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City willing to listen to Alpena Power Co.

June 18, 2012
Steve Schulwitz - News Staff Writer , The Alpena News

ALPENA - Last week Alpena Power Resources approached the City of Alpena and Alpena Township to express and gauge the parties' interest for selling the water and sewer systems to the local utility provider. The idea of acquiring the services from the local governing bodies has been considered for some time, and Alpena Power Chairman Stephen Fletcher decided to try to open up dialogue.

"We've been mulling this over for a period of years, but we didn't do anything about it because there wasn't enough money due to making other improvements in the company," Fletcher said. "Last week I said to myself, 'If I'm going to do this, I need to do it soon.' It seemed to me it may be the perfect time to inquire about it."

Fletcher compared the process to trying to purchase a house from someone who may not have it for sale. He said the owners can refuse to sell, or agree to talk and possibly negotiate a price.

"We are at this time waiting for answers from the city and the township to see if they would like to have discussions. We anticipate those after they have the opportunities to host meetings," he said. "If they don't, then we have spent about $5 in postage, and if they do, then we can start looking into numbers and other structure. There would be a lot to do, and at this point all we have done is reach out to them."

Mayor Matt Waligora said he received word about Alpena Power's interest Friday and hasn't spoken to Fletcher yet. He said as with all other proposals, he thinks the city should at least investigate what Alpena Power has to offer.

"I haven't met with him yet and I don't think anyone from staff has yet either, but from my perspective we should explore every option put before us," Waligora said. "There is a benefit from something like this in terms of taking the burden of the cost of this off of the tax payer, but we would have to do our homework to see what other effects it would have on them. This is all very early on in the process."

City Engineer Rich Sullenger said the staff at city hall will take all things into consideration before making a recommendation to Alpena Municipal Council for what action to take in the matter.

"We will look at the potential impact of this for the city and for the citizens, and obviously the number-one concern is how it would impact our customer," Sullenger said. "We want to make sure whatever is done they continue to pay the lowest rate possible. If we were to sell, we would lose complete control of setting fees, so that is somewhat a concern. This is really preliminary, and this will be like any other proposal we get. We will gather all of the facts and put together a report and recommendation for the council with what is best for the people in mind."

Fletcher said there are two factors that would go into what the rate would be if Alpena Power would assume control of the utility operations. He said the first would come from the state, and the second would derive from what the cost structure for the purchase would be.

"First, the Michigan Public Service Commission sets the rates, just as they do for gas and electricity," Fletcher said. "The second thing is the selling parties can in some ways influence the rates by how a purchase agreement is negotiated and worked out. There are things that can be done to keep a reasonable rate."

United Water is the current operator of the water and sewer system, and it recently entered into an eight-year contract with the city in exchange for fronting the money to replace outdated water meters in town. Fletcher said he thinks United Water would have to be a part of the equation moving forward unless a settlement could be reached, which could add significantly to the overall cost.

"I think you would either have to honor the duration of the contract the city entered into for the use of their service, or buy them out," Fletcher said.

Councilman Shawn Sexton said he hasn't determined yet if a sale of the city's utilities would be a good thing or bad, but is open to discussing the issue with others involved.

"I don't know what to think about this yet," Sexton said. "I think it is something you have to keep an open mind about, but it would have to be good for everyone. I'm not optimistic that it would be better than what we have now in United Water, but it won't hurt to look into it."

Steve Schulwitz can be reached via e-mail at or by phone at 358-5689.



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