Sitka assembly previews FY27 utility rate recommendations: electricity flat, water up 6%, harbors and wastewater face big long‑term costs

Sitka City and Borough staff on Thursday presented the Assembly with FY2027 enterprise fund rate recommendations that would hold energy rates steady while raising water, wastewater, solid waste and harbor fees to cover upcoming debt and capital needs.

Brooke (staff member) told the Assembly the electric fund is stable in the near term and staff recommended "no change to the energy rate" for FY27, but cautioned that holding energy rates flat does not solve long‑term capital replacement needs. She said staff plans to complete the third and final year of a previously approved three‑year customer charge phase‑in; for a typical residential customer that phase‑in represents roughly $8 a year.

The presentation emphasized that Sitka operates locally owned utilities — water, electric, wastewater, solid waste, harbors, an industrial park and an airport — and that the community’s small customer base and remote location drive higher fixed costs for infrastructure. "Rates reflect operating costs, debt service, long‑term capital investment and regulatory requirements," Brooke said, describing models staff used to project multi‑year needs.

On water, Brooke said the critical secondary water project—meant to provide redundancy for drinking water—was expected to finish this year at about $18,000,000, most financed by a 20‑year low‑interest DEC loan. Staff recommended a 6% water rate adjustment, which she said would add about $4 a month (roughly $48 a year) for a typical unmetered residential customer and help cover an anticipated $1,000,000 increase in annual debt service when repayment begins in FY27.

For wastewater, staff described a renewed EPA wastewater discharge permit that requires additional effluent disinfection with compliance due by November 2030. Brooke estimated the project cost at a little over $13,000,000 and said the city was notified in January of a $10,000,000 congressionally directed spending award; formal agreements were pending and the award would require a 20% local match (approximately $3,000,000). Staff recommended a 2% wastewater rate increase to accumulate working capital toward that match and near‑term needs.

The solid waste fund — which ships all garbage and recycling off‑island and is sensitive to shipping and fuel costs — drew a 2% rate recommendation (about $2 a month for a typical 96‑gallon once‑weekly pickup). Brooke said the rental and hauling of roll‑off containers are handled by the contractor (Alaska Waste) and that the city’s roll‑off rate structure is under separate review.

Harbor infrastructure needs, Brooke said, are large and long term: staff cited rough estimates of roughly $54,000,000 for Eliason Harbor, $22,000,000 for Thompson Harbor and $27,000,000 for Ceiling Cove, with Crescent Harbor phase 2 (floats 5–7) estimated at about $10,000,000. For FY27 staff proposed a 4% harbor rate increase — the same as the prior year — intended to maintain the fund’s position while staff pursues grants and reprioritizes capital work.

Assembly members asked a range of follow‑up questions, including whether a small, phased increase now would reduce larger future spikes. One committee member said, "I'd rather have 1% this year and 1.5% next year," arguing a modest buffer could avoid larger hikes later. Brooke replied that staff uses multi‑decade models to inform recommendations and that current projections include inflationary increases for the next several years.

Brooke closed the presentation with an example household impact that blended the recommended adjustments and estimated the total monthly change at about $8 for a typical single‑family household, noting actual bills will vary with use and service level. She emphasized the Assembly’s direction would guide what is included in the proposed FY27 budget, but the budget is not final until formally adopted.

The Assembly thanked staff for a clear, accessible packet and presentation; members asked staff to post the materials online so the public can see how the recommendations were reached. The meeting moved next to other budget items and adjourned later in the evening.