] mentioned that 180 days of cash on hand
that that's one of that's the target
[1:32:44] that's one of our targets to make sure
that we have about six months of of cash
[1:32:50] set aside in case there's in case
something happens in case there's issues
[1:32:54] at the transfer station, the landfill,
long haul contracts, something something
[1:32:58] goes wrong, anything like that. We want
to make sure that we're able to have
[1:33:01] that liquidity to cover because there
would be nothing worse than having trash
[1:33:06] on the side of the road in high season
and that would affect not only residents
[1:33:10] but also the the tourists coming into
place. We also then I mentioned the
[1:33:16] closure liability target. we only have
about 25 years left of our landfill um
[1:33:21] of our landfill. And so the closure
liability target is really is the cash
[1:33:27] balance is equal to that calculated
closure and postclosure care liability
[1:33:32] um for the current period. So right now
it's about a million dollars is what it
[1:33:37] would take to if we had to shut down the
landfill tomorrow. Obviously that that
[1:33:41] will grow with inflation over time, but
one of the things we had talked about
[1:33:46] was setting aside a closure liability
fund separate. And so where the Soliv
[1:33:52] Fund would then make deposits to to the
closure uh to the closure liability fund
[1:33:58] and where that that would be restricted
um to make sure that we have enough
[1:34:03] money that's set aside um for for that
impending closure and what what that'll
[1:34:10] look like when there's no revenue coming
into that system anymore. And so those
[1:34:14] were our reserve targets. The revenue
sufficiency again we're trying to hit
[1:34:18] we're trying to hit that balance. We
want to make sure that our revenue is
[1:34:22] sufficient to cover our expenses on an
annualized basis. We talked about what
[1:34:26] the short of a shortfall of about
$500,000 per year over the forecast
[1:34:31] period. So we're we're looking we need
to make sure that we're we're recouping
[1:34:35] those expenses. And then the third
component being we talked about the
[1:34:40] capital um solid waste fund does not
have any existing debt and we and the
[1:34:46] goal was expressed that the that we
should fund everything through um
[1:34:50] through payown for that. And so if we
take all that together and we take the
[1:34:55] balance beam what would it take to get
to a revenue sufficient point targeting
[1:35:02] 180 days we get to the financial plan
the reserve balances that are in front
[1:35:06] of you now. So the rate increases are
necessary to meet the financial targets.
[1:35:11] So we'll talk about bills next, but what
this means is we would need an increase
[1:35:16] of 5 and a half% on the disposal side
year-over-year from um starting April 1
[1:35:23] on 2026 and then following January 1st
um a year after through 2030. And then
[1:35:30] for the collection component, we would
want to have a nine and a half percent
[1:35:35] increase followed by 3% thereafter. And
the nine and a half increase part of
[1:35:40] that is has to do with we know that
there was a large disposal a large
[1:35:45] substantial disposal increase that has
just occurred fairly recently. Whereas
[1:35:49] the collection um the collection rates
have lagged have lagged behind um for
[1:35:56] lack of a better term. we hadn't kept
pace with at the same rate as we had for
[1:36:01] the disposal. And so with that plan on
the right hand side, you can see that we
[1:36:06] meet our reserve targets in all years of
the forecast, which is that 180 days, as
[1:36:12] well as we're meeting our PL our
landfill closure liability target.
[1:36:18] And so with the proposed rate increases
that I just mentioned, that five and a
[1:36:22] half percent on disposal, that nine and
a half followed by 3% on the collection
[1:36:27] side, um it this shows what a sample
bill would be. So the first um the first
[1:36:33] section talks about the landfield
tipping fee. That would be about a 12 uh
[1:36:37] $12.82
increase um over the next year. Um our
[1:36:43] residential access fee is about $1.50
per month. And then as far as the
[1:36:48] collection rate um increase, it's a$121
um per month with that nine and a half
[1:36:55] percent. And if we take the blended what
a typical residential bill would look
[1:36:58] like, which would be our collection rate
plus that residential access fee, it
[1:37:03] would it would be about $42.80,
which would equate to about a $2.71
[1:37:10] um cent per month increase.
So, I've talked talked pretty quickly um
[1:37:18] so far, but I do want to take a quick
pause and see if anybody has any
[1:37:22] questions at this point.
[1:37:29] » So, one of the things that wastes do,
they also subsidize any type of
[1:37:34] recycling. They don't have any
um revenue structures to support
[1:37:41] recycling. And I think that in the
upcoming
[1:37:47] fees that we going to probably end up
having to start to charge
[1:37:51] something for commercial car
should probably take something in
[1:37:56] consideration that the other thing I
think that we need to considering rate
[1:38:01] is um
[1:38:06] we have uh
customer
[1:38:11] virtual customers especially that need
everyday services compared to uh weekly
[1:38:20] service or bi-weekly services. And there
should be a rate structure that makes
[1:38:24] for that because in some cases they're
using every square footage for
[1:38:29] commercial space and they don't allow
enough space to accumulate garbage. So,
[1:38:33] we're having to go to that particular
facility every day, which is more
[1:38:38] manpower uh that we're expending than we
would for a weekly or bi-weekly
[1:38:44] inspection.
