HomeMy WebLinkAboutRes1980-048
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9/22/80
CITY OF SEWARD, ALASKA
RESOLUTIO;-j NO. 80-48
A RESOLUTION APPROVING THE POWER SALES CONTRACT BETWEEN
THE CITY OF SEWARD AND CHUGACH ELECTRIC ASSOCIATION
WHEREAS, the City of Seward does not have sufficient
electric generation capacity to provide its population wjth the
current and anticipated demand for power; and
WHEREAS, the Chugach Electric Association (CEA) has
existing generation capacity sufficient to meet Seward's need
for power; and
WHE~EAS, the Seward Electric Utility has purchased
electric power from CEA for several years without a contract;
and
WIIEI1EAS, the City Manager and CEA officials have
negotiated a tentative power sales contract in recent months:
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF SEWARD that:
Section 1. The City of Seward hereby accepts and
approves the power sales contract between the City and Chugach
Electric Association, a copy of which is attached hereto as
Exhibit 1 and incorporated herein by reference.
Section 2. The City Manager is hereby authorized
and directed to execute the approved contract, thereby binding
the City of Seward to the terms thereof.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA this 22ndday of September, 1980.
CITY OF SEWARD, ALASKA
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'RaymOp'd L. Hugl i, M r
AYES: Hugli, Cripps, Gillespie, Leer, Soriano, Swartz
NOES: ~Ione
ABSENT: Campbell
ATTEST: APPROVED AS TO FORM:
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J Anne E. Shanley /'
City Clerk
Ranald H. Jarrell
Attorney for the City of Seward
(City Seal)
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COUNTERPART NO. I
CHUGACH ELECTRIC ASSOCIATION, INC.
Anchorage, Alaska
AGREEMENT FOR THE SALE OF WHOLESALE POWER
THIS AGREE~lliNT, made in duplicate as of this
day of,
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, 1980, by and between CHUGACH ELECTRIC ASSOCIATION, INC. ,I
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an Alaska nonprofit electric cooperative membership corporation ;
:' having its offices at Anchorage, Alaska, hereinafter called
;
,"Seller," and CITY OF SEWARD, a municipal corporation of the State'
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I, of Alaska, hereinafter called "Purchaser,"
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! WITNESSETH:
WHEREAS, Seller and Purchaser entered into that certain
: Agreement for the Sale,of Wholesale Power, dated July 1, 1961,
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; whereby and whereunder Seller agreed to sell and furnish to Pur-
chaser, and Purchaser agreed to purchase and receive from Seller,
all of the wholesale electric power and energy required for the
operation of Purchaser's electric utility system, not however,
except under the conditions mentioned, to exceed 2,700 KW;
WHEREAS, Seller participates in programs of the
Rural Electrification Administration, U.S. Department of Agricul-
ture, pursuant to the Rural Electrification Act of 1936, as
! amended (7 U.S.C. ~~ 901, et ~.), and as such participant is an
"Act Beneficiary" and eligible for loans from the said Administra-'
tion to finance capital investments in electric generation, trans-
mission, and distribution facilities;
\I1HEREAS, Seller has electric pmver supply contracts
with Homer Electric Association, Inc, (Homer) and Matanuska Elec-
tric AssGciation, Inc. (Matanuska), likewise "Act Benefj,ciaries"
under the above-mentioned Rural Electrification Act of 1936, as
amended, under which said contracts Seller sells and delivers
electric power and energy to these purchasers at the average cost
thereof;
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: Agreement for the Sale
of Wholesale Power,
: Page 2
WHEREAS, Purchaser is not an "Act Beneficiary" under the
aforesaid Rural Electrification Act of 1936, as amended;
WHEREAS, Purchaser's requirements for wholesale electric
power and energy for the operation of its electric utility system
exceeds, or will exceed, the limitation hereinabove mentioned,
that is 2,700 KW; and
WHEREAS, Seller and Purchaser agree that it will be to
their mutual benefit for Seller to continue to furnish wholesale
electric power and energy to Purchaser for the operation of its
electric utility system;
NOW, THEREFORE, for and in consideration of the mutual
convenants herein contained, and the payments to be made as here-
inafter provided, Seller and Purchaser agree as follows:
1. Sale of Electric Power and Energy:
Seller agrees to furnish and sell to Purchaser, and
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Purchaser agrees to purchase and receive from Seller, the electric
power and energy necessary for Purchaser's electric utility system,
subject to the terms and conditions as hereinafter provided.
