Story last updated at 2:23 p.m. Thursday, April 25, 2002

HEA tries again to buy Seward utility
by R.J. Kelly
Managing Editor

Homer Electric Association officials put its $18 million offer to buy Seward's city-owned electric utility before the Seward City Council on Monday.

While the proposal was submitted to Seward in a Feb. 8 letter from HEA to Seward City Manager Scott Janke, the Monday workshop and council sessions with HEA general manager Norm Story were the first formal presentations to the council, said HEA spokesman

Joe Gallagher.

The proposed sale must gain the approval of at least 60 percent of Seward voters if the city decides to put it on the ballot next fall. It must also be approved by the Regulatory Commission of Alaska, which oversees utilities.

The idea for HEA to buy the Seward utility is not new. In a 510-443 vote in November 2000, Seward voters approved a sale, but the tally was 61 votes short of the required 60 percent majority.

According to a recent story in the Seward PhoenixLOG newspaper, the fact that no specific offer had been on the table at the time of that referendum was believed to have played a role in the vote shortfall.

Under HEA's non-binding offer, the association will maintain the backup generation capability now in Seward and run the electric system as a division of HEA with its own name, identity and separate assets and costs. All current and future Seward customers would be members full members of HEA, with all the same rights and benefits of current HEA members.

The purchase price to Seward would be spread out over five years.

Among the positive impacts HEA predicts are a 5 percent reduction in residential electricity rates in Seward, a 10 percent commercial rate reduction, guaranteed cash flow to Seward's general fund for five years, extension of HEA's service area, access to large equipment and personnel resources, and cost reductions for services, equipment and supplies.

"Consumers in Seward and the current Homer Electric service area share common political, economical and utility reliability concerns," Story said in a statement released Tuesday. "Working together as one cooperative will result in improved service and outage response, and potentially lower rates through reduced costs."

HEA officials are prepared and expect to participate in more meetings with community residents and officials to discuss the proposed purchase between now and the fall election, Gallagher said.