Um, so those are some of the concerns
[1:38:48] that I have in regards to what we're
doing with the rate structure that we
[1:38:52] have to look at it, make sure that we're
charging equitably. I know in a lot of
[1:38:57] places they also have charges for carry
out. If you're at a long distance from
[1:39:02] the the truck, then it's add manpower to
do that that time and it should be
[1:39:07] compensated for
um
[1:39:13] we all know what we had to pay for a new
hook truck this year was $325,000
[1:39:18] for a vehicle. Garbage trucks are over
200,000.
[1:39:24] I remember when I used my garbage truck
for $65,000.
[1:39:29] So,
>> I'd love to tell you it's going down,
[1:39:32] but we were seeing some invoices like
close to $4 to $500,000
[1:39:37] in some areas.
>> And one of the things I don't see in
[1:39:41] here, I see closure money, but I don't
see when we close this landfill, we got
[1:39:46] to replace it.
And there's no capital
[1:39:51] fund that we're paying into for the
potential of maybe we get away from a
[1:39:56] landfill completely and we ship
everything using an ampad compactor
[1:40:01] or we have to relocate the existing
landfill so that we could continue to
[1:40:06] dispose of our um you know demolition
waste uh
[1:40:13] at a cheaper price than it would cost us
of course to send it off island. And by
[1:40:17] that time the technology be may be such
that we're incinerating or whatever it
[1:40:23] may be going to be in 25 years or we get
into an agreement throughout Southeast
[1:40:29] Alaska that is a combined effort of all
the communities for
[1:40:35] soloutheast
Alaska that could be a cheaper option.
[1:40:40] But I think that um when this landfill
closes out, we're going to have to have
[1:40:46] some funds available to move to the next
step, whatever be. And I don't know how
[1:40:52] we structure that inventory rate or what
we can estimate that cost at, but it's a
[1:40:57] real cost that's going to come to the
city at some point.
[1:41:03] » Yes, Abby. In this proposed rate
increase, did I totally miss like the
[1:41:08] commercial side of the increase or
are we strictly only looking at
[1:41:13] residential income?
>> No, there's commercial in here.
[1:41:16] » It's um we just showed a residential
bill impact just um to look at what that
[1:41:22] would look like. Um the commercial bill
is varied uh based off of the the waste
[1:41:27] generation. Um so the increase the
collection increase would be to across
[1:41:31] the board to all both residential and
commercial customers. Um the Timmy fee
[1:41:37] again across the board. Um but just for
the purposes of the presentation we just
[1:41:41] showed a sample residential bill but we
could calculate um what a commercial
[1:41:46] bill impact would look like. Um so you
could see it too
[1:41:49] » to follow up your honor.
>> Yes.
[1:41:51] » So just to make sure I'm understanding.
So on page 33, all those rates are
[1:41:58] existingly structured. According to your
proposed rate increase, the collection
[1:42:04] side of this, you're saying 9.5%
increase for every single item that's
[1:42:11] here, right? And then on the disposal
side, you're saying
[1:42:15] 5.5% for all the options. Okay. Thank
you.
[1:42:26] So we have our contract already has a
built-in multiplier for escalating every
[1:42:32] year. Is that correct?
>> Yep.
[1:42:34] » And then unlike the lower 48, we put
everything on a bargain that
[1:42:42] » which keeps filling up.
[1:42:46] Any
[1:42:49] questions?
[1:42:53] And so you said that we're going to have
to do 9 and a half% and we could change
[1:42:58] that to eight. But then how many years
out did that project?
[1:43:02] » 9 and a half% to 3%. Uh
>> that was on the collection. You said we
[1:43:06] had to start at
>> nine and a half. Yes.
[1:43:08] » Yeah.
>> That would be the suggestion for the
[1:43:10] first year.
>> That would be the suggestion for the
[1:43:12] first year and then we're going to move
to eight%. moved to 3%.
[1:43:16] » 3%. Okay.
>> Uh 3% um from 2027 to 2030.
[1:43:26] » It's not coming.
>> Yes. Abby,
[1:43:28] » did we look again at the, you know,
looking at different proposed increases
[1:43:33] on residents versus commercial instead
of just one flat rate across everyone,
[1:43:40] every category? Just didn't know the
other option. We had options. So, I just
[1:43:45] didn't know
>> there are any other options.
[1:43:48] » So, we do have some other options. Um,
maybe if I get into the RA design that
[1:43:52] kind of will might address some of the
things that came up as far as
[1:43:55] seasonality in some of those commercial
versus residential. Um, so some of the
[1:44:02] things that we looked at with the staff
was we definitely heard we definitely
[1:44:05] understand that it's very highly
seasonal a highly seasonal area and so
[1:44:11] and you're not alone in that. A lot of
the municipalities on the coast, whether
[1:44:15] it's in southeast Alaska or whether it's
even down in Texas, face those same face
[1:44:20] those same concerns, especially when it
comes to waste generation because at the
[1:44:24] end of the day, the tourist leap when
you have a lot a good portion of waste
[1:44:28] that's still there. And so something
that we talked about was was addressing
[1:44:33] Mr.