Seller will not be obligated to furnish electric power and energy ,
to Purchaser at a rate any time in excess of 9,000 KH; Purchaser
may purchase electric power and energy at a rate in excess of the
I foregoing 9,000 KW when and if Seller has additional power avail-
able for that purpose; Purchaser will reduce its purchases of
electric power and energy from Seller to a rate of not to exceed
9,000 KW when requested by Seller; and, provided further, nothing
herein will be interpreted to give to Purchaser the right to use
electric power and ellergy from Seller at any greater rate than
9,000 KW.
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Agreement for the Sale
of Wholesale Power,
Page 3
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2. Inter-tie:
Seller will operate and maintain a line to inter-
connect its facilities with those of the Purchaser at or near
Mile 25 (Lawing) of the Seward Highway, hereinafter called
"Delivery Point."
3. Service Characteristics:
Electric power and energy furnished hereunder will
be alternating current, three-phase, sixty (60) cycles, at a vol-
tage of 14.4/24.9 KV, plus or minus five percent (5%), at the
Delivery Point.
4. Power Factor:
Purchaser will maintain a power factor between
ninety-five percent (95%) lagging and ninety-five percent (95%)
leading at Delivery Point, but Purchaser will be permitted to
operate at a lower power factor when, in the discretion of Seller,
such operation will not prevent Seller's making full use of its
generation, transmission, and distribution facilities.
5. Standby Facilities:
It is mutually understood that Purchaser likewise
has generating facilities, hereinafter called "Purchaser's Gene-
rating Plant," consisting of 5,500 KW of Purchaser-owned capacity..
In the event that Seller is unable to furnish electric power and
energy to Purchaser hereunder, Purchaser will, at the request of
Seller, supply the electric power and energy required for its
utility system from Purchaser's Generating Plant.
6. Metering:
The quantities of electric power and energy sold and
delivered to Purchaser hereunder from time to time will be mea-
sured by "in and out," fifteen-minute integrating, demand-type
metering equipment to be furnished, installed, and maintained by
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Agreement for the Sale
of Wholesale Power,
Page 4
, Seller at Delivery Point, The meter, or meters, shall be sealed,
and such seals shall be broken only when the meters are to be
inspected, tested, adjusted, or replaced. Purchaser will be
afforded reasonable opportunity to be represented on all such
occasions.
Metering equipment will be tested by Seller at least
once each year, and at any other reasonable time upon request of
either party. Metering equipment found to be defective or inaccu-:
rate will be repaired, readjusted, or replaced, as may be appro-
priate, by and at the expense of the Seller.
Should any meter
fail to register, the electric power and energy sold and delivere~
during such period of failure will be estimated by Seller from the
, best information available, and Purchaser will be billed accord-
ingly.
If a meter test, as herein provided, discloses an error
, exceeding two percent (2%), an appropriate adjustment will be made
on the current billing record, but no correction or adjustment
will be made for a longer period than such error or inaccuracy
may be determined by Seller to have existed. When an error or
inaccuracy requires an adjustment, as provided herein, such adjust-:
ment shall be reflected in the billing statement rendered in the
month next following such adjustment, and shall constitute liqui-
dation of any claim between the parties hereto arising out of any
such error or inaccuracy.
If a test of the metering equipment
made at the request of the Purchaser shows that meters are regis-
tering within two percent (2%) accurate, the Purchaser will bear
, the expense of such test.
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Agreement for the Sale
of Wholesale Power,
Page 5
7. Substations:
A. Seller will continue to own and operate the sub-
station at/or near Mile 7.5 of the Seward Highway, heretofore con-
structed and installed by Seller pursuant to the above-mentioned
agreement for the Sale of Wholesale Power, dated June 1, 1961,
I therein and, as enlarged by 2,500 KVA in 1975, that is, to a
i, total capacity of 5,500 KVA, hereinafter called the "Transforma-
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tion Point."
