HomeMy WebLinkAbout02192020 PACAB Work Session PacketPORT &COMMERCE
ADVISORY BOARD
WORK SESSION PACKET
Topic: Review the February 3, 2020 Council work session
on electric rates and utilities.
Wednesday, February 19, 2020 at 12:00 p.m.
Council Chambers
Port & Commerce Advisory Board
February 19, 2020
TABLE OF CONTENTS
Ordinance 2019-016, Amending City Code Section 14.15 — Electricity, Article
415 — Interconnection Requirements, Procedures, And Application Process
For An Alternative Power Source Less Than 25KW.
Enacted October 28, 2019
Port & Commerce Advisory Board Minutes
May 15, 2019 PACAB recommends to council approving utility rebates for heat
pump installs at 50150 or $1, 700.
Rural Energy Savings Program
Affordable loans to help consumers implement cost-effective, energy
efficient measures.
Port & Commerce Advisory Board 2020 Priorities
Electric Department PowerPoint Presentation
January 31, 2020 Letter from Citizen, Phil Kaluza
CITY COUNCIL
WORK SESSION PACKET
Topic: Discuss Electric Department rates, classifications,
utility infrastructure management, current contract
regarding power factor adjustment penalty, current
status/process of selling electric utility, update on current
demand meter project, update on the air-to-air project,
clarifying billing, and timeline or schedule for pole
replacement.
Monday, February 3, 2020 at 6:00 p.m.
Council Chambers
City Council Work Session
February 3, 2020
TABLE OF CONTENTS
Ordinance 2019-016, Amending City Code Section 14.15 — Electricity, Article
415 — Interconnection Requirements, Procedures, And Application Process
For An Alternative Power Source Less Than 25KW.
Enacted October 28, 2019
Port & Commerce Advisory Board Minutes
May 15, 2019 PA CAB recommends to council approving utility rebates for heat
pump installs at 50150 or $1, 700.
Rural Energy Savings Program
Affordable loans to help consumers implement cost-effective, energy
efficient measures.
Port & Commerce Advisory Board 2020 Priorities
Sponsored by: PACAB
Introduction Date: October 14, 2019
Public Hearing Date: October 28, 2019
Enactment Date: October 28, 2019
CITY OF SEWARD, ALASKA
ORDINANCE 2019-016
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING CITY CODE SECTION 14.15 — ELECTRICITY,
ARTICLE 415 — INTERCONNECTION REQUIREMENTS,
PROCEDURES, AND APPLICATION PROCESS FOR AN
ALTERNATIVE POWER SOURCE LESS THAN 25KW
WHEREAS, PACAB's responsibilities include providing input tca the City Council o)n
policy and procedural rnatters involving the establishment and continuance ofcoo nmercial
activity', improving the qUality of late and protecting the pubhe's best interest and performing
other duties as red. Uested by the ( I ity Council; and
WHEREAS, in December, 2017, Council (firectcd 11ACAB to explore options f'or
alternative energy in Seward, and
WHEREAS, the rulesn fOr interconnection are (X re established by S" 14J5A
L11111/11,11/1", Interconnection with ("ustomer-Owned Alternative P0WC1- SOU cc Generation Equipment, -
and
WHEREAS, PACAB believes that interconnection of customer -owned alternative
power source generation equiptnent with the City's electrical distribution system is a key
cornponeril of responsible energy policy; and
WHEREAS, the ("'ode was last update(] in 2014 by Ordinance 2014-003 ain ordinance
of the City (7ouncil of the City ofSeward, Alaska, amendingTitle 14 cat" the City's ('ode of
Ordinances to provide for interconnection of small renewable energy sources to the City's,
electrical distribution system; since this section of code was enacted in 2014, no
homeowners in Seward have been able to SUceessfully connect to the C"ity's electrical
distribution system; and
WHEREAS, amending the code to remove certain hardware requirements WOUid
lessen the financial and administrative burden of interc(,,)nnec6on while retaining compliance
with all applicable codes and providing lor the safety of the ("ity's Flectric DeparttTlent
cinployces and equipment-, and
WI-IEREAS, these changes would bring Seward City Code in line with other local
and national utility intercolincction policies.
