Unalaska, AK – The Unalaska City Council is looking at buying a third generator for the city's anticipated new powerhouse, in addition to the two new units currently in storage in Finland. The idea surfaced in discussions of the city's 2009 financial plans at Tuesday night's meeting. It prompted surprise and criticism from some council members, especially Dick Peck.

"This is the first time that I have heard that we are in fact purchasing the third generator," Peck said Wednesday. "There [has been] no notification from staff about the purchase, or the justification for it."

The city's draft 2009 capital and major maintenance plan, which was presented at the meeting by interim Planning Director John Fulton, includes a projected $4 million for the additional generator. Mayor Shirley Marquardt said that's the beginning of the process, and that buying the generator is far from a done deal.

"That's why the third generator showed up in the draft capital budget: because it's time for council to say, 'OK, let's talk about this--do we want to get going on this engine now?'" she said. "Because a year from now we should have the powerhouse online, and may be looking to put that engine in."

Marquardt also argued that the idea was not new, and had been kicked around informally in previous meetings.

Peck countered that that informality was precisely the problem, and the city was putting the cart before the horse by officially considering buying another generator before seriously analyzing customer demand, or alternatives like efficiency improvements and wind power.

"We should have some type of integrated resource plan that brings all of these power supply options into one document, so we can take a look at what is the best solution for this community," he said. "And all we are getting from staff at this point is piecemeal."

Right now, the city's powerhouse is capable of generating about 7 megawatts of power. City officials believe peak demand may be almost three times that, but it's complicated because so many local processors and other businesses run their own generators.

The city recently received permits to expand the powerhouse, but hasn't put the project out to bid yet. Marquardt said she was leery of trying to compare the costs of energy alternatives until those bids come in, especially after the city's recent experience with the South Channel Bridge project.

"Council will look at the rates again, but not until the bids are opened for the powerhouse," she said. "We have no idea what those bids are going to come in on. And it's scary--you just look at what happened with the bridge."

Last year, city administrators had expected bids for the bridge project to come in around $17 million, but the lowest was $11 million more than that, forcing the city to reconsider its other road improvement priorities. The powerhouse project is bonded for $27 million. Peck, who used to be the city's utilities director, estimates that as it stands now, that construction could raise local utility rates by as much as 25 percent in the short term, before long-term efficiency gains level them out again.

At its next meeting, the City Council will also hold a public hearing and a final vote on a resolution to spend $1.5 million on exploratory geothermal drilling in the Makushin Valley this summer. City Manager Chris Hladick and Public Utilities Director Dan Winters are in California this week for another meeting with Jack Wood, the owner of the subsurface rights for Mukushin Volcano, which the city needs to lease to develop its geothermal potential. The state legislature is also considering appropriating another $1.5 million for the project, something city officials hope will happen before the session ends on Monday.