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HomeMy WebLinkAboutRes2017-068 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2017-068 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING THE ELECTRIC RATES AND CHARGES, REDUCING SEASONAL RATES, AND ADJUSTING RATES TO REFLECT SEWARD ELECTRIC UTILITY CHARGE, COST OF POWER ADJUSTMENT AND CUSTOMER CHARGE FOR 2018 AND 2019 WHEREAS, the Seward City Council conducted extensive public rate review work sessions for the purpose of addressing critical infrastructure and operational needs of the Electric Utility;and WHEREAS, the Council finds that it is in the financial interests of the Electric Utility to increase the electric tariff by the projected Consumer Price Index of 2.1% in 2018, which will be offset by a Chugach 2.0%decrease in 2018 (for a net increase of 0.1%), and 1.6%Consumer Price Index increase in 2019; and WHEREAS, the Council finds that it is in the best interests of the residents and small business owners of the Seward Electric Utility to reduce the seasonal rate; and WHEREAS, the Council seeks to incrementally increase rates in order to recover increased costs for infrastructure and operational needs of the electric utility,while avoiding single-year larger rate increases; and WHEREAS, to that end,Council approves changes to the Electric Tariff as attached hereto in"Electric Rates& Charges 2018", effective January 15, 2018; and WHEREAS, the Council further approves changes to the Electric Tariff as attached hereto in"Electric Rates & Charges 2019"to be effective January 15, 2019. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1.Effective January 15,2018,the Seward City Council hereby approves the adjusted Electric Tariff rates and charges as attached hereto as "Electric Rates & Charges—2018". Section 2.Effective January 15,2019,the Seward City Council hereby approves the adjusted Electric Tariff rates and charges as attached hereto as"Electric Rates & Charges—2019". Section 3. This resolution is effective immediately upon passage. CITY OF SEWARD,ALASKA RESOLUTION 2017-068 PASSER AND APPROVED by the City Council of the City of Seward, Alaska,this 23`d day of October, 2017. THE CITY OF SEWARD, ALASKA David Squires,May.r AYES: Keil,McClure, Slater, Squires NOES: Casagranda, Towsley,Horn ABSENT: None ABSTAIN: None ATTEST: iti)L, &ON Brenda J. Ballou, MMC City Clerk X11 (City SfittPle:4,4, . Vy.SR�s4O s SEAL • �1'a Council Agenda Statement Meeting Date: October 23, 2017 of se C To: City Council ', 44ASi0" Through: James Hunt, City Manager From: John Foutz, Manager Electric Utility Agenda Item: Amending Electric Rates and Charges, Adjusting Seasonal Rates and Adjusting Rates to Reflect Seward Electric Utility Charge, Cost of Power Charge and Customer Charge for 2018 and 2019. BACKGROUND&JUSTIFICATION: At the recommendation of the contracted electric financial engineer, Mike Hubbard of Financial Engineering Company, Administration recommends that electric rates will be increased effective January 15, 2018 by the projected Consumer Price Index (CPI) of 2.1 percent. This is projected to be offset by a planned Chugach Electric decrease of 2.0 percent for the City of Seward. This will be a net effect to the Seward electric utility customers of 0.1 percent in 2018. In addition, rates will increase, by the projected CPI, an additional 1.6 percent effective January 15, 2019. The City requires more data to confirm or deny the merit of the seasonal rates before abolishing the seasonal rates. The Council has directed that the seasonal rate be less impactful on the customer's monthly statement. The seasonal rate has been adjusted to approximately 15 percent of the base Seward Utility rate for residential and small general. The percentages are not exact since the consumption, on average, is different in the defined winter and summer months. During previous budget work sessions, the Seward City Council chose to implement seasonal rates to the Residential and Small General Service rate classes. This was meant to provide year- round residents and small business with some rate relief during the winter when economic activity is minimal and to allocated more expenses from the winter months to the summer months to coincide with the higher economic activity. The Harbor Department, which is categorized as Small General but is another City department, remained with an annual base rate. Large General Service remained unchanged. The customers of the City of Seward Utility have expressed they want the electric utility bill to be easier to comprehend and transparent. To accomplish this,the utility bill will be reformatted to show Seward Utility Charge, Cost of Power Adjustment and Customer Charge for all classes of service. The Large General Service will still include a charge for demand. This proposed tariff includes a fee schedule for the purpose of recovering costs associated with individuals who elect to turn off power seasonally. First in the Rates for Electrical Power by Class of Service is the System Delivery Charge as follows: "A system delivery charge(SDC)of$28.75 will be applied to any service that uses less than 150kWh/month, whether or not electric service is used. This replaces the Seward Utility Energy Charge and the Cost of Power Adjustment and is subject to proration. SDC under this schedule is an addition to the customer charge and is based on a monthly usage of 150 kWh times the energy rate and the COPA. Absent an active customer the registered property owner will be billed this monthly minimum charge. Second, is a reconnect a service fee in the Schedule of Fees and Charges as follows: "Seasonal Turn-On Fee and Seasonal Turn-Off Fee(excludes brand new service; includes new account name or same account name;waived if<2 months between turn-off and turn-on). Zone I= $150.50;Zone II=$150.50; Zone III=$165.55 for 2018. The basis for this recommendation is to charge the customer the approximate monthly infrastructure fee multiplied by seven months. In the Schedule of Fees and Charges, Existing Facilities a line has been added to address the use of the City of Seward's transmission system for transporting power outside of the City of Seward's system,which has been classified as, `Transmission Rate.' INTENT: The purpose of Resolution 2017- is to modify the Electric tariff to sufficiently recover projected expenses to the Electric Enterprise fund for fiscal years 2018 and 2019. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan( 1. 3, 3. 7. 3. 1, 3. 7. 3. 2): Continue to upgrade 1 and expand utilities to meet existing needs and encourage future X development. Expand customer base within the Seward Electric Utility area as a means to reduce energy costs and improve services. 2 Strategic Plan:The mission of the City of Seward government is to X provide quality leadership and economic wellbeing of its citizens 3. Other(list): X FISCAL NOTE: The 2.1%increase in 2018 is expected to be mostly offset by a Chugach decrease for the City of Seward as a wholesale customer and submitted to the RCA in October 2017 will generate a net increase to the Seward customers of 0.1%. The 1.6%increase in 2019 is expected to compensate for a projected slight loss in overall sales. Those added revenues are crucial to the ability of the Electric Fund to cover the cost of some of its critical capital needs and operating costs. Approved by Finance Department: ' 4n. ' i r RECOMMENDATION: 0'9) Seward City Council approves Resolution 2017- amending the Electrical Rates and Charges tariffs for 2018 and 2019.