CITY OF SEWARD, ALASKA
ORDINANCE 2019-016
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA HEREBY ORDAINS that:
Section I. Seward City Code TITLE 14.15.415 — INTERCONNECTION
REQUIREMENTS, PROCEDURES, AND APPLICATION PROCESS FOR AN
ALTERNATIVE POWER SOURCE LESS THAT 25KW is hereby amended as follows:
(Deletions are Bold Str4kethr-oughs; Additions are Underlined Bold Italics.)
14.15,415 - Interconnection requirements, procedures, and application process "ran
alternative power source less than 5kw.
(a)� Application. In order to proceed with interconnection of an alternative power source, the
custorner must complete an application for a new/rework, of electrical service and ail
interconnection application. The customer shall also provide equipment specifications,
protection arrangements, and design drawings to the city for review.
(b) Compliance with codes and standards, Interconnections shall not be fueled by nor
connected to any non -qualified alternative energy sources. Interconnection customers, shall
comply with all applicable local, state, and federal codes such as building codes, National
Electric Code (NEC), and National Electrical Safely Code (NESC) for file installation of an
interconnection. Once operating, the city reserves the right to require the custorner, at the
customer's expense, to provide corrections, modifications, or additions to the interconnection
as required or recornmended by government or industry regulations, and standards. "I'lle city
will provide written documentation of the necessary clianges and a time frame to complete. If
the customer fails to comply with the changes in the specified time fi-arne, the city will open
and lock the interconnection.
(e-y, .. ........... 14 --- maintain---the—exisfing•ei,
........ systea s--"wer .... q.ua1ft.y-.--a.nd --- retiability-,--only- one M.- e r-
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distr-ibu4ion4fan*former-wfll4w-mAhorifed-.
W (c) .PoWeEAa Ij t-Y all,d reliability. -The interconnection with the electric system shall not
cause any reduction in the quality and reliability of service provided to other city customers.
There shall be no generation of abnormal voltages or voltage fluctuations, and the harmonic
content of the interconnection output must be below that level which would cause interference
with other customer loads, other utilities, or city facilities and equipment.
To minimize interference, the city requires the interconnection to meet the power quality
standards presented in accordance with section 10, Recommended Practices for Individual
Consumers of the latest Institute of Electrical and Electronics Engineers (IEEE) Standard 519,
IEEE Recommended Practices and Requirements for I larmonic Control in Electrical Power
Systems. In addition to rilecting all requirements identified in this document, the interconnection
shall comply with all city ordinances and resolutions, and latest IEEE 1547, IEEE, Standard
CITY OF SEWARD, ALASKA
ORDINANCE 2019-016
Conformance Test Procedures for Equipment Interconnecting Distributed Resources with
Electric Power Systems.
fe)-(d) Testinp!,. Prior to initial energization of the interconnection, an inspection and tests will
be performed by both the interconnecting customer and city personnel. "I'lle purpose of the
inspection and testing will be to determine if the generator and related equipment of the
interconnection meets the minimum requirements described by IEEE 1547, IEEE 519, and UL,
1741, Underwriter Laboratories Inc., Standard for Inverters, Converters, and Interconnection
Systern Equipment for Use With Distributed Energy Resources. Based on the inspection, the city
may elect to accept the installation and energize the interconnection. In the event that
discrepancies are noted between the certified equipi-nent, and drawings previously provided to the
city and the Customer's system inspected by the city, retesting may be required. Tile custorner
shall be solely responsible for all costs associated with any retesting.
to (e) City ins pcction and customer inaintenance records. The customer shall maintain the
interconnection in good working order. The interconnection (i.e., generator and associated
equipment) is subject to inspection and retesting by the city upon reasonable notice each year
after the unit is placed in service. The customer will assume full responsibility for the routine
rilainteriance of the interconnection and associated protective devices. The customer shall
maintain accurate records of all maintenance activities performed. These records shall record the
date and time, the person(s) who performed the activities, and a brief" description of the work.
