HomeMy WebLinkAboutRes2009-081Sponsored by: Oates
,,,,,_, CITY OF SEWARD, ALASKA
RESOLUTION 2009-081
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING A NO-FAULT SETTLEMENT WITH POLAR
EQUIPMENT, INC. IN THE AMOUNT OF $27,865.32 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 spring of 2008, causing discontinuity in electrical service to the SMIC service area, and
adversely impacting Polar Equipment, Inc. dba Polar Seafoods; 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 sent a letter to Polar Equipment, Inc. dated November 18, 2008,
offering the terms of the settlement, which Polar Equipment, Inc. 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, the City received a claim for damages from Polar Equipment, Inc. and as a
result, the Seward City Council met in executive session on December 8, 2008 and discussed
possible settlement terms; 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, faulty fuses, 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 Polar Equipment, Inc. the amount of
$27,865.32 as settlement for costs incurred by Polar Equipment, Inc.
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 2009-081
Section 3. Funding in the amount of $27,865.32 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 24th day of
August, 2009.
THE CITY OF SEWARD, ALASKA
c
Willard Dunham, Vice Mayor
AYES: Valdatta, Kellar, Smith, Keil, Dunham
NOES: None
ABSENT: Bardarson, Corbridge
ABSTAIN: None
ATTEST:
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Council Agenda Statement
Meeting Date: August 24, 2009
To: Phillip Oates, City Manager ~/~~
From: Kristin Erchinger, Finance Director
Agenda Item: Electric Settlement with Polar Equipment, Inc dba Polar Seafoods
BACKGROUND & JUSTIFICATION:
A series of electrical disruptions occurred in the spring 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; Polar Equipment, Inc., dba Polar Seafoods, and Seward Ship's Drydock. 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 on
December 8, 2008, 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.
Polar Equipment, Inc. has signed a `no fault' settlement letter agreeing that the settlement of
$27,865.32 constitutes a complete settlement of their claim. It has further verified from its insurance
provider, that it is 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 Polar Seafoods 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 : /~yyy
RECOMMENDATION:
City Council authorize a settlement in the amount of $27,865.32 with Polar Equipment, Inc.