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HomeMy WebLinkAboutRes2019-097 Sponsored by: Meszaros Public Hearing: November 25,2019 CITY OF SEWARD,ALASKA RESOLUTION 2019-097 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 THE ADVANCEMENT OF MARINE SCIENCE (SAAMS) FOR ADJUSTED ELECTRIC RATES WHEREAS, SAAMS and the City are 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 Alaska SeaLife Center year-round and provides full- time employment in the City; and WHEREAS,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 Alaska 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 Alaska 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 recommends that the City Council approve the special contract with SAAMS based on current financial hardships. 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 enter into a Special Contract for Electric Rates ("Contract")in substantially the form presented at this meeting. Section 2.This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 25th day of November, 2019. CITY OF SEWARD,ALASKA RESOLUTION 2019-097 THE CITY OF SEWARD,ALASKA Sue McClure, Vice Mayor AYES: Osenga, Seese, Baclaan, Butts, McClure NOES: None ABSENT: Lane, Terry ABSTAIN: None ATTEST: /62114/tit/ Brenda J. Ballou, MC City Clerk (City Sea :.y � V� F. ® ice• A o Y4 to • I t �.,,rE OF.N `�sy`'. Council Agenda Statement Meeting Date: October 28, 2019 of To: City Council Through: Scott Meszaros, City Manager From: John Foutz, Electric Utility Manager 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 no longer had an `industrial Rate.' For SAAMS changing to the higher `Large 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, less attraction to the area by visitors 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 SHAMS. The proposed rates are based from the special contract which expires in December 2019. The following suggested rates were calculated in 2015 and were intended to progressively move the Sealife Center towards the Large General service rate by charging an estimated Consumer Price Index (CPI) of 1.24-o plus 2% above the amount of the expected December 2019 for the fifth year (2020). At this juncture the City Council has chosen to freeze the rates for two years. If the suggested rate for the following years, after the two year hiatus, as calculated to bring SAAMS to approximately the same rates as large general service in electric and demand by the year 2027. Percentage spikes were levelized slightly. 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: Yes No N/A 1. Comprehensive Plan: (1.3, 3.7.33, 3.7.3.2) X 2. Strategic PIan (document source here): X 94 F_31 Other(list): X 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 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. The projected additional monthly revenue to the electric department is shown on the attached table. 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 end-of-year 2019 rates for the Sealife Center are an electric rate of$0.04106 per kilowatt/hour and a demand rate of$21.72 per kilowatt. The suggested rate in energy and demand for SAAMS respectively is$0.04106/kWh and$21.72/kW for 2020,$0.04106/kWh and$21.72/kW for 2021. Any other charges or rates that may be applicable will follow the Large General Service rate class. The following table shows the 2019 rate as a basis per month, followed by the approximate amounts SAAMS would pay as a Large General Service customer and the Cost of Power Adjustment equivalent rate. Signing SAAMS to a special contract will not increase their electric bill in year 2020 or 2021. Approved by Finance Department: tc,l_�__1/-.�1 ATTORNEY REVIEW: Yes No RECOMMENDATION: The City Council pass resolution 2019-097, 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. 95 SPECIAL CONTRACT FOR ELECTRIC RATES This Special Contract for Electric Rates ("Contract") is between the City of Seward ("City") whose address is P.O. Box 167, Seward, Alaska 99664 and the Seward Association for the Advancement of Marine Science ("SAAMS")whose address is P.O. Box 1329, Seward, Alaska 99664. WHEREAS, SAAMS and the City are 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 Alaska SeaLife Center year-round and provides full-time employment in the City; and WHEREAS, 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 Alaska SeaLife Center is necessary to avoid requiring the City to assume operation of the facility; and WHEREAS, after starting the industrial rate, the actual demand for electric power 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 Alaska SeaLife Center for the City. The parties hereby agree as follows: Section 1 . Effective Date and Term. This Contract shall become effective January 1 , 2018, upon approval by the City Council for the City and execution by each party. This Contract shall remain in effect until December 31 , 2021. Upon termination or expiration SAAMS shall remain indefinitely at the same rate, as described in this contract, without further action by the parties. Section 2. Rate Adjustment. Throughout the term of this Contract SAAMS shall be entitled to electrical rates and charges as described below: 1 Rates stated in the City of Seward Electric Tariff applicable to Large General Service shall apply except as follows: To the extent Chugach Electric Association, or any alternative wholesale provider, increases energy and demand rates they will be directly and cumulatively added to the rates below: Energy Charge: From January 1, 2020 to December 31 , 2020 the rate shall be $0.04106 per kilowatt hour (kWh) From January 1, 2021 to December 31, 2021 the rate shall be $0.04106 per kilowatt hour (kWh) Demand Charge: From January 1, 2020 to December 31, 2020 the rate shall be $21 .72 per kilowatt (kW) From January 1, 2021 to December 31 , 2021 the rate shall be $21 .72 per kilowatt (kW) The minimum monthly Demand shall be 750 kW. Fuel charges and rate changes established by Chugach Electric Association (CEA) or any future wholesale provider to the City of Seward through the Regulatory Commission of Alaska (RCA) shall be passed directly through to SAAMS without any markup from the City and shall increase each of the rates listed above. Section 3. Requirements. SAAMS represents that it currently faces financial difficulties and is looking for ways to reduce its costs while continuing to operate and maintain the Alaska SeaLife Center to a standard that is comparable to other well-operated and well-maintained marine research facilities throughout the United States. It is expressly agreed and understood that the rate adjustments described in Section 2 of this agreement shall apply only to the Alaska SeaLife Center and shall not apply to any other properties or operations of SAAMS. Electric service is subject to interruption by the City when peak demand is in excess of what the City can generate. Section 4. Assignment. This Contract shall not be assigned. Section 5. Amendments. Any amendments, including extension of term, rate adjustments, or other provisions of this Contract, shall be agreed to in writing and signed by both parties following approval by the Seward City Council. 2 Executed this day of w .; 2019. SEWARD ASSOCIATION FOR THE ADVANCEMENT OF MARINE SCIENCE Tarp L. Riemer President and CEO CITY OF SEWARD Recommended by: S tt Mesza s John outz, a y an ger City Manag ATTEST: enda J. Bal ou, C City Clerk 9 2 _ w F ® ® f,3 ®, oic 1 �_ 3