These records shall be made available to the city for inspection at all times upon reasonable
notice to the customer. Failure to comply may result in the disconnection of the equipment or
additional testing as Outlined in subsection (e) above. The customer is solely responsible ror all
costs associated with any inspections, and testing required.
(g) (f) Visible, lockable disconnect switch or electric break. An accessible, visible, lockable
disconnect switch or electric break, whichever is applicable, is to be provided by the customer
which is lockable in the open position only. This switch rnust be appropriately labeled, when
locked in the open position for any of the following conditions, ri,iay be unlocked only by city
Personnel. Tile city will lock the switch in the open position under the following circurristances:
(1) it" it is necessary for the protection of line crew personnel when working oil de -
energized circuits during a system emergency-,
(2) If inspection of the interconnection reveals a hazardous condition or a lack of proper
rnaintenance;
(3) If the interconnection interferes with other customers, other utilities, or with the
operation of the city's distribution systern;
(4) If the city determines that the interconnection has generated power from a iloll-
qualified altemative energy resource; or
(5) For general rnaintenance ofthe city's distribution system.
CITY OF SEWARD, ALASKA
ORDINANCE 2019-016
The city will provide at least five days' notice, unless the circumstances warrant shorter
notice, before locking the switch open for general maintenance as provided in condition (v)
above.
(h) (1!,) Metering/billing.—The customer shall install and maintain a kilowatt-hour rileter, or
meters, at the interconnection, capable of registering the hi -directional flow of electricity at tile
point of interconnection at a level of accuracy that meets all, applicable standards, regulations,
statutes, and ordinances. The meter(s) may measure such parameters as time of delivery, power
factor, voltage, and Such other parameters as the city shall specify. The customer shall provide
space for metering equipment as specified by the city with the location of the meter(s) to be
approved by the city. The customer is solely responsible fcrr all costs associated with the
purchase, installation, and maintenance of all equipment required by the city in order to properly
meter the interconnection,
0) (h) Nominal voltaXes_and , hasThe generator narneplate voltage must be the same as
one of the nominal voltages supplied by the city. The nominal voltages are 120/240 V single-
phase, 1,20/208 V three-phase, and 277/480 V three-phase, If the generator nameplate voltage is
different from the city's nominal voltages, the customer must supply a dedicated generator
transformer that will provide the required nominal voltage. The required transtim-ner connection,
unless otherwise specified, is grounded wye-grounded wye.
0) (i) Fault current increase and upgrading equipment. In general, installation of a new
generator will increase tile fault current level at the customer's electrical facility. 'rhis may
require upgrading some of the customer's equipment, 'file customer will assume full
responsibility of upgrading customer's own equipment.
00 0), 5�tLr In general, induction generators start as, motors; also,
synchronous generators may be designed to start as motors. The customer -owned generator
starting as a motor shall meet the motor starting requirements prescribed by the city. The city
may require the customer to provide, at customer's own expense, special or additional starting
equipment.
(1) (k) Qjgq There are additional safety concerns that shall be
addressed when considering circuit grounding of the interconnection interconnected to the city"s
utility system. To ensure proper grounding of the generating facility, the customer shall follow
all applicable national, state, and local codes regarding grounding for applicable generating
installations,
(m) (1) S rachrcrrmi aticrn, The interconnection must be synchronized with the city's utility
system at all times and the customer shall be responsible for the cost and maintenance of` all
synchronization equipment.
(at) (n) Automatic disconnection, and Tillie-
Dely yCd Automatic Reconnection. The interconnection shall be designed to automatically
disconnect and lockout when the city"s service is interrupted for any reason. The-deviees��
CrrY OF SEWARD, ALASKA
ORDINANCE 2019-016
have a manual res Automatic Rreconnection of the interconnection to the city's utility
system shall be done only on hot-bus/hot-line/sync-check.
