HomeMy WebLinkAboutRes2015-087 Sponsored by: Hunt
CITY OF SEWARD,ALASKA
RESOLUTION 2015-087
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
SPECIAL CONTRACT WITH ICICLE SEAFOODS, INC. FOR
DISCOUNTED ELECTRIC RATES FOR SEWARD FISHERIES
WHEREAS,Icicle Seafoods operates Seward Fisheries year-round and provides full-time
employment in the city; and,
WHEREAS,job creation,job retention, and promotion of fishing and fish processing are
important to residents and the City of Seward; and,
WHEREAS,economic of operations of Seward Fisheries is necessary to the region
and residents of Seward; and,
WHEREAS, except during a peak season in the summer, the actual demand for electric
power is 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 recommended that the City Council approve the special
contract with Seward Fisheries based on current financial hardship resulting from growing
competition from offshore fish processor.
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.
Section 3. This resolution shall be effective immediately. The contract shall be effective
January 1, 2016.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 26th day of
October, 2015.
CITY OF SEWARD,ALASKA
RESOLUTION 2015-087
THE CITY OF SEWARD,ALASKA
an Bardarson,Mayor
AYES: Keil, Butts, Altermatt, McClure, Bardarson
NOES: None
ABSENT: Squires, Casagranda
ABSTAIN: None
ATTEST:
/ / r
A
J•hanna -, CMC
ity Cler
(City Seal)
�ooEQeaaeo6��„®0
oy
ct
•
O
)M
Ea
0 0 P`c
o Q'
•tft>
w Q6
OP.r 1�� r
.,,n Im j: P .
c�"n. y j t •�.,
Council. Agenda Statement
Meeting Date: October 26,2015 e` st�,,4,4
To City Council
...... ....
Through: James Hunt, City Manager '14.AS
• .
From: John Foutz,Electric Utility Manager
Agenda Item: Special Contract with Icicle Seafoods, Inc. for Discounted Electrical Rates for
Seward Fisheries
BACKGROUND &JUSTIFICATION:
The electric tariff industrial rate, as of January 1, 2010, was abolished. 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."
Seward Fisheries' unique requirements include; year round employment for Seward residents,
economic influx to the Seward area, seasonal demand in excess of 750 kW, and the importance of
retaining a business in the community. Seward Fisheries claims that if they pay the `large general
service'rate they will not be able to maintain their facility profitably and would be forced to close it.
If that were to happen the impact on Seward would be negative with the loss of jobs,tax revenue
and revenue to the city owned utilities as well as a potential loss of revenue to small local businesses.
The proposed rates are based from the special contract which expires in December 2015. The
following suggested rates are calculated to bring Icicle Seafoods into the large general rate class
within five years.The electric and demand rates are calculated to be approximately equally,based on
monthly dollar average,applied over the years 2016 to 2020 to match a projected Large General rate.
Percentage spikes were levelized slightly.
INTENT:
To sign a special contract with Icicle Seafoods, Inc. for Seward Fisheries for a special electric rate
lasting two years.
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan(1.3, 3.7.3.1, 3.7.3.2): X
2. Strategic Plan (document source here): X
3. Other (list): X
Electric Rates&Charges:Page 2-2:3.Special Contracts: Special contracts may be negotiated by
the Utilities Manager with customers that have a demand in excess of 750 kW or that have 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 2009 Seward Fisheries was charged a rate of$0.00574 per Kilowatt-hour for an energy charge and
$10.25 per Kilowatt for a demand charge; In January 2012 Seward Fisheries started with an electric
rate of$0.00891 and a demand rate of$12.86. The end-of-year 2015 rates for Icicle Seafoods are an
electric rate of$0. 017460 per kilowatt/hour and a demand rate of$19.18 per kilowatt.
The suggested rate in energy and demand for Seward Fisheries respectively are
$0.02812/kWh(1st 200 kWh/kW), $0.03729 (Additional kWh) and$19.83/kW for 2016 and
$0.03877/kWh (1st 200 kWh/kW), $0.05707 (Additional kWh) and $20.49/kW for 2017 and
$0.04943/kWh (1st 200 kWh/kW), $0.07684 (Additional kWh) and $21.14/kW for 2018 and
$0.06008/kWh (1st 200 kWh/kW), $0.09662 (Additional kWh) and $21.80/kW for 2019 and
$0.07074/kWh (1st 200 kWh/kW), $0.1178 (Additional kWh) and $22.45/kW for 2020. The
minimum monthly billing demand shall be 750 kW.
Any other charges or rates that may be applicable will follow the Large General Service rate class.
The following table shows the current 2015 rates as a basis per month,followed by the approximate
amounts Seward Fisheries will pay in 2016 through 2020 by the recommended Special Contract.
Also included is the estimated percentage and dollar increase per month.
Signing Icicle Seafoods to a special contract will increase their electric bill by approximately 10.13%
and an approximate dollar amount of $4,958.92 per month and $59,506.99 per year. If Icicle
Seafoods pays the Large General Service rate in one year the percentage increase would be 56.44%
and an increase to annual revenue of$274,651.43.
Approved by Finance Department: 46,42. Jattwese)
ATTORNEY REVIEW: Yes _ No_t_
RECOMMENDATION:
The City Council pass resolution 2015-087, giving the City Manager authorization to enter into a
special contract with Icicle Seafoods for special electric rates for the Seward Fisheries location.