something that you had said was there
[1:44:37] are businesses in areas where there's a
high level of service where where your
[1:44:44] your staff is going out seven days a
week and more than that more than going
[1:44:47] out seven days a week they it's a highly
manual process and where they can't get
[1:44:52] their trucks in certain areas and they
they aren't able to to pick up pick up
[1:44:58] the cans and the trash in the same way
that they would do a residential
[1:45:01] customer. And so something that we
looked at was a backdoor collection. Um
[1:45:05] a back door collection which would be an
additional fee on top of a commercial
[1:45:10] customer's monthly bill. And so that
would be [clears throat] something
[1:45:13] that's charged from in from April to
October which is designed to recover the
[1:45:20] cost of a service that you're already
providing. um but would be a revenue
[1:45:24] generating uh what would turn into a
more of a revenue generating um so
[1:45:30] revenue generating fee I should say and
so and so that's something that would
[1:45:35] and I'm going to jump ahead just quickly
um one slide is just to show you what we
[1:45:41] were calculating with that and so the
goal is we're just trying to reflect the
[1:45:46] cost of providing the service that
you're already doing like I mentioned
[1:45:50] before you guys are providing a high
level of service to all your customers,
[1:45:53] but um but commercial especially
especially when it comes time to the
[1:45:56] with the seasonality. And so we need to
be able to cover the cost of staffing
[1:46:01] which also includes temporary labor. And
so how do we this the overall system has
[1:46:06] to be designed to to maintain this level
of service. And so what we did was we
[1:46:12] calculated a backward fee which is on
the right hand side um of and we're
[1:46:16] trying to get to a monthly unit cost um
for this service. And so what we did was
[1:46:21] we took uh we took a a labor rate which
is a combination of a fully burned and
[1:46:26] hourly rate with an overhead allowance
and then we were making calculation of
[1:46:31] what's the average time to just service
a single cart in this area. And so if
[1:46:37] somebody has to go out and they have to
they leave the truck they go out they
[1:46:41] pick up the can and they have to take
the truck to the excuse me take the can
[1:46:44] to the truck. We estimated be about 60
about 60 seconds to do this. And so and
[1:46:51] just for just for reference for a
regular if you were trying to pick up
[1:46:56] like on average just a residential
customer that could take anywhere
[1:47:00] between 3 to 5 seconds to dump a to dump
a can. So 60 seconds and is takes a long
[1:47:06] time, right? It's a big difference there
and to provide this service. And so we
[1:47:10] were estimating the total cost like per
pickup is about 50 cents um per per tip
[1:47:15] of the can. And so what we then did
working with staff what we had looked at
[1:47:20] was how many pickups do you have in
these in these areas from April to
[1:47:25] October and in your high season where
you're having seven days a week service
[1:47:29] because the service will drop off as we
get into
[1:47:34] » into the slower months. uh we average
about 17 and 3/4 pickups or trips per
[1:47:41] month. And so what that equates to is a
monthly unit cost of $9.76.
[1:47:48] And so we were working with staff. We
were we would propose that there is this
[1:47:53] alternative collection rate for this
backdoor fee service to reflect that
[1:47:58] cost of providing this service in those
seasonal months that would be targeted
[1:48:02] at those commercial customers where this
service is provided. Um and so that was
[1:48:07] one thing that we did look at um to
protect our uh to more accurately
[1:48:16] allocate the cost of providing that high
level of service.
[1:48:23] The other thing that you got to realize
too is we have no
[1:48:27] um
volume control uh in the residential
[1:48:34] area. The guy gets the same garbage bill
whether he had one can or four cans
[1:48:41] and there so that the guy that's using
four cans is getting the real deal. The
[1:48:46] guy had one can is paying the standard
range.
[1:48:50] You may want to think about whether or
not we're going to go to a per can
[1:48:54] charge rather than just a per unit
charge.
[1:49:01] » Didn't we used to go didn't we used to
have a unit per unit charge?
[1:49:06] » We have a per can charge for commercial
R not
[1:49:10] » but not local. We don't charge per can
at gas. No, never we never done a can
[1:49:18] » and we use 90 gallon cans I think is
what they are now but the average can
[1:49:24] rate for residential are 32 gallon basis
and that's what the national standards
[1:49:29] they
but u you know we're receiving those
[1:49:36] that waste that's costing us money uh
landfill volume is where it's at. How
[1:49:42] much can you pack into a cubic yard of
land to That's where you make your
[1:49:46] revenue. If you're you waiting your
space and you're only getting 400 lb to
[1:49:51] a cubic yard, you're waiting that
landfill. If you use a compactor and get
[1:49:55] it to 900 to a,000, then you extend a
life to your landfill. You're not going
[1:50:00] to have it. So, the volume coming in
should cover the cost of compacting it
[1:50:07] and extending your life in your land.
Yes. U if we were to go to like a a
[1:50:15] charge by the can, who would be
responsible for collecting and reporting
[1:50:17] that data? Would that be on the
collections team or
[1:50:20] » Yeah. Well, the thing is is that we're
we provide the cans to the house right
[1:50:25] now and they're expensive can you
because we got to ship them up by volume
[1:50:29] and all. So, we pay a lot for cans. So,
we know exactly how many cans are out
[1:50:35] there and they all have serial numbers
and we can know which which can is
[1:50:39] which. But that would be a standard
thing that we'd put in. The collector
[1:50:43] knows exactly how much he's picking up
at the house. And if somebody or another
[1:50:47] can they come city, we put it on their
in their buildings.