Following verbal authorization by the eleetrie manager or the
designeeFAn automatic reclose of the interconnection breaker (or interrupting device) is
permitted once utility power has been restored a minintum qfflve minutes.
(o) (n)Single phasim,),, protection. The customer is advised that a phase -unbalance disturbance
on the city's utility system can result in overheating of" the interconnection. A tiegative-sequcnce-
type relay (current or voltage) could be necessary to initiate tripping under phase -unbalance
conditions and may also be used to block closing of the autornatic disconnecting, device if the
city's utility systern is single -phased.
(0 (o) Generating facility protection. The custorner is fully responsible for the protection of
the generator and all of its associated equipment. Protection should be provided fior the
custorner's own equipment failures, faults, and other disturbances on the city's utility system.
(q) (p) Fault detection and automatic isolation. To prevent an interconnection frorn supplying
current to a fault on the city's utility system, the interconnection shall be equipped to provide
isolation ftorn the city's utility system for any fault occurring on the city"s utility system. Ilie
automatic isolation shall be done prior to the city's breaker (or recloser reclosing, and within a
reasonable period of time, typically less than two seconds (120 cycles).
The customer is solely
responsible for all costs associated with the purchase, installation, and maintenance of all
equipment required by the city in order to properly isolate the interconnection from the city's
utility system for any fault occurring on the city system.
(*) (q) Under/over voltage relay, To prevent any hazardous operating conditions, the
interconnection shall be isolated from the city's utility system liar any under -voltage (lower than
90 percent of nominal voltage) and over -voltage conditions (higher than 110 percent of nominal
voltage) within two seconds (120 cycles). The customer is solely responsible for all costs
associated with the purchase, installation, and maintenance of all equipment required by the city
in order to properly isolate the interconnection from the city's utility system for any voltage level
described above.
(0 (r) Under/over frequency rday.To prevent any hazardous operating conditions, the
interconnection shall be capable of disconnecting the customer's generation source from the
city's utility system for any over- frequency and under-firequency conditions exceeding 60.5 Hz or
below 59.5 Hz within 50 milliseconds (6 cycles). The customer is solely responsible for all costs
associated with the purchase, installation, and maintenance of all equipment required by the city
in order to properly isolate the interconnection from the city's utility system for any frequency
deviation described above.
(s) Dedicated (list ribution transformer. To ensure reliable service to other city custorners
. .......... . ......... . ........
and to minimize all possible problems for other city customers, the electric department nu�v,
when it deems it necessmy under the circumstances, require the interconnection shafl to be
interconnected to the city utility systcrn through a dedicated -to singlc-customcr distribution
CITY OF SEWARDI ALASKA
ORDINANCE 2019-016
individual transforiner. Thi§r-----irefnent-4mW-bc-.-wai-ved--by.--the-ek-etr-k-dqw-4nwnt4kr"git
written authorizati when ift
.Wr-opf M, --A*mnder--- --eireunrAanees. Any cost
associated to achieve dedicated -to -single -customer service shall be the customer's sole expense.
(t) 5Ltqale- ,pha sei�qtLn facility on throe- hase distribution transformer. A custorner-
� cLn— - _g-,,
owned single-phase generating facility I OKW or greater shall not be allowed to be connected to
a city three-phase distribution transforrTicr. This requirement may be wetived by the electric
department through written authorization Pvhen it deems it ap1wopriate under the
circumstances.
J*) (u) Surge protection. The customer is responsible for the protection of customer's
interconnection froin transient surges initiated by lighting, switching, or other systern
disturbances.
(w) (y) Future modification or expansion. Any future modification or expansion of the
interconnection will require a separate review and approval by the city.
(Y,) (w) Reservation of rights. The city reserves the right to require additional interconnection
requirements for interconnection of alternative power source generating facilities, in order to
preserve the safety and integrity of the city's utility systern.
