HomeMy WebLinkAboutRes2021-085 CITY OF SEWARD,ALASKA Sponsored by: Bower
RESOLUTION 2021-085
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
NEW WHOLESALE POWER SUPPLY CONTRACT WITH CHUGACH
ELECTRIC ASSOCIATION (CEA) FOR AN INITIAL TERM OF THREE
YEARS WITH TWO THREE-YEAR RENEWALS
WHEREAS, the City of Seward has received electric power from Chugach Electric
Association, Inc. (CEA)under various contract arrangements since 1961; and
WHEREAS, the current contract, approved by Resolution 2006-023, and its associated
Amendments No. 1 and 2, will expire on December 31, 2021; and
WHEREAS, the City of Seward and CEA have negotiated a new agreement, titled 2022
Wholesale Power Contract between the City of Seward (Seward Electric System) and Chugach
Electric Association, Inc. ("2022 Agreement"); and
WHEREAS, the 2022 Agreement provides for an initial three-year term, with two
subsequent three-year automatic extensions,unless terminated by Seward or CEA via an advanced
written notice of twelve(12)months; and
WHEREAS, the 2022 Agreement is essentially an extension of the 2006 Agreement,
allowing CEA to interrupt Seward power supplies if those supplies are not available from the CEA
system; and
WHEREAS, additionally, in recognition of Seward's capacity from the Fort Raymond
Power Plant,no generation reserves or costs associated with reserves are assigned to Seward; and
WHEREAS,the 2022 Agreement ensures that no other CEA customer will have a better
rate than Seward; and
WHEREAS, the 2022 Agreement provides significant opportunity for mutual benefit in
key areas of operations, including: employee training, right-of-way clearing and maintenance,
electric vehicle charging infrastructure, dispatching and engineering services,back-up staffing in
emergencies, cyber security, and implementing Advanced Metering Infrastructure(AMI); and
WHEREAS, both parties negotiated in good faith and with a desire to better serve the
citizens and businesses of Seward and surrounding communities.
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD,ALASKA that:
CITY OF SEWARD, ALASKA
RESOLUTION 2021-085
Section 1. The City Manager is hereby authorized to enter into a new wholesale power
supply contract with Chugach Electric Association for an initial term of three years with two three-
year renewals for a total of nine years in substantially the same form as attached herein.
Section 2.This contract shall go into effect on January 1, 2022.
Section 3. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 9th
day of August, 2021.
THE Y F S
hris rry, Ma or
AYES: Baclaan, McClure, Seese, Osenga, Casagranda, DeMoss, Terr
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
renda J. al u, MMC
City Clerk
(City Seal).0..8..8%,
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City Council Agenda Statement
Meeting Date: August 9, 2021
To: City Council
Through: City Manager Janette Bower
From: Rob Montgomery, Electric Department Director
Agenda Item: Approval of new Power Supply Contract with Chugach Electric Association
Background & Justification:
The City of Seward has received electric power from Chugach Electric Association (CEA) under
various contractual arrangements since 1961. With the existing I5-year power supply contract set
to expire at the end of this year, Seward's Electric Department gauged the interest of other electric
utilities within the state to supply Seward's power. Three of the six electric utilities/power
providers receiving letters from Seward responded with interest: CEA,Homer EIectric Association
(HEA) and Matanuska Electric Association (MEA). Following meetings and in-depth discussions
with all three, it was determined that CEA continues to offer several key advantages the others
simply cannot match, including: lowest rate, geographic location with a direct connection to
Seward's electric system, availability to and ownership of their own natural gas supplies, and
historic knowledge of Seward's system and operations.
After informing HEA and MEA that CEA would be awarded the contract,the Electric Department
met on six separate occasions with CEA executives to negotiate contractual details. Highlights of
the new contract are:
• There is no increase in the rates for utility charges and demand charges. Also, cost of
power charges will be the same as those CEA charges its other customers.
• The initial term of the agreement is three years with two, three-year renewals for a total
of nine years. With three-year renewals, Seward has more frequent flexibility to react
should market conditions in AIaska present other opportunities.
• As a system customer of CEA, Seward receives the benefit of CEA's mixed generation;
mixed generation simply means CEA generates power from numerous power sources,
giving it the option to generate electricity from the most economical sources. These
sources include CEA's low-cost generation from Bradley Hydro and Plant 2A, which
CEA acquired from Municipal Light &Power(ML&P).
• Seward gets a discounted rate because of its ability to generate its own system reserves
from the Fort Raymond power plant.
• Gives Seward the ability to buy its own economy energy from HEA, MEA or Golden
Valley Electric Association (or even Cook Inlet Corporation's Fire Island wind). CEA
agreed to allow for this modification should Seward have such an opportunity.
• A commitment from CEA to strengthen its support and mutual aid of Seward in various
areas of its business, including employee training, right-of-way clearing and
maintenance, electric vehicle charging infrastructure, engineering services for
substations, assistance with dispatching and engineering for the Fort Raymond power
plant, back-up staffing in emergencies, and implementing Advanced Metering
Infrastructure (AMI)to increase system reliability and reduce line losses.
• CEA agrees that no other customer will have a better rate than Seward.
• CEA agrees to let Seward obtain its own natural gas supplies after providing CEA a 12-
month notice, giving Seward an opportunity to secure its own low-cost gas should market
conditions make doing so favorable.
• CEA agrees to raising net metering limits for Seward to match CEA's own limits. CEA
expects to increase limits to 5 percent of its average retail demand.
• CEA agrees to look at expanding the use of Small Power Projects on the Seward system.
• CEA agrees to work with Seward in contracting right-of-way maintenance to assist
Seward in keeping costs down.
• CEA agrees to provide right-of-way clearing on its distribution lines from Dave's Creek
Substation(Sterling Highway) to Lawing Substation (Seward Highway) without charging
Seward. The existing contract had Seward paying two-thirds of the clearing cost.
• CEA agrees to use capital credits earned by Seward to reduce CEA's billing to Seward
over the following 12-month period, thereby reducing costs for Seward's customers.
• CEA agrees to remove language from the existing contract that gives it the ability to
charge Seward a power factor charge
• The agreement clarifies language permitting Seward to install its own electric meters at
Dave's Creek Substation to independently meter the CEA power consumed by Seward,
allowing Seward to accurately monitor line losses on its system.
• The agreement incorporates the Bradley Lake sharing agreement, with CEA paying
Seward's share of costs incurred under the Bradley Project Power Sales Agreement to the
Alaska Energy Authority.
As a regulated utility, CEA has limited flexibility when it comes to lowering rates or offering a
special rate for a single customer.However,this new contract will result in cost savings for Seward
in several areas of its business through the support services CEA is willing to provide.