[1:50:51] So as you know, if they only use one
can, they only get bill for one can. If
[1:50:55] they got two cans in there and they
don't fill one,
[1:50:59] they they shouldn't get a charge for
that, right?
[1:51:04] A lot of community, we can't do it here
because it's very popular stuff. They go
[1:51:08] to a blue bag. You get a standard can 90
gallon can and any extra garbage filter
[1:51:12] in a blue bag and you get charged by the
bag and you pay you pay for the bag up
[1:51:17] front.
[1:51:20] Yeah. I hesitate to even bring this up
because I don't want to say something
[1:51:25] that would
[laughter] be critical of our charging
[1:51:29] system and I know the whole point of all
this is to collect more money. But on
[1:51:34] kind of that same line of thinking and
correct me if I'm wrong, but my
[1:51:37] understanding is uh if you are in an
efficiency apartment at a complex that
[1:51:43] has say more than 10 units and there's
two dumpsters outside
[1:51:49] uh and you're one person in an
efficiency apartment presumably using a
[1:51:53] very minimal amount of garbage. Your
garbage bill is the same as a household
[1:51:58] full of eight people with three cans
outside that are only getting charged
[1:52:03] one. So,
>> uh, like I said, I don't want to bring
[1:52:07] up too many gripes here or anything, but
there are plenty of areas to improve
[1:52:11] upon.
>> Yeah.
[1:52:12] » And I hate to say that cuz the answer is
always since the '9s.
[1:52:16] » The [laughter] answer the answer is just
like the water rates, it always ends up
[1:52:19] with everybody paying more. So, that's
why I hate to even bring it up, but I
[1:52:23] just wanted to throw that in there.
>> We used to have a 35gallon can I think
[1:52:27] that they could do something with. No,
those are those are two stories, but I
[1:52:32] think like we do something special at
the towers because it's a centralized
[1:52:38] collection with a compactor which is
different. It might have a different
[1:52:42] rate per unit there, too. So,
[1:52:49] [laughter]
[1:52:52] » just covering your cost. We don't we're
not looking to bank a whole bunch of
[1:52:55] money. We just want to cover cost.
That's all we need to do. And so and and
[1:53:00] solid weights are pretty fixed. You
don't
[1:53:04] no other way to get rid of gar.
>> Well, and like you said, we have to also
[1:53:09] consider 25 years is going to come fast.
>> It is.
[1:53:13] » And we have to have a plan and we have
to have the capital to you don't. So
[1:53:20] [laughter]
>> some of us will Jen will be here.
[1:53:25] » I'll be here. [laughter]
My family's got longevity.
[1:53:30] » So, u but yeah, these rates are
realistic. I I
[1:53:36] » I worked for a land pill for no year
understanding
[1:53:41] costs.
>> So, I would just say the other other
[1:53:45] things that we did look at was having
specific rates for your high usage
[1:53:50] customers um to really target that
higher level of waste generation. Um for
[1:53:55] example, like the pork Um so right now
um I believe the city it's not just one
[1:54:02] fee for the port it gets charged your
commercial rate and so versus and that's
[1:54:08] and so in some areas where they have
high level of seasonality or they have
[1:54:12] these large large users like whether
like in other like large cruise ship
[1:54:18] terminals um I know that the cruise
ships can't can't drop their waste off
[1:54:23] here necess all their waste in the ship
necessarily but they generate a lot of
[1:54:26] waste in general. general on on shore
and the commercial businesses do. This
[1:54:30] is something that other municipalities
have looked at um both in the area as
[1:54:34] well um as in the lower 48 on the coast.
Um we we talked about um that with city
[1:54:42] staff. The other thing being on the
disposal rate, we would suggest that
[1:54:47] because your fees are so highly
connected to your long haul contract
[1:54:51] that at a minimum there should be a pass
through provision on your disposal rate.
[1:54:56] um that's tied again at minimum of the
increase in your contracted rate. And so
[1:55:02] anything so that would be an automatic
pass through and then there um if for
[1:55:07] [clears throat] anything again large
increases in overall costs with
[1:55:11] inflation um anything like that on the
disposal side that that would be an
[1:55:15] additional rate but at minimum you would
have that pass through of what that
[1:55:18] contracted cost is and again as a
reminder that's about 40% of your
[1:55:23] overall budget is that long haul
contract uh which which encompasses a
[1:55:29] large portion of the overall
And then as mentioned again previously,
[1:55:35] we would recommend a separate landfill
closure fund um to make sure that your
[1:55:39] cash balances are being set aside to
target that calculated closure and
[1:55:43] postclosure care liability to avoid any
rate shock for future customers. Um
[1:55:48] that's something that we would recommend
having levelized levelized annual
[1:55:53] deposits um over there. We know that in
25 years and in this between now and
[1:55:57] then, you'll be thinking of other
possible routes to go down for what to
[1:56:02] do when the landfill closes. But in the
meantime, we would recommend having a
[1:56:06] separate landfill closure fund and
having those funds restricted. Um that
[1:56:10] way you don't burden future rateayers
for assistant that they did not.
[1:56:17] » There are some fees that aren't or
services that provide are here. We do
[1:56:22] construction and demolition pickup.
And I assume that the rates were applied
[1:56:27] to the cord evil.
>> Yep.