(y) (r) ���
f altcrriatie_pq�qj�gg
gilergy cliveries.. ... . ... . .. . ........ . .. . ..require-powe-r-sour-ee-.,,I-o 1-e diseonnev, . fro the eity's elee,'Heal -1-stribution
system whenever the city is generating its own power. The electric department shall have the
right at any time, without liability to, the customer or any other person, to interrupt the alternative
power source:
(1) When reasonably necessary, in order for the electric department to construct, install,
maintain, repair, replace, rernove, investigate, or inspect any equipment: or any part of
the electrical distribution systern; or.
(2) If" the electric department reasonably determines that interruption or reduction of
deliveries or power is necessary because ofa systern emergency, a fiorced outage, force
niaJeurc, or other operational considerations.
(Ord. No. 2014-003, § 2, 6-9-2014)
Section 2. ']"his ordinance shall take effect ten (10) days following its enactment.
CITY OF SEWARD, ALASKA
ORDINANCE 2019-016
ENACTED BY THE CITY COUNCIL, OF "I'HE CITY OF SEWARD, ALASKA
this 28' day of October, 2019.
THE CITY OF SEWARD', ALASKA
... ... . ...
CZ
, Mayor
AYES: Baclaan, Osenga, Lane, McClurc, Seesc, Terry
NOES: None
ABSENT: Butts
ABSTAIN: None
ATTEST:
Lim
Brenda J. Ballou, N4MC"
City Clerk
I
I
0�1� qf'Senvard, Alaska Pon and Commerce Ade 4soty Boor. d Minutes
May 15, 2019 Volume 3, 3 74
CALL TO ORDER
The May 15, 2019, regular meeting of the Port and Commerce Advisory Board was called to
order at 12:01 p.m. by Chair Christy Terry,
OPENING CEREMONY
Harbormaster Regis led the pledge of allegiance to the flag.
ROLL CALL
There were present:
Christy Terry presiding, and
Bruce Jaffa Laura Schneider
t,yndallacluette Erin Lemas
Comprising a quorum of the board; and
Absent — Carl Hughes excused
Also, Present:
Scott Meszaros, City Manager
Norm Regis, Harbor Master
GeNcil Flaherty, Executive Liaison
Suzi Towsley, Council 1,iaison
Colby Lawrence excused
CITIZENS' COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED
FOR PUBLIC HEARING
Ester Porter with the Coast Guard, Marine Industry Training for Port Security and Sal"'ety. She
stated that she is out of the Anchorage Sector and she is here working with the railroad and the cruise
ship terminal but she is available to, the city regarding safety and security. Her job is to see how
Seward is doing and what if anything needs to be done to improve the port's safety and security.
APPROVAL OF AGENDA AND CONSENT AGENDA
Motion (Paquette/Schneider)
Motion Passed
Approval of Agenda and Consent
Agenda
Lo TIM "7=
SPECIA1, ORDERS, PRESENTATIONS AND REPORTS
Alaska Railroad Report - Christy Terry submitted electronically, no additional information,
Chamber of Commerce Report — Cindy Clock submitted electronically
I-larbormaster Report — Norm Regis submitted electronically but added that he asked the fire chief to
come in case there were any building code questions based on our agenda. He answered questions
regarding the launch ramp progress and about the upcoming Seward Mermaid Festival.
Cio� of'Sevvard, A laska Port andConnnerce Advisory Board Mintifes
Mail 15, 2019 Volume 3, 375
Administration Report — Scott Meszaros stated he was available to meet with anyone who, is
interested, please schedule an appointment.
UNFINISHED BUSINESS
7A -Approve December 19, 2018, January 2, 2019, , February 6, 2019, March 6, 2019 and
April 3, 2019 minutes.
Terry suggested that the approval of the Minutes to be at a meeting in July.
NEW BUSINESS
8A - Proclamation in support of Spring Creek Correctional Center Maximum Security Prison.
Motion (Jaffa/Paquette)
Motion Passed Unanimous Consent
8B - Review and discuss progress toward Alternative Power Source Interconnect Code
Revision Information - A Resolution of the Port And Commerce Advisory Board of the City Of
Seward, Alaska, Providing A Recommendation To Council To Update Portions Of SCC
14.15.4 Interconnection With Customer -Owned Alternative Power Source Generation
Equipment
Motion (Terry/Paquette)
Motion To Amend (Terry/Jaffa)
Main Motion Passed
Approve Resolution 2019-003
Amend Resolution 2019-0I03 by striking "at
the next possible Council Meeting" to "before
the end of October 2019."