Intent:
To ensure through a new power supply contract with CEA the ongoing delivery of reliable and
affordable electric power to the City and surrounding communities while also expanding on the
support services provided to Seward by CEA.
Consistency Checklist: Yes No N/A
Comprehensive Plan (1. 3, 3. 7. 3. 1, 3. 7. 3. 2) Continue to upgrade
1. and expand utilities to meet existing needs and encourage future X
develo ment.
2 Strategic Plan:The mission of the City of Seward government is to X
provide quality leadership and economic wellbeing of its citizens
3. Other (list): X
Fiscal Note: Costs associated with purchasing power from Chugach will be reflected in proposed
tariff changes to utility customers, thereby passing the cost of purchased power to the utility
customers.
Funding is from: 15000-3006-7101 through 15000-3006-7102 -
(Chugach Power Purchases and Power Fuel Costs)
Finance Approval:
Recommendation:
For Council to approve Resolution 2021- , authorizing the City Manager to enter into a
new wholesale power supply contract with Chugach Electric Association for an initial term of
three years with two three-year renewals for a total of nine years.
2022
WHOLESALE POWER CONTRACT
BETWEEN
CHUGACH ELECTRIC ASSOCIATION, INC.
AND THE
CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM
SECTION 1. PARTIES
This 2022 Wholesale Power Contract ("Agreement"), dated as of June , 2021,
("Signature Date"), is entered into by and between Chugach Electric Association, Inc., an Alaska
non-profit electric cooperative corporation, having its offices at Anchorage, Alaska("Chugach")
and the City of Seward, Seward Electric System ("Seward")having its offices at Seward, Alaska.
Chugach and Seward may hereinafter be referred to individually as a"Party" and collectively as
the "Parties."
SECTION 2. RECITALS
WHEREAS, Chugach has furnished Electric Power to Seward under various contractual
arrangements since July 1, 1961;
WHEREAS,the current 2006 Agreement for the Sale and Purchase of Electric Power and
Energy and Amendments No. 1 and 2 to that agreement terminate on December 31, 2021;
WHEREAS, the Parties desire to continue Chugach's provision of Electric Power to
Seward pursuant to the terms and conditions of this Agreement;
WHEREAS, the Parties also desire to establish a framework to work together to identify
and plan for additional opportunities to provide mutual aid, maximize efficiencies, and reduce the
costs of operating and maintaining their respective electric systems where possible;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
SECTION 3. AGREEMENT
3.1 Sale and Purchase of Electric Power. Chugach shall sell and deliver to Seward,
and Seward shall take and pay for, at the rates provided for in Section 4, all of Seward's
Electric Power requirements from Chugach, subject to those terms and conditions hereinafter
provided.
Page 1 of 17
3.2 No Dedication of Resources. Nothing under this Agreement shall constitute
either (i) a sale, lease, transfer, dedication, or conveyance of an ownership interest in or to any
of Chugach's Generation or Transmission Resources, or (ii) an entitlement to the electric
capacity or associated energy from any specific Generation or Transmission Resource. Chugach
shall have sole authority, which it may exercise in its discretion,to manage, control, and operate
all of its Generation and Transmission Resources, subject to Chugach's obligation to provide
available Electric Power to Seward under this Agreement.
3.3 Electric Power Without Reserves,The Electric Power,which Chugach is obligated
to sell to Seward under this Agreement, shall be provided without system production Reserves.
Seward shall be responsible for providing its own Reserves.
3.4 Optional Gas Sully. Upon twelve (12) months advance written notice to
Chugach, Seward may elect to provide its own supply of gas ("Seward Gas") to be used by
Chugach to meet its obligation under this Agreement to generate, sell, and deliver Electric
Power to Seward. To exercise this option, the Seward Gas supply must be made available to
Chugach on a firm basis from the date the Seward Gas option becomes effective through the
remaining Term of the Agreement. To the extent Seward exercises this option and an
interruption in the Seward Gas supply occurs, Chugach shall be relieved of its obligation to
provide Electric Power under this Agreement for so long as such interruption continues.
Chugach shall have no obligation to take, or liability associated with, any Seward Gas that
cannot be used by Chugach during (a) an interruption event under Section 3.5, or (b) an
Uncontrollable Force event. The Parties shall negotiate in good faith regarding any
additional terms and conditions necessary to effectuate the Seward Gas option if and when
notice of such election is received by Chugach.
3.5 Interruption of Service.
(a) To the extent Chugach's available power production and power
purchase contract resources (not including economy or emergency power purchases) are
insufficient to serve Chugach's other firm loads, Chugach may interrupt service to Seward as
necessary (either completely or in part) to protect the continuity of service to Chugach's other
firm loads, subject to the follow limitations:
i. Chugach shall not be obligated, but will attempt in good faith,
to provide reasonable advance notice to Seward of such interruptions, with such notice to be
made by calling the emergency services dispatcher for the City of Seward at(907) 224-3338, or
such other number as the Parties may from time to time agree upon in writing.
ii. Chugach shall not be obligated, but will attempt in good faith, to
purchase replacement emergency Electric Power from other utilities to avoid interruption under
this Section.
(b) Seward shall be responsible for all costs of supplying its own Electric
Power to meet its system load during interruptions under this Section.
Page 2 of 17
(c) Seward may interrupt service with Chugach to engage in test running of
its own generation resources and Chugach may require up to forty-eight (48) hours advance
written notice.
3.6 Delivery Points. Subject to Section 3.5, Chugach shall furnish the Electric
Power purchased by Seward under this Agreement to Seward at: (i) Daves Creek Substation
(high side of breaker 952), and (ii) near the Lawing Substation at approximately mile 25 of the
Seward Highway, or such other delivery point(s) as mutually agreed to by the Parties in writing.
Title and risk of loss of Electric Power delivered to Seward shall pass from Chugach to Seward
at the delivery points, and Chugach shall have no responsibility for transmission and
distribution beyond such delivery points for such delivered Electric Power.
3.7 Resale of Electric Power Prohibited: Limit on Amount of Electric Power. All
Electric Power delivered to Seward under this Agreement shall be used exclusively to serve
Seward's retail electric loads as ultimate consumers and end-users of the Electric Power and shall
not be resold to any other entity or otherwise used or disposed of, by contractual agreement or
otherwise, in any other manner or for any other purpose. To assist in enforcing this provision,
the Parties agree that at no time will Seward take, and at no time will Chugach be obligated to
supply, Electric Power under this Agreement in amounts in excess of Seward's system demand
or requirements calculated at the time Electric Power is delivered to Seward. Nothing contained
in this Section 3.7 shall preclude Seward from using Electric Power supplied hereunder to meet
its retail electric loads while engaging in contemporaneous off-system sales of Electric Power
available to Seward from its own or other sources.
