The Haines Borough Assembly on Tuesday unanimously approved a new fuel tariff expected to nearly quadruple municipal revenues from shipments, based on current volumes.

The borough approved a rate of 2 cents per gallon, dropping to 1.75 cents on volumes in excess of five million gallons per year. It will bring in $237,000 per year, compared to previous revenues of $62,500, based on annual shipments of 12.5 million gallons.

“It’s a hefty increase,” said borough manager Mark Earnest.

The new rate more accurately reflects the cost of operations, maintenance and replacement of Lutak Dock, Earnest said. The facility needs new sheet piles on its face, and drainage and surface improvements, he said.

“This facility is a vital link not only for our community but all the way up to the North Slope. It needs upkeep. This will go a long way to helping us do that.”

The borough started negotiations with fuel supplier Delta Western with a proposed nickel tariff, plus an excise tax of one-half-cent per gallon. It also would have levied a one-cent-per- gallon charge in supplemental rent for fuel kept in tanks on borough land. That arrangement would have raised nearly $1 million per year.

The final deal dropped the excise tax proposal and supplemental rent charges. Annual base rent of $25,000 for borough land under fuel tanks at Lutak will continue to be charged.

Having three fees “was kind of redundant,” Earnest said. “There was interest in both parties to consolidate through-put fees under the tariff and only have one rate apply.”

The two-cent rate was based on a study the borough commissioned by Northern Economics, an Anchorage-based consulting firm contracted by the borough to help set the rate. In a Dec. 14 memo, the firm recommended a slightly different tariff schedule that also resulted in $237,000 per year.

The memo said “$230,700 annually… is sufficient to cover operating costs as well as a majority (63 percent) of the capital costs of the dock. This recommendation is contingent upon a review and adjustment of the cargo tariff to ensure that the dock facilities are adequately funded by a combination of revenues from these two activities.”

Earnest said the borough would next be looking at cargo tariffs.

The tariff can be adjusted at any time, and it provides for annual increases to offset inflation. There was no consideration for inflation in the previous tariff, which cost the borough money, Earnest said.

“Delta Western has asked the borough to consider a tariff that provides fiscal certainty over a period of time. We said we’d consider that” but made no promises, Earnest said.

The new tariff became effective this week. Due to an apparent drafting error in a previous lease agreement between the borough and Delta Western, the borough appears to have lost more than $150,000.

Earnest said the borough could have sought to recoup that money from Delta, but due to imprecise wording in the tariff, the firm also could have made a claim against the borough. “There was a risk in pushing this too hard. We decided to focus on moving the process forward.”