Proposal to cut electric rates may fizzle

ALEX DeMARBAN

May 15, 2008 at 1:01PM AKST

Presidential candidates aren’t the only ones offering tax relief in the face of rising prices.

Councilman Willie Keppel wants to lower sky-high electric prices in Bethel -  by cutting taxes paid by the power plant operator.

Under his proposed ordinance, introduced to City Council this week, Bethel Utilities Corp. would no longer have to fork over the city’s 6 percent sales tax when it buys diesel fuel to run the power plant.

The state regulatory commission would ensure that the tax cut would translate into reduced rates for electric customers, Keppel said.

The proposal may not pass because it would cost the city more than $700,000, he said.
City residents need the relief because many pay around $300 a month for electricity, Keppel said. Under the proposal, the average ratepayer would save $6 a month for every $100 they spend.

Mayor Eric Middlebrook doesn’t think the proposal will pass.

The city is in a financial pinch, and the city manager has proposed cutting several positions, including more than half the fire department, he said. Losing the tax income would make things worse.

“We’re going through the budget process right now and we could not absorb that kind of loss from revenue without serious layoffs affecting vital services the city provides,” he said.

The proposal will spark a worthwhile discussion, Middlebrook said.

Many people don’t know that the city double dips on sales taxes from fuel.

First, the utilities corporation is taxed. Once the fuel becomes electricity, the city charges the 6 percent sales tax again, this time billing the ratepayer.

“I’d really like to make it fair, to fix it so it’s not double dipping, but the city can’t afford to do this now,” he said.

Alex DeMarban can be reached at (907) 348-2444 or (800) 770-9830, ext. 444.