3.8 Joint Use Agreement. The Joint Use Agreement attached as Exhibit A is made a
part of this Agreement and incorporated by reference herein.
3.9 Economy Energy Transactions. In the event of changed market conditions related
to economy energy, Seward may request that the Parties meet and confer regarding potential
modifications to this Agreement that would allow Seward to meet a portion of its Electric Power
needs through market economy energy transactions. The Parties shall negotiate such
modifications in good faith; however, Chugach shall not be obligated to accommodate such a
modification to the extent Chugach determines in its sole discretion that it would cause
operational or economic hardship to Chugach.
3.10 Mutual Assistance. The Parties shall continue to work together and discuss
potential additional opportunities and arrangements for Chugach and Seward to expand their
commercial relationship in ways that will achieve mutual benefits and efficiencies for both
Parties. The Parties believe that given their unique relationship, additional efficiencies could be
gained through:
(a) Coordination of right-of-way vegetation management activities through
engagement of a mutually acceptable Qualified Contractor, as described in the Joint Use
Agreement.
Page 3 of 17
(b) Coordination of employee training activities where possible such that
Seward employees are given the opportunity to attend Chugach sponsored training events
(particularly in the area of safety training).
(c) Coordination regarding electric vehicle charging infrastructure and
renewable generation resources.
(d) Coordination and assistance related to dispatch and engineering services
for the Fort Raymond power plant.
(e) Coordination and assistance with engineering for Seward substations and
Railbelt cyber security compliance.
(f) Coordination and assistance with Advanced Metering Infrastructure
("AMP') meter installation and connection to Chugach's system.
3.11 Treatment of Small Power Proiects.
(a) The aggregate installed capacity of all Small Power Projects selling
electric capacity and/or energy to Seward shall not exceed 500 kW unless mutually agreed
otherwise.
(b) Metering. All Small Power Projects selling electric capacity and/or
energy to Seward shall be individually metered and such metering information shall be available
to Chugach for purposes of calculating Seward's monthly bills in conformance with this Section
3.11.
(c) Energy Costs. Chugach's monthly invoice to Seward, based on Electric
Power deliveries identified in Section 3.6, shall be reduced by a dollar amount equal to the kWh
received by Seward from Small Power Projects multiplied by Chugach's tariffed rate for non-
firm power purchases for that billing month. Unless and until an alternative avoided cost
calculation is developed, the "Non-firm power rate" in the approved Chugach Tariff Sheet No.
97 (Purchase and Sales Rates for Qualified Cogeneration and Small Power Production Facilities)
for each month shall be used to determine the amount by which Chugach's invoice shall be
reduced based upon Seward's purchases from Small Power Projects. At any time prior to the
end of this Agreement, Chugach may propose to the Regulatory Commission of Alaska
("Commission") an alternative avoided cost calculation to apply to Seward's purchases from
Small Power Projects. Prior to filing any such proposal, Chugach shall meet with Seward to
discuss how the proposed change, if approved, would affect Seward's monthly invoice. Any
changes in the calculation of the avoided cost rate(s) are subject to the standard review and
adjudicatory process of the Commission. Seward reserves the right to oppose any such proposal
before the Commission.
(d) Capacity Costs. All rates and resulting invoices charged by Chugach to
Seward shall be computed as if the capacity received by Seward from Small Power Projects were
received from Chugach. The wholesale billing rates charged by Chugach to Seward shall not be
reduced to reflect any contribution of capacity from Small Power Projects.
Page 4 of 17
(e) Except for the reduction in Chugach's monthly invoice to Seward
computed pursuant to Section 3.11(c), all demand- and energy-related costs, other than fuel and
purchased power charged by Chugach to Seward, shall not be reduced to reflect electric capacity
or energy received by Seward from the Small Power Projects. Demand and energy provided by
the Small Power Projects shall be included in monthly billing amounts and included in the
determination of cost assignment in cost of service studies.
(f) For purposes of Chugach's quarterly Fuel and Purchased Power Cost
Adjustment Factor updates, the amounts credited to Seward pursuant to Section 3.11(c) for
Seward's purchases of electric capacity and/or energy from Small Power Projects will be
considered part of Chugach's system costs. Those costs shall be apportioned to all classes of
service, including Seward, consistent with established cost-of-service methodologies.
(g) Before allowing a Small Power Project to interconnect with Seward's
facilities or equipment or accepting any electric capacity and/or energy from a Small Power
Project, Seward shall confirm, to Chugach's satisfaction, its ability to provide Chugach with data
that are compliant with and subject to all metering requirements of this Agreement. Seward shall
require by contract with the Small Power Project that the Small Power Project will (A) pay to
Chugach the installed cost of the Chugach meters/recorders designated by Chugach as necessary
for Chugach to record the energy and capacity supplied by the Small Power Project to Seward;
(B) provide, without charge, a telephone line (dedicated or shared) for telephone access by
Chugach to the Chugach meters/recorders; and(C)provide to Chugach,without charge,full access
to any Chugach-owned meters/recorders on the premises of the Small Power Project and any other
rights that Chugach has with respect to other meters under this Agreement.
3.12 Treatment of Net Metered Non-Utility Generation.
(a) This Agreement shall not be construed to prohibit Seward from purchasing
or receiving from a Seward retail customer the electric output from an on-site Eligible Non-Utility
Generation facility under a net metering service arrangement with the Seward retail customer,
provided that the facility has a nameplate capacity of 25 kW or less, and provided that the total
nameplate capacity of all Seward net metered generation facilities does not exceed the greater of
two (2) percent of Seward's average retail demand or the amount permitted under Chugach's
operating tariff for its retail members at the time.
(b) Chugach's rates for Seward's purchases of Electric Power (including both
monthly billing demand and determination of contribution to system peak, total system demand
and energy requirements) under this Agreement shall be based on actual Chugach billing
determinants. In this manner, the impact of net metering installations will be to reduce Seward's
billing load and cost responsibility by the amount of actual generation received by Seward from
net metered facilities.
(c) Nothing in Sections 3.11 or 3.12 precludes Chugach from negotiating
directly with any Small Power Projects or with any power supplier to purchase electric capacity
and/or energy.
Page 5 of 17
SECTION 4. RATES AND BILLING
4.1 General Ratemakin4 Provision. The rates and charges applicable under this
Agreement shall be established, and shall be revised from time to time, in accordance with (a)the
substantive ratemaking principles set forth in Section 4.2, and (b)the ratemaking procedures set
forth in Section 4.3.This Agreement and rates proposed hereunder shall be submitted to the
Commission for advance approval. The schedule of initial base rates under this Agreement are set
forth in Chugach CPCN No.8, Tariff Sheet No. 99 (65th Revision). Chugach shall ensure that
during the term of this Agreement Seward's total cost of Electric Power is not adversely
affected by future supply arrangements executed with any third-party purchaser(s) of Electric
Power ("Third-Party Transaction"). For clarity, "not adversely affected" shall mean that
Seward's total cost of Electric Power shall not be higher than it otherwise would have been
absent the new Third-Parry Transaction. To the extent an adverse effect is determined by
Seward to exist, Seward shall notify Chugach of such determination and seek to resolve the
issue with Chugach in good faith. Disputes arising hereunder may be submitted to the
Commission for resolution by either Party at any time.