[1:56:37] » Yes. And
>> I'm in the blind spot tonight. Don't
[1:56:39] worry. Um, can somebody remind me how
much it costs to buy one of the bear
[1:56:46] cans?
[1:56:49] » Is it 180? Yeah,
>> like a can or
[1:56:53] » new ones are really nice. I finally got
[clears throat] one.
[1:56:56] » Good evening.
>> Can't remember your report.
[1:56:57] » Honorable mayor and council members,
Seth Brachie, public works director and
[1:57:01] engineering manager. Uh, thank you for
the question, Council Member Bradberry.
[1:57:05] So, our new uh bear resistant bear
resistant cans are um we have 210 of
[1:57:13] them on the way right now and they run
about uh $350 a can. Um, we don't sell
[1:57:20] them to the customer. We rent them out
uh very similar to how we do uh all of
[1:57:25] our other cans. So, you we have a $10 a
month bear can fee and that covers the
[1:57:32] cost. We have a payback period for the
can to cover our cost there. So,
[1:57:39] [clears throat]
>> so
[1:57:42] if you have a $10, so after three and a
half years of having that bare can, then
[1:57:47] that rental fee goes away and it just
goes into the regular
[1:57:53] collection fees or will it remain
forever?
[1:57:58] » Um, so it's
>> because you just said it. Yeah,
[1:58:00] » remember. So, yeah, that's what we we
figured it on a three-year return
[1:58:05] period. Um, we need about we have about
3,500
[1:58:10] cans in out in the residential system
and we've only bought about 260
[1:58:17] bear can so far. So, um, it's not our
anticipation to have every house have a
[1:58:24] bear can. That's not the plan at all.
So, but back to the return period. Um,
[1:58:30] you know, I think these we want to see
how they last. Um, we anticipate some
[1:58:36] bear bites and some damage that way. Uh,
and then we can adjust from there if we
[1:58:42] need to.
>> So, you're testing them out in a good
[1:58:45] spot, huh?
>> They're in, uh, so far they're going
[1:58:48] right to the hot spots, right in the
danger zone. [laughter]
[1:58:52] » Yeah. So, just to follow up on that,
maybe I misunderstood. So, it's $10 a
[1:58:57] month rental fee to pay these things
off. Is it So, if you're in a if you're
[1:59:02] a problem
person whose garbage gets
[1:59:07] into by the bears all the time.
You someone from the city contacts them,
[1:59:14] sets this up, says, "We have these new
cans. We'd like you to try and their
[1:59:18] bill goes up $10." And I guess the
answer I was looking for, I didn't quite
[1:59:22] hear was after the three-year period,
does your fee go back down $10 or how?
[1:59:27] Just out of curiosity so I understand
how it works.
[1:59:31] » Thank you, Council Member Gas. to
clarify, as long as you have a bear can,
[1:59:36] you'll pay the bear can rental fee.
>> Okay?
[1:59:39] » So, we have to make sure we cover our
cost, have replacement cans
[1:59:44] there.
>> So, if you get a new bear can, you're
[1:59:47] going to see $10 a month more than if
you have the old can.
[1:59:50] » So, a key component of that is we have a
lot of customers that do a good job of
[1:59:56] keeping their garbage taken care of.
They either keep the bag inside and
[2:00:01] don't put it out until the morning of
their collection or they have a garage
[2:00:06] or they have some sort of enclosure that
they've spent money to build. Um, so we
[2:00:12] didn't want to punish those customers
because they're doing what the catch can
[2:00:16] municipal code says they're supposed to
and that's a good thing.
[2:00:21] But for some folks, they're just they
don't have a garage or they don't have a
[2:00:25] place to store it. So, we want to be
able to offer this as an option rather
[2:00:31] than just saying, you know, this is uh
you know, we're here all the time
[2:00:36] because bears have been hitting your can
repeatedly. You know, we want to have an
[2:00:40] option there for customers to go to that
was still reasonable for cost.
[2:00:46] » But so, just to ask again, if you have
the new can, it's $10 a month more than
[2:00:50] the people who don't. Is that correct?
>> Correct.
[2:00:52] » Okay. Thanks.
And and the other option is there is an
[2:00:57] ordinance in place where they can be
fined for not taking care of the
[2:01:00] garbage.
>> I think it's 200 bucks or something like
[2:01:03] that.
>> At least you do that. We don't
[2:01:06] » Yeah, we don't
>> we still have it, but we can
[2:01:08] » don't find anything. [clears throat]
>> Um and then do we have any recovery
[2:01:13] costs associated with our regular cans?
>> So that's built into the rate currently.
[2:01:22] Um, you know, one thing, so we we've
done a pilot program with these beer
[2:01:26] cans, and uh, our residents have
commented they're happy to pay that $10
[2:01:32] fee if it means they're not out picking
up the garbage off the street or from
[2:01:37] from the wooded area next to their
house. That's one of the worst things
[2:01:40] » Yeah.
>> to do. [laughter]
[2:01:42] » If you asked, there'd be some neighbors
that'd be willing to pay that $10
[2:01:47] [laughter]
>> for them. Yeah.
[2:01:51] Thank you, Seth. Any other questions?
[2:01:57] Any followups?
[clears throat]
[2:02:00] » That concludes your presentation.
>> Yes, I believe it does.