Yes: Jaffa, Lemas, Terry
No: Paquette, Schneider
Unanimous Consent
8C - Discuss and make recommendation to Council re: possible rebate credit for Air to Air
Heat Pump install
Motion (Terry/Lemmas)
The Port And Commerce Advisory Board
recommends, to council approving utility
rebates for heat pump installs at 50150 or
$1,700.00.
Motion passed Unanimous Consent
Ru'ra�l Enerig�y Saivings Pro�gralmi (R,EiSP)i
a-UUM "I M
The Rural Energy Savings Program (RESP) provides loans to entities that agree to make affordable loans to help, consumers
implement cost-effective, energy efficiency measures. This program, authorized by Congress in the 2014 Farm Bill, helps to build a
cleaner and more sustainable domestic energy sector for future generations. RESP will help lower energy bills for rural families and
businesses and will reduce barriers to investment in energy efficiency projects or activities.
7
Who is an eligible borrower under this program.
Eligible applicants include current and former Rural Utilities Service (RUS) borrowers, subsidiaries of current or former RUS
borrowers, and entities that provide retail electric service in rural areas.
How is RESP, different from the Energy
Efficiency a�nd Conservation Loan
Program (EECLP)?
RESiP offers a lower -cost financing option —a zero percent
interest rate;
nonprofit organizations, municipalitles and states)i, while
EECLP program borrowers are limilted to utillities that serve
rural areas;
RE�SP offers longier loan terms- 20 years veirsuis 15 years for
EECILP loans.
How may funds bei used?
M
0 4, roMMUMOTIMUMUM, INOMMURWii
.................. . . . . . . . . . . . . . .
in the annual funding announcement published in the
Federal Register.
The RUS borrower is eligible to apply for a loan of up to
20 years at a: 01 percent interest rate. (Up to 4 percent of the
loan total may be used for startup costs.) The RUS borrower
q�ualified coinsumersi.
What goverins this program?
These loans are made available under the authority of
Act of 2002 Q U. S.C� 8107a)i (Section 640:7).
How do I learn moire7
WON 111111604
Sponsored pima: PACAB
CITY OF SEWARD, ALASKA
PORT AND COMMERCE ADVISORY BOARD
RESOLUTION 2020-001
A RE'SOLUTION OF THE SEWARD PORTAND COMMERCE ADVISORY
BOARD, RECOMMENDINC COUNCIL APPROVAL, OFTHI�11 PORT
All COMMERCE ADVISORY BOARD 111111011UTIES FROM
FEBRUARY 2020TO FEBRUARY 2021
WHEREAS,PACAB's resp�o�iisib�ilities,�treliste(.I inSC(I" 2,30,325 Powersand Dutiesand
WHEREAS, at its December 18, 2019 work session, PACAB rev ievved and refirlCd their
[Iriorifies and Goals, list f6r 2020
NOW, THEREFORE, BE IT RESOLVED BY THE PORT AND COMMERCE
ADVISORY BOARD OF THE CITY OF SEWARD, ALASKA that:
Section I.The following list ol'Priorificsand Crioals frorn February 20�20 through
1`ebruary 2021 is hereby approved by, the Board an(] recornmended C(,,$ Council for their
approva.1-
PRIORIT'IES
• Support harbor operations and harbor users
• Llelp lead Seward Marine Industrial Center (SMIC) developnient
• Advise and support the Seward Chamber of (','omnierce in their marketing role t*or the
city
• Explore and promote energy alternatives and community sustainability practices
Support actions and legislation that promote the viability ofall businesses
Promote quality of fife for Seward residents
SHORT TERM GOALS
• Review the vessel property tax and provide reconimendationto Council
• Sponsor an f"nergy workshop for the community
• l.,,valuate options for as heat PLInip rebate prograrn and present a proposal to
Council
• flold another joint work session with the Planning & Zoning Commission about a
SMIC overlay
• Work towards developing a Climate Action Phan