4.2 Substantive Ratemaking Principles. The rates and charges applicable under this
Agreement shall be just and reasonable,not unduly discriminatory,and consistent with the terms and
conditions of this Agreement and all other lawful obligations of Chugach. The rates and charges
shall be based on cost-of-service studies designed to ensure that Chugach's total revenue
requirement, including, but not limited to generation, transmission, and fuel and purchased
power expenses, is divided fairly and appropriately between Chugach's generation, transmission,
distribution,and customer functions so that no function will significantly or persistently cross-
subsidize the other. Fuel and purchased power costs shall be recovered through Chugach's
quarterly cost of power adjustment factor rates. All rates charged to Seward shall exclude
any costs associated with power purchased by Chugach from the Fire Island Wind Project.
Since Chugach is not committing any system production reserves to providing service to Seward
under this Agreement, and Seward is relying on its own reserves, no Production Reserve Costs
shall be allocated to Seward.
4.3 Ratemaking brocedures. Chugach shall supply and be paid for Electric Power
under this Agreement on a total requirements basis, except that Production Reserve Costs shall
not be allocated to Seward, as discussed below. The following ratemaking and billing
provisions shall apply:
(a) Allocation of demand-related costs. Demand-related costs will be
allocated to Seward for ratemaking purposes in accordance with a methodology that is consistent
with the fairness principles set forth in Section 4.2 of this Agreement and will be based on Total
System Demand,with the exception that no Production Reserve Costs will be allocated to Seward.
(b) Computation of demand charges. To establish demand charges(expressed
in dollars per kilowatt/month) for the sale of electric capacity in future rate cases, test period
demand-related costs, excluding Production Reserve Costs, will be allocated to Seward based on
its proportionate contribution to the overall system peak.
Page 6 of 17
(c) Billing demand and payment for capacity. Seward's billing demand in
each month shall be Seward's actual peak demand on the Chugach system for that month.
(d) Payment for energy. Chugach will charge and be paid for energy for each
monthly billing period in an amount equal to Chugach's then applicable energy charge(excluding
fuel and purchased power expenses)multiplied by Seward's total system energy requirements for
that month, which energy requirements shall be metered at the Points of Delivery. Fuel and
purchased power costs will be recovered through Chugach's cost of power adjustment factors,
which are reduced by economy energy sales margins and wheeling revenues that would otherwise
have been assigned to Seward based on Seward's proportionate share of the total system firm sales
on the Chugach system.
(e) BRU Contributed Capital Surcharge. Chugach will charge and be paid a
monthly amount equal to the then applicable BRU Contributed Capital Surcharge multiplied by
actual energy delivered by Chugach to Seward.
(f) Customer Charge. Chugach will charge and be paid a monthly amount
equal to the then applicable customer charge multiplied by the number of delivery point meters.
(g) Good Faith. The Parties agree to operate their systems in good faith to
accomplish the purpose of relying upon the power supply Reserves provided by Seward while
providing Seward with a reduced demand cost allocation reflecting the unique nature of the service
provided under this Agreement.
(h) Billing. Seward shall pay bills within 15 days of receipt. In the event any
portion of any bill is disputed,pending resolution of the billing dispute,the undisputed portion of
each bill shall be paid to Chugach in timely fashion pending resolution of the disputed amount.
(i) Margins (capital credits. Seward shall be entitled to an allocation of
margins (capital credits) based on Seward's contribution to Chugach's electric generation and
transmission margins consistent with Chugach's bylaws. Upon retirement of patronage capital in
a manner consistent with Chugach's bylaws and applicable board policies, such amount retired on
behalf of Seward shall be divided and applied equally as an offset(credit)to Seward's subsequent
twelve monthly bills for Electric Power.
4.4 Billing for Bradley Lake.
(a) Chugach shall be entitled to schedule and receive Seward's share of Electric
Power from the Bradley Lake Hydroelectric Project,including any Electric Power associated with
the Battle Creek Project("Bradley Project").
(b) Chugach shall be entitled to comingle any Electric Power Chugach receives
under Section 4.4(a) with all other Electric Power available to Chugach and use such Electric
Power to serve Chugach's system load.
(c) Chugach shall pay the Alaska Energy Authority ("AEA") for Seward's
share of costs incurred under the Bradley Project Power Sales Agreement("Bradley PSA"),which
includes Battle Creek Project costs, and the Memorandum of Proposed Transaction dated
Page 7 of 17
December 17, 2020, whereby AEA acquired certain transmission assets from Homer Electric
Association, Inc. These costs and the attendant energy and capacity from the Bradley Project will
be included as a Chugach system resource for ratemaking purposes. This Bradley Lake billing
arrangement is strictly for administrative efficiency and is expressly not an assignment of
Seward's share of Bradley Project Electric Power to Chugach.
(d) This Section 4.4 is not intended to alter,amend, or modify any of the Parties
rights and obligations under the Bradley PSA or other agreements related to the Bradley Project.
The intent of this arrangement is simply to increase administrative efficiency as between the
Parties with respect to how Seward's share of Bradley Lake Electric Power is to be handled.
SECTION 5. TERM
This Agreement shall continue in full force and effect from the later of January 1, 2022, or
the date Commission approval is received ("Effective Date") pursuant to Section 14.13 for a
period of three (3) years ("Term"). The Term of this Agreement shall automatically extend for
two (2) successive three(3)year terms unless either Party provides written notice of termination
to the other Party at least one (1) year prior to the expiration of either the initial Term or any
subsequent term thereafter.
SECTION 6. PROVISIONS RELATING TO ELECTRICAL SERVICE
6.1 Electric Power to Be Made Available. Except when prevented by an
Uncontrollable Force or when Chugach has interrupted service under Section 3.5 of this
Agreement, Chugach shall use its best efforts to deliver a constant and uninterrupted supply
of Electric Power to Seward at the delivery points designated in Section 3.6 in the amount of
Seward's total demand for Electric Power.
6.2 Restoration of Service. In the case of a partial or total loss of service to Seward
as a result of problems encountered on the Chugach system, including an Uncontrollable
Force or interruption under Section 3.5 of this Agreement, Chugach will use its best efforts
to restore service in a prompt and non-discriminatory manner.