[2:02:06] Time to wrap up. Thank you so much. I
know a lot to get through. Appreciate
[2:02:11] your patience.
>> Yeah. And I I think everybody's going to
[2:02:15] do some reading on this and research as
we go through this. Um and at some point
[2:02:21] we will be asking the council how
beneficial is this because we still have
[2:02:25] water and sewer rates that we have to
get through maybe harbor rates and
[2:02:29] whatever other rate structures we're
looking at.
[2:02:32] » So your honor on the subject of water
water and wastewater rates. Um that's
[2:02:37] something that we won't tackle until
probably later in the year if at all. Um
[2:02:42] again because it's highly dependent on
getting our commercial water meters
[2:02:46] installed and that up and running and
having the data to support a new grade.
[2:02:49] » Yeah. But that's down the road we're
going to have to take.
[2:02:51] » It is. Yeah, absolutely. I mean there's
we have we have a slew of great needs,
[2:02:54] but we're starting with with electric
and solid waste.
[2:02:58] » I appreciate it.
>> Yeah. Just one question about where we
[2:03:02] are in this process with Raphelis and I
appreciate the presentation that you've
[2:03:05] given and being here in person that
really helps a lot just for discussion.
[2:03:08] uh if if we're in a position now where
the council is going to discuss some of
[2:03:11] the uh some of the findings that have
been presented to us, do we have the
[2:03:16] opportunity to give feedback to Raph
Talis and continue the discussion about
[2:03:21] how best to structure these rates or
this is sort of what we're working with
[2:03:24] at this point?
>> No, I think we relay our concerns and uh
[2:03:28] suggestions to the manager's office, the
manager can work with him to get us
[2:03:32] answers back on that.
>> Great. Thank you.
[2:03:36] » Anything else? I appreciate it. This is
really good information and I appreciate
[2:03:41] the breakdown. Thank you.
[2:03:46] » So with that, do I have a motion to come
out of uh the work that regular session?
[2:03:52] » I move the city council reconvene into a
special meeting.
[2:03:55] » Second.
>> Been seconded. Madam clerk, would you
[2:03:59] please call the role?
>> Yes.
[2:04:02] » Yes.
>> Binigan.
[2:04:04] » Yes.
>> Bradbury.
[2:04:06] » Yes. Gage,
>> yes.
[2:04:08] » Cuz
>> yes.
[2:04:09] » Matani,
>> yes.
[2:04:10] » All right.
>> All right. Is there any other business
[2:04:13] before us? Any comment, question?
>> Yes.
[2:04:19] » What do you have? I'm sorry. I don't
know. Uh I didn't quite realize we were
[2:04:24] jumping out of things. Uh so
we have these recommendations, these
[2:04:30] various plans.
uh given that this was a lot of input or
[2:04:35] a lot of energy that went into this and
everything. I mean I guess I'm asking
[2:04:41] you what what what is our next step? I
mean but we got to discuss which
[2:04:46] scenarios we want to look at doing.
>> This meeting is being transcribed and
[2:04:50] summarized.
>> I guess I don't want to just I don't
[2:04:53] want to just break and call it a day and
then forget about this. So what's kind
[2:04:57] of our way forward here? Well, I think
what we were going to want to do is have
[2:05:01] staff boil this down and bring it back
to us with a rate structure for the next
[2:05:04] five to 10 years that we can look at and
then the council will have to decide
[2:05:08] what action they want to take to move
forward with that. That be appropriately
[2:05:13] » we can do that. I mean I I think your
honor um there was some good things that
[2:05:17] were mentioned tonight that I think
staff would like to talk with with refus
[2:05:22] to see if there's yet even more
possibilities. There always are. Um, so
[2:05:27] it might warrant a future discussion and
presentation. I mean, the the end goal
[2:05:32] here, of course, is to come up with a
rate structure that we can memorialize
[2:05:35] in an ordinance, and we're not there
yet. Um, I don't think there's consensus
[2:05:39] on what that rate structure looks like
to achieve the the revenue increases
[2:05:44] that we need for both of those
utilities. So, I I for me, I think we'd
[2:05:48] like to talk more with Raph Telus and do
a little bit more brainstorming based on
[2:05:51] some of the things that we heard
tonight. I think if there's additional
[2:05:55] thoughts or considerations that council
members have, you can relay those to
[2:05:59] myself or Sean and we can continue to
have dialogue with Rafelis.
[2:06:03] » I would like to have further
conversations on how we manage the big
[2:06:07] electrical project and how they fit into
our capital plan because I don't want to
[2:06:10] overbudget. I don't want to overrate in
regards to not knowing what the exact
[2:06:15] need assessment is on that. So
>> maybe the action would be before we put
[2:06:19] them into capital program, we do a needs
assessment. Oh, absolutely. Yeah. Yeah,
[2:06:24] there's definitely some preliminary
work, but I think for the purposes of um
[2:06:29] you know, the capital improvement
program that we have, which is a
[2:06:31] five-year horizon, which is what we gave
Raphelis, so they're just working off of
[2:06:36] that. But I I totally agree and now that
we have a new electric division manager
[2:06:40] to reassess those priorities and shift
things around. Um, but again, even
[2:06:46] though we come up with maybe a five-year
horizon,
[2:06:50] perhaps we're only doing those rate
increases year-over-year. So, it gives
[2:06:53] us time to recalibrate as the big
capital improvement programs shift.