• Discuss and review the January 2020 City Council work session with the electric
department
PORT AND COMMERCE ADVISORY BOARD
RESOLUTION 2020-001
• Determine action needed to address halibut by -catch and provide recommendation
to Counci I
• Support the work of the Airport Connnittee
• Create an ad hoc committee for SMIC Development and an ad hoo: committee liar
Energy
• Send a board member to the Alaska Municipal I,eague Conterence
• Priorifize City, State, and Federal Priorities for port and con-unerce initiatives
• Evaluate city utility infrastructure Bear future growth
• Participate in Joint Work Session with 1-fistoric Preservation cornaiiacc on
Downtown Historic 0verlay District
• Reviewthe SMIC Development Plan
• l'I'valuate the Blue Pipeline Initiative anal give recommendation to Council on the
city's continued investment
o Provide input on the Capital Improvement Plan
LONGTERM GOALS
• Revi ew the f I arbor Tari IT (Target Com pletion 202 1')
• Submit a Giniate Action Plan to Council for adoption (Farget Completion 2021)
• U pdate f e ward Boat Harbor Vila n (Target Comp let io n 202 1 )
• Update SMIC Development Plan (Target Completion 2022)
Section 2. This resolution shall take effect irnmedfately upon its, adoption.
PASSED AND APPROVED by the Port and (-ommercc Advisory Board of t1le ('.'ity of
Seward, Alaska, this 'a, clay of January, 2020.
'THE CITV OF SEWARD, ALASKA
Ul uu chneider, Chair
A Y E' S.- Smith, [lughes, Lawrence, Schneider
NOf,"S: None
Al: SFNT: laffia, l...,ernas, Paquette
ABSTAIN: None
PORT AND COMMERCE ADVISORV BOARD
RESOLUTION 2020-001
.Jessica Stallard
Deputy City Clerk
(City Seal)
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JAN 3 1 202,0
0FRCE
--CITY CLERK
TOSeward City Council & PACAB members
Date: Jan. 30th, 2020
SUBJECT: Discussion on electric utility matters
l would like to preface my comments, with a little of my background. During my seventeen, years
in Nome, I served six years as an elected Nome Joint Utility Board member, and another six
years on the Nome City Council which, like Seward, the council ultimately oversees the utility.
Twas a different time and a different place than Seward is today, but many of the issues remain
the same.
In preparing for the utility discussion f requested information on some of the financial and
operational characteristics of our electric utility, The City Clerk's Office was helpful in directing
me to the 2017 financial statement as the more recent statement is not yet available. l did
receive some info from the electric utility on proposed projects for the coming year as well as
historical kWh purchasing and sales.
Current status of our infrastructure: From the 2017 financials one metric of evaluating
our grid is to look at the value of the utility assets and the ratio of the net value (less
depreciation) divided by the total value. $25,602,559 / $67,510,847 = 33%®. It is my
understanding the industry standard is a 50% ratio (little higher including inflation). An
example: Chugach Electric's ratio is 57%. This indicates we are not keeping up with
investments, to our system. Fortunately our debt is low and we have cash assets that will
help mitigate the need for needed investments. This is overly simplifying our current
status, but is a useful data point.
Another valuable metric is line -loss. The difference between kWh purchased from
Chugach and the kWh sold. These losses occur from transformers, loading on
distribution lines, splices and connections, etc... Differences between rural and urban
distribution networks vary but from my research a 5-6% line loss is considered typical.