6.3 No Duty to Third Parties. This Agreement shall not create on the part of
Seward or Chugach any legal duty owed to the retail, wholesale, or wheeling customers of
the other Parry, including without limitation, any legal duty to maintain continuity of electric
service to other Parties or customers. Nothing in the foregoing sentence shall limit the rights
afforded Chugach or Seward under this Agreement.
6.4 Prudent Utility Practice. The Parties shall design, construct, maintain, operate,
and repair their respective facilities and equipment in accordance with Prudent Utility
Practice. Seward shall also design, construct, operate, maintain, and repair its facilities
and equipment in a manner that ensures satisfaction of the following constraints:
(a) Seward's load shall not cause sine-wave distortion or large, short-interval
demand that will impair service or cause interference with telephone, television, or other
Page 8 of 17
facilities, or other utilities' customers.
(b) Seward's load shall not result in a deviation from phase balance of more
than ten (10) percent at any time.
(c) Seward and Chugach shall each supply their own Volt-Amperes Reactive
("VAR") requirements, as measured at the delivery point, to correct any power factor problems
on their respective sides of the delivery point. Seward must maintain a minimum 90% power
factor. In the event that Seward is unable to meet this power factor requirement, the Parties shall
meet and confer regarding a mutually acceptable solution to the problem.
6.5 Reserves.
(a) Chugach shall not be required to provide or maintain Reserves to support
Seward's Generation Resources.
(b) Seward shall be required to maintain sufficient Reserves to support any
and all of its Generation resources at all times that Seward is operating its Generation Resources
in parallel with Chugach's Generation Resources.
(c) The Parties shall meet and confer regarding potential modifications to this
Section 6.5 in the event of a material increase to Seward's Total System Demand as a result of a
new large commercial customer coming onto Seward's system.
6.6 Voltaize. The Electric Power provided hereunder shall be three-phase, alternating
current, at nominal voltages ± 5% under normal conditions and ± 10% under emergency
conditions. All Parties shall endeavor to maintain proper phase voltage balance on their respective
systems. If a problem with voltage occurs, all Parties will use their reasonable best efforts to
correct such problems.
6.7 Frequency. Chugach shall use its reasonable best efforts to maintain its
system frequency at 60 hertz averaged over each twenty-four (24) hour period.
SECTION 7. METERING
7.1 Performance of Meter Testinti. With respect to metering equipment,the Parties
shall each:
(a) make or provide for biennial tests and inspections of all meters and
recorders used for billing purposes under this Agreement in order to maintain a commercial
standard of accuracy;
(b) restore to a commercial standard of accuracy any meters found to be
inadequate or inaccurate; and
Page 9 of 17
(c) provide the other Party with the results of any such test or inspection
that shows any inaccuracy more than 0.5 percent slow or fast.
7.2 Notice of Meter Testing. Each Party shall provide the other Party with written
notice at least one (1) week prior to the performance of any meter tests or inspections. Each
Party shall be permitted to have representatives present at such meter tests and inspections.
7.3 Right to Request Additional Meter Testing. Each Party shall make or provide
for additional tests of its meters and recorders at the request of the other Party and in the
presence of representatives of the requesting Party. The cost of any additional test requested
by such Party shall be borne by the Party owning the equipment if such test shows a meter or
recorder is inaccurate by more than 0.5 percent slow or fast.
7.4 Correction of Meter Errors. Metering errors shall be corrected in the manner
applicable to utilities and wholesale customers prescribed in 3 AAC 52.465(d) and (e), as
amended from time to time.
SECTION 8. FORCE MAJEURE
No Party shall be liable or responsible to the other Party, nor be deemed to have
defaulted under or breached this Agreement, for any failure or delay in fulfilling or
performing any term of this Agreement (except for any obligations to make payments to the
other Party hereunder), when and to the extent such Party's ("Impacted Parry") failure or
delay is caused by or results from an Uncontrollable Force. The Impacted Party shall give
notice to the other Party within three (3) days of the Uncontrollable Force event, stating the
period of time the occurrence is expected to continue. The Impacted Party shall use diligent
efforts to end the failure or delay and ensure the effects of such Uncontrollable Force event
are minimized. The Impacted Party shall resume the performance of its obligations as soon
as reasonably practicable after the removal of the cause. In the event that the Impacted Party's
failure or delay remains uncured for a period of thirty (30) consecutive days following written
notice given by it under this Section 8, the other Party may thereafter terminate this
Agreement upon ten (10) days' written notice. Seward shall be responsible for meeting its
own Electric Power needs when Chugach is unable to supply Electric Power as a result of an
Uncontrollable Force.
SECTION 10. INDEMNIFICATION AND LIMITATION OF LIABILITY
10.1 Indemnification. Each Party (as "Indemnifying Party") shall indemnify,
defend, and hold harmless the other Party, and its managers, officers, directors,
representatives, agents, employees, contractors, affiliates, and successors and assigns
(collectively, "Indemnified Parry") against any and all losses, damages, liabilities,
deficiencies, claims, actions,judgments, settlements, interest, awards,penalties, fines, costs,
or expenses of whatever kind, including professional fees and reasonable attorneys' fees,that
are incurred by Indemnified Party (collectively, "Losses"), to the extent arising out of any
third-parry claims alleging:
Page 10 of 17
(a) material breach by, or non-fulfillment of any provision of this Agreement
binding on, the Indemnifying Party or Indemnifying Party's representatives, as applicable;
(b) any negligent or more culpable act or omission of Indemnifying Party
(including any reckless or willful misconduct) in connection with the performance of its
obligations under this Agreement;
(c) any bodily injury, death of any person, or damage to real or tangible personal
property caused by the negligent or more culpable acts or omissions of Indemnifying Party
(including any reckless or willful misconduct); or
(d) any failure by Indemnifying Party to comply with any applicable federal, state,
or local laws,regulations,or codes in the performance of its obligations under this Agreement.
10.2 Notice. Defense. and Settlement of Legal Proceedin2.
(a) If any legal proceeding shall be instituted, or any claim or demand made,
against any Indemnified Party with respect to which the Indemnifying Party may be liable
hereunder,the Indemnified Party shall give prompt written notice thereof,within thirty(30)days
thereof by certified mail, return receipt requested, and promptly deliver a true copy of any
summons or other process, pleading or notice to the Indemnifying Party.
(b) In any action in which there is no reasonable possibility of joint liability of
the Parties to this Agreement, the Indemnifying Party shall have the absolute right, at its sole
expense and without the consent of the Indemnified Party, to defend and settle any such legal
proceeding, claim or demand. However, the Indemnifying Party shall give notice, if possible, to
the Indemnified Party of any proposed settlement. In no event shall the participation of the
Indemnified Party in the defense and settlement of any legal proceeding claim or demand,
interfere with or alter the Indemnifying Party's absolute right to control the defense and/or
settlement of the legal proceeding, claim or demand. The Indemnified Party may, if it sees
fit, participate in defense of any such legal proceeding, at its own expense.
