Ketchikan’s city hall on June 11, 2020 (KRBD file photo by Maria Dudzak)

Power and water rate hikes for Ketchikan’s city-owned utility are up for a final City Council vote Thursday. The planned increases would raise electric rates by 1.5% and water rates by 4% for Ketchikan Public Utilities customers.

The move would raise the average resident’s combined bill by $4.33, according to the city’s estimates. That’s $1.80 more for electricity and $2.53 more for water.

The reason for the electric rate hike is a 3.5% increase in the rate the local utility pays to the Southeast Alaska Power Agency. That’s a joint venture of the communities of Ketchikan, Wrangell and Petersburg that generates hydropower from two large reservoirs in the southern panhandle.

Even with the increase, residents’ bills would still be about half the state average. That’s what acting Electric Division Manager Jeremy Bynum told the council at their last meeting.

“1200 kilowatt-hours, kind of an average for the home here in Ketchikan, is $140. This small rate increase will raise that by a couple dollars, at most. We will still be the lowest electric rate in the state of Alaska,” Bynum said.

Bynum said he expected a further rate hike from SEAPA in 2024 and possibly another in 2025. The rate had been held steady for more than two decades before a series of increases that began in 2021.

As for the 4% increase in water rates, City Manager Delilah Walsh says it’s necessary to pay for the cost of a voter-approved loan that was used to replace a water main near Schoenbar Road. She said the city’s agreement with its lenders required the increase.

Walsh said she’d like to have a deeper discussion about a rate-setting policy later this year. She said the utility’s Water and Electric divisions each ran a deficit last year.

Both rate hikes passed 5-1 over opposition from Council member Jai Mahtani in first reading. The increases are up for a public hearing and a final vote on Thursday.

In other business, the council will consider setting the city’s sales tax on residential rent at 3% year-round. Because those taxes are only charged on the first $1,000, Ketchikan city residents would pay a maximum of $55 in taxes on rent if the measure is adopted. They currently pay up to $65 per month.

The change is part of the winter rate under the new seasonal sales tax system adopted by the council last year. City sales taxes are currently slated to rise to 5.5% on April 1 as Ketchikan looks to capitalize on the summer tourism season.

The Ketchikan borough’s 2.5% sales tax, which is charged in addition to the city’s tax, would not be affected.

Ketchikan’s City Council meets at 7 p.m. Thursday at City Hall. The council takes testimony from the public at the beginning of the meeting and during public hearings. The meeting is broadcast on local cable channels and livestreamed on the city’s website.