[2:06:58] » I'm sure that our new utility manager as
he gets his feet on the ground is going
[2:07:02] to have other suggestions in regards to
capital investment and how we do those.
[2:07:08] So, I appreciate all that.
Yes, Abby.
[2:07:12] » I briefly mentioned it earlier about the
electric, but uh or to the mayor of
[2:07:18] electric. Um
I guess for me and any of the rates
[2:07:23] increases that we're doing is we have an
opportunity to provide relief to our
[2:07:30] residents. Um even though we need to
have a gain, we're asking a lot of our
[2:07:35] citizens. We hear it. You know, they've
come to the podium and talked about all
[2:07:39] the concerns and the costs. We're
increasing sales tax, increasing the
[2:07:43] cap, increase, you know, property tax,
mail rates, you know, all these things
[2:07:47] are starting to add up and just the cost
of living here. And I really want us to
[2:07:53] consider that. And this now that we're
actually planning long term instead of
[2:07:57] just putting out a fire today. I'm
really looking at how can we positively
[2:08:03] impact our residents even though they're
the bigger biggest users. Totally
[2:08:06] understand that both solid waste and
this. How can we positively impact them
[2:08:12] as a way of giving like you know a thank
you for allowing us to continue to make
[2:08:17] as much revenue as we do off of, you
know, technically their front front
[2:08:22] door. And so I really would like to to
hopefully see something more
[2:08:28] even or more in favor of the resident
side. I understand commercial we need to
[2:08:33] support economic growth and things like
that, but we're also hearing our
[2:08:38] citizens say enough is enough. Um so
commercial growth maybe doesn't go
[2:08:42] handinhand with what our citizens are
wanting. But also you mentioned the
[2:08:47] average rate for electricity you know is
17 cents and you know under these
[2:08:54] proposed rates you know they're at 12
cents when our citizens are at 16 14 or
[2:08:59] 16 depending on what tier you know maybe
we need to look at flipping that um
[2:09:06] to really incentivize you know our
citizens you this is a great place to
[2:09:10] stay keep our resident number instead of
downfall trajectory that we're in for
[2:09:15] customers. But that's just something
that in all the rate studies that we do
[2:09:20] in the future and whatnot, I really
would like to look at that opportunity
[2:09:23] because we do have it here in front of
us as we're planning in the long term.
[2:09:28] » Thank you.
Any other comments?
[2:09:32] We'll move on to mayor and council
comments.
[2:09:35] Abby,
>> none.
[2:09:38] » Jan Lee.
Yeah, I just have I really appreciate
[2:09:42] this. This gives more clarity to a few
things. I think um one of the things I'd
[2:09:47] like to see uh in the future and I think
council um we all need to consider the
[2:09:54] next we have to think nine generations
up
[2:09:58] in the back of our minds. we have to
consider the people, the generations
[2:10:03] that'll be here in the future and um
having a plan in place and I mean and
[2:10:11] making sure that the community also
understands that you know that
[2:10:17] as much as I wish things would go back
to what they were in the 80s and 70s and
[2:10:21] 60s um cost of everything is it will
continue to go up. It's there's no um
[2:10:29] going backwards in a lot of ways. Um,
but I I was I found this to be very even
[2:10:37] with that 5% increase, I thought, you
know, I was like, I could do a dollar,
[2:10:43] you know. I mean there's I mean there's
some things that I think um
[2:10:49] can happen and flip the script when it
comes to our um commercial and and um
[2:10:56] even our seasonal commercials that come
here that do impact our our
[2:11:01] infrastructures um and they put a lot of
attacks our systems majorly and and how
[2:11:08] do we capitalize on that because that's
the only way we're going to um even out
[2:11:13] the um cost on the if those of us who
live here, you are out. Thank you.
[2:11:21] Appreciate it.
>> Yeah.
[2:11:24] Got two comments. One, thanks folks for
coming. And second, uh
[2:11:31] the uh the landfill 25 years that's
tomorrow.
[2:11:36] » Yeah. And we can sit here and talk about
it. But if we don't start thinking now,
[2:11:41] there may not be a place. And you might
even some of you may remember Tom Coin's
[2:11:46] place on Gina. I don't know whether it's
viable or not, but he had a place. But
[2:11:51] if we don't start thinking now, any land
that's available isn't going to be
[2:11:54] available.
>> So maybe not this year, we'll let Lacy
[2:11:59] get gone for a couple years, [laughter]
but keep it in the back of your mind.
[2:12:04] Um, the other one is on the electrical.
Um, rates are going to be rates. And
[2:12:12] like I said earlier, I don't want this
town going out of power. I've lived here
[2:12:17] long enough that I know when the power
goes out, it can be gone for three or
[2:12:21] four days.
And if we stick our head in the sand and
[2:12:24] we don't appropriately look at the
generator and the transformer that we're
[2:12:30] talking about at the right time,
they'll go out on us
[2:12:35] and I'll guarantee you how many years it
takes to replace one. You could order it
[2:12:40] and have the money and it's going to
take you three two years to get one. So,
[2:12:44] as we do rates, keep in mind that's got
to be there at some point in time.
[2:12:50] That's all.
Thank you Jay.