(c) Where joint liability of both Parties to this Agreement is a
reasonable possibility, no Party which has exposure to joint liability shall be limited in
their participation in the action.
(d) If the Indemnified Party,without the prior consent of the Indemnifying
Party (which consent, if requested,shall not be unreasonably withheld), makes any settlement
with respect to any such legal proceeding, claim or demand, the Indemnifying Party shall be
discharged of any liability hereunder with respect thereto.
(e) The Indemnifying Parry shall pay all reasonable costs incurred by
the Indemnified Party in any successful enforcement of this indemnity.
10.3 No Consequential or Indirect Damages. NOTWITHSTANDING ANYTHING IN
THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY OR ANY OF ITS
Page 11 of 17
REPRESENTATIVES SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR
ENHANCED DAMAGES, LOST PROFITS OR REVENUES, OR DIMINUTION IN VALUE,
ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE
FORESEEABLE, (B) WHETHER OR NOT IT WAS ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES AND (C) THE LEGAL OR EQUITABLE THEORY (STATUTE,
CONTRACT, TORT OR OTHERWISE)UPON WHICH THE CLAIM IS BASED;PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL THE FOREGOING LIMITATIONS ON
LIABILITY OR DAMAGES LIMIT THE LIABILITY OF ANY PARTY TO ANY OTHER
PARTY FOR THIRD-PARTY CLAIMS FOR WHICH INDEMNIFICATION IS REQUIRED.
SECTION 11. INSURANCE
Each Party agrees to use its best efforts to obtain and maintain in full force and effect
during the term of this Agreement, adequate insurance with responsible insurers as may be
required by law.
SECTION 12. DEFAULT AND DISPUTE RESOLUTION
12.1 Notice of Default. Upon failure of any Party to perform any obligation
hereunder, the Party or Parties to whom such performance is due shall make demand in writing
upon the defaulting Party. If such failure, other than a failure to pay Chugach when such payment
is due, is not cured within thirty (30) days from the date of such demand it shall constitute a
default at the expiration of such period. Chugach's bills to Seward shall constitute written
demands for payment for purposes of this Section and Seward shall be considered to be in
immediate default of their payment obligations if such bills are not fully paid within 10 days after
they are due.
12.2 Performance Pendinti Resolution of Dispute. Pending resolution of any dispute,
each Party shall continue to perform its obligations under this Agreement, including the
obligations to deliver and receive Electric Power and the obligation to pay bills submitted by
Chugach for such Electric Power. All Parties shall be entitled to seek immediate judicial
enforcement of this continued performance obligation notwithstanding the existence of a dispute.
Application for such enforcement shall be made to the Superior Court for the State of Alaska, in
Anchorage.
12.3 Consultation to Resolve Disputes. After notice is delivered and before default
occurs under Section 12.1 the Parties shall in good faith endeavor to meet promptly and to resolve
any dispute through good faith negotiation. If a Party has met its obligation of good faith under
this Section 12.3, and if the dispute has not been resolved before default occurs, than that Party
shall be entitled at any time thereafter to seek immediate judicial enforcement of this Agreement
in the Superior Court for the State of Alaska, in Anchorage, by bringing any suit, action or
proceeding, at law or in equity, including without limitation mandamus, injunction, damages and
action for specific performance, as may be necessary or appropriate to enforce any covenant,
agreement or obligation of this Agreement.
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12.4 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH
SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES
THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.4.
SECTION 13. RIGHT OF ACCESS AND REMOVAL
Each Parry will have access to the premises, facilities, or property of the other Party at all
reasonable times for any purpose necessary or appropriate to the performance of this Agreement.
Upon termination of this Agreement in accordance with the provisions hereof, each Party will
remove any property or equipment which it may have installed on the premises of the other Party
for any purposes hereunder. Seward shall provide Chugach with access to existing metering or
allow Chugach to install any metering and equipment necessary or convenient to allow Chugach
to track Seward's load and generation during periods of interruption of service from Chugach.
SECTION 14. MISCELLANEOUS
14.1 Waiver. Any waiver at any time by any Party to this Agreement of its
rights with respect to any default of the other Parry hereto, or with respect to any other matter
arising in connection with this Agreement, shall not be considered a waiver with respect
to any prior or subsequent default,right, or matter.
14.2 Severabilitv. If any term or provision of this Agreement is invalid, illegal, or
unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that any term or other provision is
invalid, illegal, or unenforceable, the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effectuate the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
Page 13 of 17
14.3 Assignment.
(a) General. Neither Party may assign any of its rights hereunder without the
prior written consent of the other Party, which consent shall not be unreasonably withheld,
conditioned, or delayed. Any purported assignment in violation of this Section shall be null and
void. No assignment shall relieve the assigning Party of any of its obligations hereunder.
(b) Assignment for Security. Notwithstanding Section 14.3(a), a Party,
without the other Party's consent, may assign, transfer, mortgage, or pledge its interest in this
Agreement as security for any obligation secured by an indenture, mortgage, or similar lien on its
system assets without limitation on the right of the secured Party to further assign this Agreement;
provided,however,that no such assignment shall relieve such Party of any obligations hereunder.
14.4 Successor and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Parties hereto and their respective successors and assigns.
14.5 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the
Parties hereto and their respective successors and assigns and nothing herein, express or implied,
is intended to or shall confer upon any other person or entity any legal or equitable right, benefit,
or remedy of any nature whatsoever under or by reason of this Agreement.
14.6 Notices. Except as provided in Section 3.5(a), all notices, requests, consents,
claims, demands, waivers, and other communications hereunder (each, a "Notice") shall be in
writing and shall be deemed to have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier(receipt requested); (c)on the date sent by facsimile or email(with confirmation
of transmission) if sent during normal business hours of the recipient, and on the next business
day if sent after normal business hours of the recipient; or(d)on the third day after the date mailed,
by certified or registered mail (in each case, return receipt requested, postage pre-paid). Notices
must be sent to the respective Parties at the following addresses (or at such other address for a
Party as shall be specified in a Notice given in accordance with this Section 14.6):
If to Chugach: Chugach Electric Association, Inc.
5601 Electron Drive
Anchorage, AK 99518
Email: Lee_Thibert@chugachelectric.com
Attention: Lee Thibert, Chief Executive Officer
with a copy to: Chugach Electric Association, Inc.
