Petersburg voters approve up to $3.3 million to finish a backup diesel generator

Petersburg voters on Oct. 6 approved borrowing up to $3.3 million to finish a new backup diesel generator, which the borough says it needs because its standby power is close to falling short.

Proposition 1 passed 709 to 366, according to the certificate of election. The results were canvassed Friday, Oct. 9.

Petersburg gets its power from hydro: the borough's Blind Slough plant and wholesale power from Tyee Lake, which reaches town over a line nearly 80 miles long, Alaska News reported in September. When the wholesale power goes out, the borough's diesel plant has to carry the whole community. Load projections show Petersburg "is on the verge of inadequacy" for that standby power, the borough wrote in its request for proposals for the project.

The answer is a 3.5-megawatt diesel generator at Scow Bay, which the utility has already bought. The bonds would pay to finish installing it. Construction cost increases since the project began caused "a dramatic budget shortfall," according to the summary of the bond ordinance read at the Assembly's June 15 meeting.

The bonds will be repaid by electric customers, not taxpayers. "It is a revenue bond, not a general obligation bond," Karl Hagerman, then the borough's utility director, told the Assembly that night. He said the debt was already factored into the utility's rate study, so it would bring no additional rate increase beyond the one the Assembly had just approved.

The bonds can run up to 20 years, with about $265,000 a year in payments, according to the borough's bond notice. The utility already owes $6.48 million on 2022 revenue bonds that paid for work on Blind Slough and on this same generator project, plus $790,000 on older general obligation bonds it repays from utility revenue.

Site work has begun. Borough Manager Steve Giesbrecht said in his Oct. 5 report that mechanical, wiring and control work would follow, "pending the outcome of the revenue bond vote."

Voters split nearly evenly on the ballot's two sales tax questions. They approved a sales tax exemption for residents 70 and older, 565 to 545, and rejected raising the cap on taxable single purchases from $1,200 to $5,000, 559 to 545. The borough had paid to advertise the cap increase but not the senior exemption, a citizen initiative, Alaska News reported Sept. 25.