[2:12:54] » Thank you your honor. Thank you for your
presentation. It opens up a lot of
[2:12:58] possibilities and opens up a area where
we can protect our residents. I mean I
[2:13:04] still believe that the commercial, the
harbor and the industrial need to pay
[2:13:09] more so that we have relief for our
long-term and yearround residents.
[2:13:15] Away from this uh we had the ports and
harbors meeting yesterday. There was a
[2:13:21] resolution that
is forthcoming but however that's at a
[2:13:26] meeting when we come back from AML in
Juno.
[2:13:30] The resolution is and was that we
approach our
[2:13:35] state representatives uh Senator
Steedman and Representative Binham.
[2:13:41] Talk to them about the fish tax that is
going into to the state that needs to
[2:13:48] find its way back. They've given us the
harbors. However, they has have not
[2:13:52] given us any maintenance uh subsidies.
They want us to bring that uh to our
[2:13:58] representatives and see what we can do
about it and also bring
[2:14:04] through the corporate relations
committee to the bureau to see why the
[2:14:08] bureau is getting 280,000. We we are
getting 219,000.
[2:14:14] That was not the case up to two years
ago. So we want to find out whether it
[2:14:17] is a bookkeeping mistake or what
happened there so that we get enough of
[2:14:21] our tax revenue because all our
commercial fishing all our fishermanmen
[2:14:25] all our process processes are in the
city. That's all I got. Thank you.
[2:14:29] » Thank you Jay Jack.
>> Thank you your honor. I'm going to echo
[2:14:32] a couple of things that council member
Cous uh mentioned and just um add one
[2:14:36] additional thought there. First is again
I appreciate the presentation. I don't
[2:14:40] think we'd ever have been able to
develop these kind of nuanced findings
[2:14:43] on our own. So, uh, really appreciate
that work and seeing a couple of
[2:14:46] different options for each of these
funds. Second, on the notion of the
[2:14:50] landfill, u, Mr. C spoke to the question
of where we might put an additional
[2:14:54] landfill in the need of one, and the
mayor spoke earlier about the fact that
[2:14:57] we don't really have any funds set up in
that regard. So, I think that's
[2:15:00] something that's going to be just as
important if we think about where we
[2:15:03] might put a future landfill. We're going
to have to start saving for that now.
[2:15:06] whether it's a you know a penny on the
dollar that putting [clears throat]
[2:15:09] aside going forward that's uh it's not
going to be a small uh expenditure and
[2:15:15] the sooner we start saving for that the
better and I don't know if that's
[2:15:17] something that can be factored into the
great considerations that you're making
[2:15:21] uh but I would certainly be keeping that
in mind. Thank you.
[2:15:25] » Thank you. I think uh the presentation
is worthwhile. I think it
[2:15:32] we've we've been working on this for
years and trying to figure out how to
[2:15:36] make it equitable and beneficial and not
create great shock and yet cover the
[2:15:42] needed costs that we have with the
operations and capital budgets that are
[2:15:48] our our our
[clears throat] finance division and
[2:15:52] managers have talked to us over a long
period of time about how we do this and
[2:15:58] uh we up and catch up to June, but
incremental raises I think are the way
[2:16:02] to do it rather than all solid
[2:16:10] and I but the information that they ret
like said there's some items that they
[2:16:18] want to flush out before they bring it
back to us in regards to how we move
[2:16:22] forward
[2:16:26] change or structure and how we're going
to do that and Ley, if you could kind of
[2:16:30] give us a an idea how this process
should move forward in a timely manner
[2:16:36] because there are some steps we need to
do before we get there. I appreciate
[2:16:39] that.
>> I guess right
[2:16:45] [laughter]
last uh I echo what everybody said. I
[2:16:50] appreciate the time. Also appreciate
that you guys came here in person. That
[2:16:54] I think says a lot. So thank you for
that. be interesting to see what we end
[2:16:59] up coming up with. It's good to have
some options. So, so, uh, yeah, it'll be
[2:17:05] interesting going forward. Uh, on a
slightly different topic, but Dick
[2:17:10] mentioned the possibility of, uh, a
landfill like Ravina someday. So, that's
[2:17:15] how I'm going to tie this in. Uh my
understanding is on the uh contest for
[2:17:20] the tunnel proposal that's been made by
Assemblyman Dial uh that it's been
[2:17:27] brought to my attention that it would be
helpful to have as many uh letters of
[2:17:32] support to that group from presumably
members of the community and such. Uh,
[2:17:38] so I was going to follow up with you,
mayor, to make sure that it's
[2:17:41] appropriate if if we do it, not, you
know, as long as we state that we're
[2:17:45] just a citizen or whatever. But, uh, I
would encourage anybody who maybe would
[2:17:51] be interested in some better access to
Gina to submit your letters. I think I
[2:17:55] saw we have till the 23rd. So, um I
think it'd be pretty cool if a whole lot
[2:18:00] of people did that and really shined a
bright light on us cuz uh my
[2:18:05] understanding is it would be a free
thing that uh this company is doing as
[2:18:09] an advertisement type thing and it could
really open things up for more
[2:18:13] development over there. So, anyway, with
your permission, I'd like to submit a
[2:18:18] letter and absolutely encourage others
to do the same.
[2:18:24] » Sounds good. Anything else?
Ajourn
[2:18:31] hearing