5601 Electron Drive
Anchorage, AK 99518
Email: Matthew_Clarkson@chugachelectric.com
Attention: Matthew Clarkson, EVP, General
Counsel
Page 14 of 17
If to Seward: City of Seward
PO Box 167
Seward, AK 99664
Email: rmontgomery@ityofseward.net
Attention: Rob Montgomery, Director, Seward
Electric
with a copy to: Boyd, Chandler& Falconer, LLP
911 W. 8ch Ave 9302
Anchorage, AK 99501
Email: Bchandler@bcfaklaw.com
Attention: Brooks Chandler, Seward City Attorney
14.7 Amendment and Modification. This Agreement may only be amended,modified,
or supplemented by an agreement in writing signed by each Party hereto and approved by
appropriate governing boards and regulatory agencies.
14.8 Entire Agreement. This Agreement, together with any other documents and
exhibits incorporated herein by reference , constitutes the sole and entire agreement of the Parties
to this Agreement with respect to the subject matter contained herein and therein, and supersedes
all prior and contemporaneous understandings, agreements, representations, and warranties, both
written and oral, with respect to such subject matter.
14.9 Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.
14.10 Cumulative Remedies. The rights and remedies under this Agreement are
cumulative and are in addition to and not in substitution for any other rights and remedies available
at law or in equity or otherwise.
14.11 Governing Law. This Agreement and all matters arising out of or relating to this
Agreement shall be governed by and construed in accordance with the laws of the State of Alaska
without giving effect to any choice or conflict of law provision or rule (whether of the State of
Alaska or any other jurisdiction).
14.12 Relationship of the Parties. Nothing herein shall be construed to create a joint
venture or partnership between the Parties hereto or an employer/employee or agency relationship.
Neither Party hereto shall have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other Party or to bind the other Party to any contract,
agreement, or undertaking with any third party.
14.13 Regulatory Approval. It is the Parties understanding that this Agreement, as a
wholesale power agreement between public utilities governed by AS 42.05.431(b), will not take
effect without the prior approval of the Commission, and will at all times after any such approval
be subject to the Commission's continuing authority over wholesale power agreements.
Page 15 of 17
14.14. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to be one and the same
agreement. A signed copy of this Agreement delivered by facsimile, email or other means of
electronic transmission shall be deemed to have the same legal effect as delivery of an original
signed copy of this Agreement.
SECTION 15. DEFINITIONS
The following terms, when used in the Agreement and Exhibits hereto, shall have the
meanings specified.
"Electric Power" means electric energy or electric capacity or both but does not include
reserve generation capacity. Where the context of this Agreement requires a distinction, electric
energy is expressed in kilowatt hours (kWh) or megawatt hours (MWh), and electric capacity is
expressed in kilowatts (kW) or megawatts (MW).
"Eligible Non-Utility Generation" means electric generation from one or more of the
following sources:
(a) Solar photovoltaic and solar thermal energy;
(b) Wind energy;
(c) Biomass energy, including landfill gas or biogas produced from organic matter,
wastewater, anaerobic digesters, or municipal solid waste;
(d) Hydroelectric, geothermal, hydrokinetic energy or ocean thermal energy; or
(e) Other sources that generally have similar environmental impacts.
"Generation and Transmission Resources" or separately "Generation Resources" or
"Transmission Resources"means all existing and future facilities (whether or not operable, and
whether or not operating) used by Chugach for generation and/or transmission of electric power,
including,in addition to physical generation and/or transmission facilities and facilities associated
with the provision of fuel for electric power generation, Chugach's rights and obligations to obtain
(by purchase, wheeling, or otherwise) electric power generated by other entities or fuel for the
generation of electric power by Chugach, to the extent that the costs of such facilities and rights
are allowably included in the rates charged to Chugach's retail consumers.
"Production Reserve Costs" means those costs allocated to that portion of Chugach's
power production capacity that represents available power production capacity (including
contract power purchases, but not emergency power purchases) in excess of Chugach's system
peak requirements.
"Prudent Utility Practice" means at a particular time any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility industry at such time,
Page 16 of 17
or which in the exercise of reasonable judgment in light of facts known at such time, could have
been expected to accomplish the desired results at the lowest reasonable cost consistent with good
business practices, reliability, safety and reasonable expedition. Prudent Utility Practice is not
required to be the optimum practice, method, or act to the exclusion of all others, but rather to be
a spectrum of possible practices, methods or acts which could have been expected to accomplish
the desired result at the lowest reasonable cost consistent with reliability, safety and expedition.
Prudent Utility Practice includes due regard for manufacturer's warranties and the requirements
of governmental agencies of competent jurisdiction and shall apply not only to functional parts of
the Parties' generation, transmission, and distribution facilities,but also to appropriate structures,
landscaping,painting, signs, lighting and other facilities.
"Reserves"means the Electric Power needed to avert shortages of capacity and/or energy
for the benefit of retail or wholesale consumers that a utility system is obligated to serve and
which is available to that system either from facilities or from purchases or other arrangements,
which such system is contractually entitled to rely upon for such purposes.
"Small Power Project" means an Eligible Non-Utility Generation facility that has a
nameplate capacity of greater than 25 M, but not greater than 500 M, is not a net metered
generation system, and sells its electric output to Seward
"Total System Demand" means the Seward demand (regardless of whether Seward is
receiving power from Chugach or its own generation) registered during that 15-minute interval
for each month in which the sum of each of the following is greatest in that month: (1)the demands
metered at the delivery points described in Section 3.6, and (2) the demand on all Seward
generation. Seward shall permit Chugach to install, or cause to be installed, suitable metering
and registration equipment on its facilities.
"Uncontrollable Force"means any cause beyond the control of a Party hereto and which
by the exercise of due diligence that Party is unable to prevent or overcome, including but not
limited to an act of God, fire, flood, volcano, epidemic, pandemic, earthquake, explosion,
sabotage,an act of the public enemy,civil or military authority,including court orders,injunctions
and orders of governmental agencies of competent jurisdiction, insurrection or riot, an act of the
elements, failure of equipment, or the inability to obtain or ship equipment or materials because
of the effect of similar causes on carriers or shippers. Strikes, lockouts, and other labor
disturbances shall be considered Uncontrollable Forces, and nothing in this Agreement shall
require either Party to settle a labor dispute against its best judgment; provided, that during any
labor dispute all Parties shall make all reasonable efforts under the circumstances, including, to
the extent permitted by law, the use of replacement personnel and/or management personnel
and/or other personnel under the provisions of a mutual aid agreement, to ensure, if possible, the
continued ability of the Parties to produce, deliver, receive, and distribute the Electric Power that
is the subject matter of this Agreement.