Circuit voltage at the Transformation Point will be
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reduced to 7.2/12.47 KV for distribution through Purchaser's
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i' utility system, and the low-side phase-to-phase voltage will be
" 12,470 volt, plus or minus five percent (5/0). This substation
, will be and remain the property of Seller, notwithstanding the
manner in which it may be affixed or attached to any other build-
ings, structures, or premise. The Purchaser hereby agrees to pay
for improvements to the Transformation Point, made by:Seller in
1975 at a cost of $49,782.35, pursuant to Section 9.B below.
B. Seller's Daves Creek Substation was likewise
improved in 1975 by (1) replacing the existing transformation
, with a transformer having an air-cooled rating of 10,000 KVA, and,
(2) installing a larger recloser on the circuit serving Purchaser,
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the replaced recloser having been salvaged. Purchaser will pay
for the foregoing improvements to the Daves Creek Substation the '
sum of $119,299.22 pursuant to Section 9.B below.
B. Additional Facilities:
A. Voltage Regulation:
Seller will proceed with due diligence to
install voltage regulation in the vicinity of Moose Pass on its
tie-line mentioned in Section 2 above.
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Agreement for the Sale
of Wholesale Power,
Page 6
B. Projected Facilities:
Seller and Purchaser mutually understand and
agree that other or additional facilities may be required to
supply Purchaser electric power and energy in excess of the
limit mentioned in Section 1 above. If Purchaser requires
electric power and energy for the operation of its electric
utility system in addition to that limit, then, and in such
event, Seller will install on a timely basis such other
facilities as are mutually agreed to be required to supply such
requirement, not to exceed, however, a total requirement of 20
MW; provided, the obligation of Seller to supply electric
power and energy to Purchaser in excess of the capacity of Pur-
chaser's own generation facilities will be subject to the condi-
tion that Seller can certify to Purchaser that Seller has suffi-
cient surplus generation capacity, over and above the combined
power requirements-of Seller and those Act Beneficiarfes supplied
by Seller, to furnish Purchaser's additional power requirements
for the operation of its electric utility system.
If any of the
other or additional facilities are to be constructed or installed
at a location, or locations, within an area certificated to
Purchaser by the Alaska Public Utilities Commission, except at
the Transformation Point described above, Purchaser may, at its
option, elect to construct and install such other additional
facilities at its own expense.
It is further understood and
agreed that Purchaser has elected to bypass Seller's substation
at the Transformation Point, and that Purchaser will pay to
Seller the unamortized portion of Seller's investment therein,
less reasonable net salvage value which payment will be made
pursuant to Section 9,B below,
All facilities installed pursuant to this Section 8
will be included in subsequent references herein to "Additional
Facilities."
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Agreement for the Sale
of Wholesale Power,
Page 7
It is further mutually understood and agreed that any
obligation which Seller may have to construct and install addi-
tional facilities hereunder is subject to Seller having obtained
the prior written approval therefor from the Administrator of
the Rural Electrification Administration, or his designee.
9. Payments:
A. Energy Charge:
The basic energy charge, that is, the charge
! per KWH of energy, hereinafter called "Base Rate," which Pur-
chaser will pay hereunder will be the average cost of such energy
to Seller, determined and computed under Seller's power-supply
contracts with Homer and Matanuska, as the same may be amended
from time to time, and as such average cost is adjusted, as
therein and hereinafter provided, following each annual audit of
Seller's operations by an independent certified public accountant.
B. Amortization Adjustment:
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The Base Rate will be adjusted to reflect the
cost of amortizing Seller's investment, after reasonable allow-
ance for net salvage value, in furnishing the Additional Facili-
ties mentioned in Section 8 above; provided, insofar as such
I facilities also serve Seller's other wholesale and/or retail
customers, such amortization expense will be shared by Seller
and Purchaser on a pro-rata basis, which division of costs will
be subject to an annual review by the parties and to such
adjustments as the parties may mutually accept. For the purpose
of determining their respective shares of the expense of amorti-
zing Seller's net investment in the Additional Facilities, it is
mutually agreed that the interest to be charged on the net
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Agreement for the Sale
of wholesale Power,
Page 8
investment will be 8% per annum, and that such net investment,
plus interest, will be amortized over a period of ten (10) years,
Purchaser will be credited with the net salvage value of the
reclosers removed in 1975 from the Daves Creek Substation men-
tioned in Section 7.B above, and the net salvage value of the
transformers and other equipment at Transformation Point, if and
. when the use of the latter facilities are no longer required by
Purchaser; provided, the net salvage value of such equipment will
; be its value after the deduction therefrom of Seller's expense
incurred for its removal and transportation to the point of its
use on Seller's system or to Seller's storage facility, as the
case may be.
