Why Sitka subsidizes electric bills: the Blue Lake Dam debt

Some Sitka households need help paying their electric bills, and the reason traces back to a dam.

The city is taking applications through Oct. 31 for its Utility Cost Subsidization Program, which cuts the municipal electric bills of residents who qualify, with savings running through 2027. The program exists because power in Sitka is expensive — and it's expensive largely because of debt.

Sitka owns and runs its own electric utility, and it carries roughly $125 million in debt from the Blue Lake Dam hydroelectric expansion. Servicing that debt eats close to half the utility's annual budget, about $8.7 million a year, and to cover it the city has raised rates over the past decade to an average near 15 cents a kilowatt-hour. Because Sitka owns all of its utilities, that cost falls entirely on local ratepayers.

The subsidy is how the city tries to keep those rates from pricing out its lowest-income households.