Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966


Battle for hydro permit heats up


An ongoing dispute over what Southeast developer should have priority status for the Walker Lake hydroelectric project is escalating, with Haines-based Southern Energy, Inc. filing an 11-page broadside against competitor Tlingit and Haida Regional Electrical Authority.

John Floreske Jr ., president of SEI, submitted the letter Feb. 8 to the Federal Energy Regulatory Commission, the entity responsible for deciding which company will receive the preliminary permit. Walker Lake is located about seven miles west of Klukwan.

In the letter, Floreske requests FERC rule against THREA for several reasons and cites their history of “terrible” service in Southeast and its attempt to dishonestly take advantage of a municipal preference rule, which gives priority to permit applications submitted by public entities over private ones.

Floreske called THREA a “‘shadow applicant’ with no depth to their corporation,” with “no construction equipment, no staffing of their own, certainly no personnel with hydroelectric permitting or construction experience, and no financial resources to apply to a successful project of any size.”

THREA was reorganized to an electric cooperative known as Inside Passage Electric Cooperative, Inc ., in 2004, according to IPEC’s website. Floreske claims THREA was recently resurrected for the sole purpose of unfairly taking advantage of the municipal preference provision.

“It is very clear that IPEC on the same day, in the same board room, with the same officers, in IPEC’s offices simply changed hats from IPEC to THREA with a resolution, keeping the same board room table and retaining the same board members for both entities. All to allow a non-municipal entity the opportunity to misuse the municipal preference rule,” Floreske wrote.

IPEC President Jodi Mitchell confirmed IPEC and THREA do have the same board members, but said THREA is a non-profit owned by the central council, while IPEC is a cooperative owned by customers. “They are not the same, and he’s trying to assert that they are,” Mitchell said.

In a March 8 letter submitted to FERC, Richard George, chairman of THREA’s board of commissioners, wrote “SEI’s arguments lack merit, and reflect misunderstandings of THREA’s nature and history, the function of preliminary permits, and the commission’s review of competing applications.”

George reiterated THREA is a political subdivision, while IPEC is a non-municipal cooperative that would likely be interested in purchasing power generated by the Walker Lake project.

Even if SEI’s plans are better adapted than THREA’s, which they aren’t, George wrote, FERC’s regulations require the commission “inform the municipal entity of the specific reasons that its plan is inferior and allow the municipal entity a reasonable period to revise its plans so that it is at least as well adapted.”

Pete Bibb, operations manager for IPEC, reported in November that Floreske and THREA were negotiating solutions to the competition, such as a possible joint venture or one party rescinding its permit application. Mitchell said those talks are continuing, but Floreske’s actions are making them challenging.

“We’re trying to find a way to work with him, but he’s not helping by making accusations like he is... If we’re trying to work together and he’s blasting us, that’s certainly not helping,” Mitchell said.

What makes a partnership agreement between SEI and THREA particularly difficult, Mitchell said, is profit motivation: SEI is a for-profit, privately-run business, while THREA is a non-profit.

“(Floreske) wants to make money and our job is to provide service and not make money. In my opinion, that’s the best way to have a public service industry: we’re a cooperative and we’re owned by our members. We try and keep costs as low as we can responsibly,” Mitchell said.

Before any FERC permits were filed, Bibb mentioned to Floreske he would be a good fit as a contractor for the Walker Lake project, Mitchell said. (The two entities, IPEC and SEI, have worked together in the past; SEI sold IPEC a hydropower facility at 10 Mile Haines Highway several years ago.)

“He knew full well we were pursuing that... and he filed behind our backs. It hadn’t even crossed my mind that he would do that to us,” Mitchell said.

“It’s in our service area, so that’s our project. It should belong to our members. It should be theirs,” she added.

SEI applied for the preliminary permit application in January 2012 and THREA applied in June.

Mitchell said attorneys are currently “trying to figure out a way that we can work together on the project,” and that she is “leaving it in their capable hands.” She doesn’t anticipate receiving a decision from FERC on the preliminary permits for at least six months.

Floreske did not return multiple calls for comment.