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HomeMy WebLinkAboutRes2009-136 Sponsored by: Oates CITY OF SEWARD, ALASKA RESOLUTION 2009 -136 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A SPECIAL CONTRACT WITH THE SEWARD ASSOCIATION FOR TIIE ADVANCEMENT OF MARINE SCIENCE (SAAMS) FOR ADJUSTED ELECTRIC RATES WHEREAS, SAAMS and the City arc parties to the Amended and Restated Agreement for Lease Of Tract 2a, Waterfront Tracts And Adjacent Tidelands, And The Lease, Operation And Maintenance Of The Alaska SeaLife Center; and WHEREAS, SAAMS operates the SeaLife Center year -round and provides full -time employment in the City; and WIIEREAS, job creation, job retention, and promotion of marine research and economic development are important to residents of Seward; and WHEREAS, economic stability of operation of the SeaLife Center is necessary to avoid requiring the City to assume operation of the facility; and WHEREAS, after starting on the industrial rate, SAAMS actual demand for electric power for the SeaLife Center site is not lower than 750 kW; and WHEREAS, the Utilities Manager is authorized to negotiate a special contract, subject to approval by the City Council, for customers who have a demand in excess of 750kW or that have unique power requirements that cannot be reasonably addressed by the Large General service tariff; and WHEREAS, the Utilities Manager has recommended that the City Council recognize the unique power requirements of SAAMS for operating and maintaining the SeaLife Center for the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is authorized to enter into a Special Contract for Electric Rates ( "Contract ") in substantially the form presented at this meeting. Section 2. The Recitals stated above are incorporated herein by reference as findings of the City Council. We find, in accordance with the City of Seward Electric Tariffs and for the reasons stated above that the SeaLife Center has unique power requirements that cannot be reasonable addressed by the large general service tariff. CITY OF SEWARD, ALASKA RESOLUTION 2009 -136 Section 3. This resolution shall be effective immediately. The contract shall be effective January 1, 2010. PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 14 day of December 2009. THE CITY OF EWARD, ALASKA illard E. Dunham, Mayor AYES: Valdatta, Bardarson, Keil, Shafer, Ambcrg, Dunham NOES: None ABSENT: Smith ABSTAIN: None ATTEST: Jc n Lewis j City Clerk_ 0 03 13 Aa awl � '1 �r 1 a , o (City Seal) of 4 W W d N1 w n BA �� • � a a naa ,,,c+ rti, Gb A sotit OF Nior * MEW Council Agenda Statement y of S Fw Meeting Date: December 14, 2009 u ; A , To: City Council 4 P Through: Phillip Oates, City Manager From: John Foutz, Electric Utility Manager 4 Agenda Item: Special Contract with Seward Association for the Advancement of Marine Science for Discounted Electrical Rates for the SeaLife Center BACKGROUND & JUSTIFICATION: As of January 1, 2010, the City of Seward electrical tariff will no longer have an `Industrial Rate.' For the three businesses that are currently being charged the Industrial Rate, changing to the higher `General Service' rate in a one year time period would be financially damaging. The electric tariff allows, "Special Contracts to be negotiated by the Utilities Manager with a customer that have demand in excess of 750 kilowatts (kW) or that have unique power requirements that cannot be reasonably addressed by the large general service tariff." In the case of Seward Association of the Advancement of Marine Science (SAAMS) these unique power requirements include a monthly demand in excess of 750 kW, full -time employment for Seward residents, economic stability for Seward, and the promotion of essential marine research. SAAMS financial stability relies on an electric rate which is comparably less than the larger General Service rate. SAAMS claims that if they pay the higher rate they could not maintain the SeaLife Center profitably, and may be forced to close. If the facility closes the impact would be great and would include higher unemployment rates, loss of revenues to the Seward area, and the City of Seward would be forced to take over the facility. The special contract applies only to the SeaLife Center site, and not to any other operations of SAAMS. INTENT: To sign a special contract with SAAMS for a special electric rate for two years, giving them time to become more financially stable. CONSISTENCY CHECKLIST: Where applicable, this agenda statement is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures or Other Plans or Policies: Yes (List Below) Electric Rates & Charges: Page 2 -2: 3. Special Contracts: Special contracts may be negotiated by the Utilities Manager with customer that have a demand in excess of 750 kW or that have a unique power requirements that cannot be reasonably addressed by the large general service tariff. Special contracts may include, but are not limited to, provisions for instantaneous demand charges, time of service, interruptible power, minimum and maximum demand, adjustment of demand level, ownership and payment of new distribution facilities, termination charges and power factor. Special contracts must be approved by the City Council. FISCAL NOTE: In April 2009 SAAMS started being charged a rate of $0.00574 per Kilowatt -hour for an energy charge and $10.25 per Kilowatt for a demand charge. The proposed rates are based on the previous industrial rate schedule in the 2009 tariff. This rate was calculated by charging 25% above our wholesale cost from Chugach Electric. The city council added a five percent increase effective January 1, 2010. The suggested rate in energy and demand for SAAMS is $0.0081 /kWh and $11.69/kW respectively. Any other charges or rates that may be applicable will follow the Large General Service rate class. The following table shows the 2009 rate as a basis per month, followed by the approximate amounts SAAMS will pay in 2010 under the Large General Service or by Special Contract. Also included is the percentage over the 2009 rate. Signing SAAMS to a special contract will increase the electric department's revenues by approximately 7.68% and an approximate dollar amount of $2,728.19 per month and $32,738.28 per year. If the Sealife Center pays the Large General Service rate the percentage increase would be 75.62% and an increase to annual revenue of $322,524.60. Sealife Center Current Sealife St Special 2009 Large General Service 2010 Contract 2 Average Monthly Bill Electric Operations & Infrastructure Fee $30.00 $31.50 Energy charge (rate) $0.00503 $0.07413 $0.0081 Avg. cust kWh 417840 250704 417840 2,099.65 18,584.69 3,389,52 $0.04263 167136 7,125.01 Energy charge 2,099.65 25,709.70 3, Fuel Charge (rate = $0.057298 @ 9/09) 23,941.40 23,941.40 23, Demand Charge (per kW) $10.15 $13.65 $11.69 Avg. Cust kW 933 933 933 9,469.95 12,735.45 10, Average Electric per month 35,540.99 62,418.04 38, Increase per month: $26,877.05 $2, Percentage overall increase: 75.62% Approved by Finance Department: jc> F fZ ) ATTORNEY REVIEW: Yes X No // RECOMMENDATION: The City Council pass resolution 2009 - / giving the City Manager authorization to enter into a special contract with Seward Association for the Advancement of Marine Science for special electric rates for the SeaLife Center facility.