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:
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Brenda J. Ballou, MC
City Clerk
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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
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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.
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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:
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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.
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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
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