C. Tax Adjustment:
(1) The Base Rate herein shall be subject to an
, adjustment to reflect the inclusion therein of a propo:-tional share
of any property, gross revenue, or other tax of any properly
authorized taxing authority which may be levied and imposed upon:
(a) Property and/or operations of Seller
'which are included in the computation of the Base Rate;
(b) Property and/or operations of Seller
,not included in the computation of the Base Rate, but devoted, in
'whole or in part, to furnishing service hereunder; and
(c) Revenue received hereunder by Seller
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(2) The adjustment for taxes levied and imposed:
on the property and/or operations mentioned in Subsection (a)
from Purchaser.
above shall be in the proportion that Purchaser's purchase of
. electric power and energy bears to Seller's total sales thereof,
including power and energy sold by Seller at retail.
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Agreement for the Sale
of Wholesale Power,
Page 9
(3) The adjustment for taxes levied and imposed
on the property and/or operations mentioned in Subsection (b)
above shall be prorated between Seller and Purchaser in propor-
tion to their use of the electric power and energy transmitted
and/or distributed thereby.
(4) Any tax imposed upon the revenue Seller
receives hereunder will be paid by Purchaser by an appropriate
adjustment of the Base Rate.
D. Line Loss Adjustment:
Seller and Purchaser will share in the costs
attributed to line losses on the inter-tie between Daves Creek
Substation and the Delivery Point in the same proportion as the
KWH delivered to Purchaser at the Delivery Point bears to the
total KWH transmitted over such facility; provided, the allocation
of line-loss expense between the parties will be subject to
annual audit.
E. Payment of Bills:
Charges for electric power and energy sold and
delivered to Purchaser, and charges for emergency electric power
and energy sold and delivered to Seller, will be determined as of
the last day of the month in which such power and energy was sold
and delivered, and bills therefor will be furnished to Purchaser
or Seller, as the case may be, on or before the 10th day of the
month next following. When any bill is not paid within thirty
(30) days from the date thereof, the account will be considered
delinquent, and the creditor, without limiting its rights at law
or in equity, may discontinue the service for which payment has
not been received and apply to the payment for such debt any sum
which may be due to delinquent debtor, but nothing herein shall
relieve Purchaser of any of its other obligations hereunder.
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Agreement for the Sale
of Hholesale Power,
Page 10
10. Continuity of Service:
Seller will use reasonable diligence to provide a
constant uninterrupted supply of electric power and energy as
herein provided, but if such supply shall fail or be interrupted
by an Act of God or the common enemy, by accident, by strikes or
other labor disputes, by inability to secure necessary rights-of
way or permits, or o'ther cause beyond and outside Seller's rea-
sonable control, Seller will not be liable therefor.
11. Term of Agreement:
This agreement will become effective on the date of
its approval by the Administrator of the Rural Electrification
Administration, or his designee, as provided in Section 16 below,
will remain in effect for ten (10) years from such date, and will
continue in effect thereafter, except that either party give one
year's written notice to the other party of its desire to termi-
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nate the same; provided, Seller may terminate this agreement at
, any time after five (5) years from its effective date, and upon
two (2) years' written notice to Purchaser, if, in the sole judg-
ment of Seller, it does not have sufficient generating capacity to
meet its own requirements and those of Act Beneficiaries it is
contractually obligated to serve; and, provided further, if Seller
terminates this agreement as hereinabove provided, Purchaser will
be released, as of the effective date of such termination, of all
obligations to reimburse Seller, by amortization through power
purchaser or otherwise, for any part of Seller's investments in
facilities hereunder not amortized at the effective date of such
termination,
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Agreement for the Sale
of Wholesale Power,
Page 11
12. Other Charges:
A. Notwithstanding the provisions of Section 11
above, the parties agree that Purchaser may terminate this agree-
ment by written notice to Seller, but such termination shall be
effective only one hundred eighty (180) days after the date of
such notice and upon Purchaser's reimbursing Seller for the then
· unamortized portion of Purchaser's pro-rata share of Seller's
. actual investment in the facilities mentioned in Sections 7 and 8
. above and constructed by Seller to make service available to Pur-
chaser hereunder, less the reasonable net salvage value of the
Purchaser's pro-rata share of such facilities. Payment of such
termination charge, and all other charges or payments owed here-
under by Purchaser to Seller, will become due and payable within
thirty (30) days after the effective date of the termination.