From the data obtained in my request for information I calculated a five year average of
a 10% line -loss for our system. This equates to an average loss of approximately 6
million kWh purchased from Chugach lost along the way to our end users. At $ . 1 0/kWh
this equates to an annual loss of $600,0100, This higher line loss also indicates the need
JAN 3 1 2020
for upgrading the aging distribution system and as a reasonable cost sJ K
Much like insulating your home to lower your heating bill. A well maintained grid could
reduce that loss by 50% or a savings of $300,000 a year. Poor power factors also
contribute to higher line losses. As a side note: I would like to see the utility work with
those problem facilities to improve their systems prior to purchasing new meters and
changing rates. (More carrot - less stick approach). On the environmental side, Iby
cutting our line -losses in half we could reduce the carbon emissions by 3 million lbs per
year. Another win -win.
2. Electric Rates: Beyond ensuring adequate revenue is generated to maintain an efficient
and reliable system, who pays for what is a very political and societal decision. As a
strong advocate for heat pumps replacing oil as both an economic and environmental
benefit, I do like the summer / winter rates. Other rate structures can offer similar or
additional incentives for encouraging heat pumps and should be explored. With, any rate
structure there is always, going to be winners and losers. Period, It is an issue with no
perfect right answer today, much less tomorrow. Rates are only part of the equation.
Ultimately for the consumer it's the bill each month that matters most. Encouraging wise
use and reduced waste is paramount to a sustainable future.
3. Selling the utility: As Seward ponders selling their utility assets, other small
communities in the country are looking at purchasing their private utility to better serve
their citizens. I believe we as a community can continue to support our own electric
utility. We may need more technical advise on rates and engineering services for
opti:mium upgrades but II think the pros of owning far outweigh selling. Though our
electric sales have been stagnant as demand side efficiencies take their toll (LED
lighting, efficient appliances, etc) I believe our near future looks much brighter.
11 assume one likely purchaser is, Chugach Electric, though they may be acquisitioned out
from the purchase of ML&P to offer us a fair price. As a regulated utility it is unlikely
they could support things like our summer/winter rates or subsidies to the Sealife Center
or other infrastructure we find essential. Or, would be willing to participate in incentive
and finance programs encouraging heat pumps that would only affect a tiny sliver of their
total customer load. Changes to their tariffs would require substantial work to receive
approval from the Regulatory Commission of Alaska, Supporting our back-up
generation capability would likely fall solely onto the City without the utility revenues to
support it.
Homer Electric would be a possibility but their rates are higher than our current rates.
Thus our rates would likely go up. Again, as part of a regulated utility we would have
little opportunity to establish unique rates to support things like heat pumps.
A Private for profit utility could buy our utility. Rates are likely to go up even more as
they will need to make a profit for investors, pay federal taxes, and acquire funding at
higher interest rates than a municipalutility,
Personally, I believe in our locally owned utility. I would suggest an advisory, board, similar to
the PACAB. Primary role to oversee the, management and make recommendations to the City
Council on utility manager hire, major expenditures, rate changes, etc., The Nome Joint Utility
Board structure has worked well for Nome for over 50 years. Not sure Seward would need to
go as far as an "elected" board, but worth considering given the electric utility is a multi -million
dollar enterprise for the city.
1: believe with the market transformation away from oil for both economic and: environmental
reasons directs us towards heat pumps and electric vehicles and will provide a huge increase in
annual sales. Recall for every gallon of heating oil we displace with heat pumps, the utility sells
11-12 kWh, Multiply that by the total gallons of heating oil potentially displaced in Seward and
the gallons of gas to be displaced by electric vehicles. With investment and leadership the future
for our electric utility looks bright. All those new kWh sales will help support maintaining our
competitive rates and provide the community the opportunity to invest in even more sustainable
opportunities including renewable energy. Given the majority of customers with Chugach and
Homer Electric are natural gas customers, the value of heat pumps are not a practical
alternative, thus their interest would be minimal. And, as part of a larger utility all those future
revenue benefits will' be diluted as they will be shared with a much larger pool of ratepayers and
all decision making is forfeited.
The future is clear for Seward to transform from an oil heating and gasoline powered cars to an
electric based system in, the coming years. The technology is already in place. How quickly we
transform will depend in part on available financing and incentive opportunities. I believe those
opportunities can be best implemented and new revenues generated by keeping our electric
utility,
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