HomeMy WebLinkAboutRes2009-076Sponsored by: Oates
,,,,~„ CITY OF SEWARD, ALASKA
RESOLUTION 2009-076
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING A NO-FAULT SETTLEMENT WITH SEWARD
SHIPS DRYDOCK IN THE AMOUNT OF $7,584.78 RELATING TO AN
ELECTRIC POWER CLAIM, AND APPROPRIATING FUNDS
WHEREAS, the city experienced a series of electrical brownouts over a period of weeks
during the Fall of 2008, causing discontinuity in electrical service to the SMIC service area, and
adversely impacting Seward Ships Drydock; and
WHEREAS, Seward City Code 14.15.610 (a) Interruption of Service states that "The city
will exercise reasonable care to provide adequate and continuous electric service. However, the city
assumes no liability for injury, loss or damage resulting from system failure... unless such ...damage
results from the sole negligence of the city;" and
WHEREAS, the City received a claim for damages from Seward Ships Drydock and as a
result, the Seward City Council met in executive session on December 8, 2008 and authorized the
city manager to negotiate a settlement with Seward Ships Drydock, provided the settlement met
specific terms; and
WHEREAS, the City sent a letter to Seward Ships Drydock dated November ] 8, 2008,
establishing the terms of the settlement, which Seward Ships has agreed to, including: 1) agreement
that said settlement represents a `no-fault settlement'; 2) providing evidence from their insurance
company that the claim is not covered by insurance coverage in order to prevent a double recovery;
3) and agreeing that this settlement does not establish an expectation for future claims or establish a
precedent; and
WHEREAS, this settlement reflects a matter of good will and courtesy by the City in order
to help this business offset costs incurred as a result of a particularly unusual circumstance involving
a prolonged series of outages, a complex power problem, and limited availability of engineers and
technicians to resolve the problem.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The city manager is hereby authorized to pay Seward Ships Drydock the amount
of $7,584.78 as settlement for costs incurred by Seward Ships.
Section 2. The Seward City Council hereby intends that this settlement agreement reflects no
fault of the City, and is solely offered as a matter of good will and courtesy, and is not intended to set
,,,~ a precedent or establish an expectation of future claims.
CITY OF SEWARD, ALASKA
RESOLUTION 2009-076
Section 3. Funding in the amount of $7,584.78 is hereby appropriated from the electric
enterprise fund retained earnings account no. 501-0000-3050 to the miscellaneous account 501-5410-
5790.
Section 4. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10th day of
August, 2009.
THE CITY OF SEWARD, ALASKA
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Clark Corbridge, Mayor
AYES: Valdatta, Dunham, Bardarson, Kellar, Smith, Keil, Corbridge
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
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Jew Lewis. CMC~~`
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City Clerk ~~.~• c• ' e~~
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(City Seal)
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Council Agenda Statement
Meeting Date: August 10, 2009
To~ Phillip Oates, City Manager
From: Kristin Erchinger, Finance Director
Agenda Item: Electric Settlement with Seward Ships Drydock
BACKGROUND & JUSTIFICATION:
A series of electrical disruptions occurred in the Fall of 2008, disrupting power to the SMIC area
over a period of approximately two weeks. The City hired specialized engineers to assess the
situation and determine the cause of the outages, since the cause was not immediately determinable
by the City's electric crew. The ultimate cause of the failure was determined, repairs were
completed, and consistent power was restored.
During the period of disruption, two private businesses were adversely impacted by the power
outages; Seward Ships Drydock and Polar Equipment, Inc. Each of these businesses submitted a
claim for damages to the City based on their need to supply backup power for their own operations.
The City administration met with Council in an executive session, and received authorization to offer
a settlement of the claims, despite the fact that the tariff specifically states that the City is not
responsible for any costs incurred as a result of electric power issues, unless they result from
negligence on the part of the City. In this case, the offers to settle represent a matter of good will and
courtesy, and are not to be used to establish a precedent for future claims.
Seward Ships Drydock has signed a `no fault' settlement letter agreeing that the settlement of
$7,584.78 constitutes a complete settlement of their claim. It has further verified from its insurance
provider, that they are not covered for the extent of these claims. They acknowledge that the
settlement reflects electrical generation costs that they would not have otherwise incurred. Based on
the above recitals, the administration recommends settlement of this claim.
INTENT:
To settle a claim related to additional costs incurred by Seward Ships Drydock to provide their own
power during a period of power blackouts. This settlement does not assign fault to the City and is
not intended to set a precedent or an expectation of future claims. Rather, it reflects a matter of good
will and courtesy extended by the City in order to help this business offset the costs they incurred as
a result of a particularly unusual circumstance involving a prolonged series of outages, a complex
power problem, and the availability of engineers and technicians to resolve the problem.
CONSISTENCY CHECKLIST:
Where applicable, this resolution/ordinance is consistent with the Seward City Code, Charter,
Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures.
FISCAL NOTE:
Funding for this settlement will come from the Electric Enterprise Fund. Finance
RECOMMENDATION:
City Council authorize a settlement in the amount of $7,584.78 with Seward Ships Drydock.
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