B. At the end of the term of this agreement, or of
i any extension thereof pursuant to Section 11 above, Purchaser will
pay to Seller that part, if any, of Purchaser's pro-rata share of
Seller's investment in the Additional Facilities which remains
j unamortized through Purchaser's purchase of power hereunder, less
.. reasonable salvage value, at the time that Seller's investment in
the Additional Facilities is fully amortized, either pursuant to
Section 9.B above or this Section. Purchaser will have title to
those items of the Additional Facilities located within the ser-
vice area certificated to Purchaser by the Alaska Public Utilities
Commission, except those items of the Additional Facilities loca-
ted at the Transformation Point, and Seller will retain title to
all items of the Additional Facilities which are located outside
such service area.
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Agreement for the Sale
of Wholesale Power,
Page 12
c. "Net salvage value" and "reasonable salvage
value," as hereinabove used, ~vill be computed by determining the
value of the Additional Facilities as salvage at the time such
determination is made, and deducting therefrom the cost to Seller
of their removal and transportation to the point at which they
will be utilized by Seller, or to the Seller 's storage facility,
as the case may be.
13. Addresses of Parties:
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Whenever provision is made herein for written notice,:
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or for the submission of a billing statement, such notice or
i statement will be considered to have been delivered when depositeu
in the United States mails, postage prepaid, and addressed to the
, parties as follows, to wit:
Se ller
or
Purchaser
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General Manager,
Chugach Electric
Association, Inc.
P. O. Box 3518
Anchorage, Alaska
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as the case may be. Either
City Manager,
City of Seward
Box 337
Seward, Alaska 99664
99501,
party may change its address of record
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14. Membership:
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I Purchaser will remain a member of Seller and will be
I entitled to all rights and privileges thereof as provided in
Seller's Bylaws.
15. Waivers:
The failure of either party to insist, in anyone
or more instances, upon a strict performance hereof, or to exer-
cise any option or right herein contained, shall not be con-
I strued as a relinquishment of any such option or right in the
future.
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Agreement for the Sale
of Wholesale Power
Page 13
16. Approval by Rural Electrification Administration:
This agreement will be effective only upon its
approval in writing by the Administrator of the Rural Electrifica-
. tion Administration, or his designee,
17. Alaska Public Utilities Commission:
The parties hereto mutually recognize and agree
, that Seller is a public utility as defined in the Alaska Public
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Utilities Commission Act, AS 42.05, and that, as a public utility,
: it is subject to regulation by that Commission. The within Agree-
ment is executed, therefore, subject to the authority of the said
! Commission to modify, amend, or otherwise change by order the
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'terms and conditions of service hereunder.
18. Termination of Prior Agreement:
On the date that this agreement becomes effective,
. as determined by Section 16 above, the similar contract between
, the parties mentioned in the first recital above, dated June 1,
1961, will terminate by their mutual agreement.
19. Counterpart Copies:
This agreement is simultaneously executed and de-
livered in three counterparts, each of which will be deemed to be
an original, and will constitute but one and the same instrument.
IN WITNESS WHEREOF, Chugach Electric Association, Inc.,
i acting by and through its President and Secretary, duly authorized
. by a resolution of its Board of Directors adopted on
1980, and City of Seward, acting by and through its City Manager,
duly authorized by motion of the Council of the City of Seward,
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Agreement for the Sale
'of Hholesale Power,
'Page 14
. dated
, 1980, have caused this agreement to be execu-
ted, sealed, and attested, all as of the day and year first above
written.
CHUGACH ELECTRIC ASSOCIATION, INC.
(Seller)
(SEAL)
By
President
: ATTEST:
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: Secretary
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CITY OF SEWARD
(Purchaser)
(SEAL)
By
City Manager
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! ATTEST:
: City Clerk