Page 17 of 17
EXHIBIT A
AGREEMENT FOR JOINT USE OF FACILITIES
This Agreement for Joint Use of Facilities ("2022 JU Agreement"), dated as of August
2021, is entered into by and between Chugach Electric Association, Inc., an Alaska non-profit
electric cooperative corporation, having its offices at Anchorage, Alaska ("Chugach") and the City
of Seward, Seward Electric System ("Seward") having its offices at Seward, Alaska. Chugach and
Seward may hereinafter be referred to individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Parties entered into that certain Joint Use Agreement, renewed and
effective February 27, 2007, pursuant to Order U-06-056(6) ("2007 JU Agreement");
WHEREAS, pursuant to the 2007 JU Agreement, Chugach's distribution circuits were
transferred from Chugach's then existing poles located in the right-of-way between Daves Creek
and Lawing substation to Seward's newly constructed poles located in a new right-of-way covering
the same corridor ("Seward Poles");
WHEREAS, pursuant to the 2007 JU Agreement, Chugach owns and operates the
distribution underbuild and associated pole attachments ("Chugach Facilities") and Seward owns
and operates the 115 kV transmission line ("Seward Facilities") and the Seward Poles (collectively
"Poles and Facilities");
WHEREAS, the Chugach and Seward Facilities are more specifically described in
Attachment 1;
WHEREAS, the Parties wish to continue their joint use of the Seward Poles on the terms
and conditions described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
AGREEMENT
Section 1. Scope and Specifications
(a) The Chugach and Seward Facilities subject to and permitted under this 2022 JU Agreement
shall be as specified in Attachment 1.
(b) The Poles and Facilities shall at all times conform to the requirements of the latest edition
of the National Electric Safety Code and any subsequent amendments or revisions thereto
("NESC"), and any other applicable rules, regulations, orders, laws, or ordinances.
Section 2. Term and Termination
(a) The term of this 2022 JU Agreement shall commence on the Effective Date of the 2022
Wholesale Power Contract to which this 2022 JU Agreement is attached as Exhibit A and shall
continue in full force and effect for twenty-five (25) years from the Effective Date,unless extended
by mutual agreement of the parties.
Page 1 of 9
EXHIBIT A
(b) The termination of this 2022 JU Agreement shall not terminate the access rights of
Chugach to the rights-of-way which it is party to between Daves Creek and Lawing substations.
The termination of this 2022 JU Agreement shall not terminate the right of Chugach to have the
Chugach Facilities attached to the Seward Poles. It is the intent of this provision that any
termination of this 2022 JU Agreement not be interpreted to terminate either Chugach's access
rights to the rights-of-way, both public and private, which it has possessed during the course of
this 2022 JU Agreement or Chugach's right to have its distribution underbuild attached to the
Seward Poles.
Section 3. Compensation
The Parties agree that Chugach will pay no costs or rental fees to Seward for the right to attach
facilities to the Seward Poles except for those costs set forth elsewhere in this 2022 JU Agreement.
Section 4. Rights-of-Way
(a) Chugach shall be named as an additional Party to the Seward rights-of-way within which
the Seward Poles are located.
(b) The Parties agree to abide by the terms and conditions of any such rights-of-way.
Section 5. Maintenance of Poles and Facilities
(a) General.
i. Chugach shall maintain the Poles and Facilities in a safe and serviceable condition
and in accordance with the requirements of the NESC, and any other applicable rules, regulations,
orders, laws, or ordinances.
ii. Chugach shall replace, reinforce, or repair the Seward Poles when Chugach, in its
sole discretion, determines that such poles have become unsafe or unsuitable for their intended
purpose.
iii. Whenever it is necessary for Chugach to replace a Seward Pole, Chugach shall,
before making such replacement, give thirty (30) days' advance written notice to Seward (except
in the case of emergency when verbal notice will be given and subsequently confirmed in writing)
specifying the time and estimated cost of such replacement.
iv. Chugach shall maintain at all times, itself or by agreement with a Qualified
Contractor, the capability, twenty-four (24) hours a day, seven (7) days a week, to respond in a
reasonably immediate fashion to any emergency situations brought to Chugach's attention.
Seward shall notify Chugach of emergency situations brought to its attention by calling Chugach's
Dispatch Center at 907-762-4661 or 907-762-4660. Such verbal notice shall be followed-up with
a written notification to Chugach describing the emergency situation and specifying the date and
time when the required verbal notification was given to Chugach. A "Qualified Contractor" means
a contractor who possesses the necessary licenses, experience, equipment, and certificates of
fitness to perform such work.
Page 2 of 9
EXHIBIT A
V. Chugach shall, in the performance of its responsibilities under this Section 5(a),
attempt in good faith to minimize to the extent reasonably possible any disruption in the services
provided by Seward's Facilities. Where maintenance work, emergency or otherwise, necessitates
interruption in services provided by the Seward Facilities, such maintenance shall be performed in
such a manner so as to minimize to the extent reasonably possible the interruption in services.
Chugach shall notify Seward in advance both orally and in writing of such planned maintenance
work. Seward shall have the right to review and approve the plan for any maintenance work that
will necessitate an interruption in services from the Seward Facilities. Such right of review and
approval shall be exercised in a reasonable manner.
vi. Seward shall notify Chugach of any unreasonable disruption in service caused by
Chugach's maintenance of the Poles and Facilities. If the service disruption is not corrected by
Chugach within a reasonable period of time relative to the circumstances, Seward shall be allowed
to perform such work as is necessary to remedy the unreasonable disruption in services.
vii. All necessary right-of-way maintenance and clearing activities related to the Poles
and Facilities from Daves Creek substation to the metered delivery point south of Lawing
substation shall be performed by a Qualified Contractor mutually agreed to and jointly contracted
by the Parties.
(b) Costs and Billing.
i. Chugach shall be solely responsible for the cost of right of way clearing, repairing,
maintaining, and replacing the Chugach Facilities.
ii. Seward shall be solely responsible for the cost of right of way clearing, repairing,
maintaining, and replacing the Seward Poles and Seward Facilities.
iii. Costs incurred by Seward in connection with any work it performs under Section
5(a)vi to restore an unreasonable disruption of service shall be billed to and paid by Chugach.
Chugach shall remit payment to Seward within thirty (30) days of receipt of such bills.
iv. Chugach shall bill Seward monthly for any costs to be paid by Seward that are
incurred by Chugach in the performance of its obligations under this 2022 JU Agreement. Seward
shall remit payment to Chugach within thirty (30) days of receipt of such bills.
Section 6. Third Party Attachments
(a) No third-party attachments to the Seward Poles shall be permitted absent Chugach's prior
written consent, such consent not to be unreasonably withheld.
(b) No third-party attachments to the Seward Poles shall be permitted absent the third-party's
agreement to maintain its attachment in accordance with the specifications and requirements of
this Agreement.
Section 7. Future Modifications
(a) When either Party desires to change the character of its circuits, such Party will give thirty
(30) days advance written notice to the other Party of such contemplated change in the character
Page 3 of 9
EXHIBIT A
of its circuits. Any such change in the character of the circuits shall require the concurrence of
both Parties, and such concurrence shall not be unreasonably withheld. All construction changes
required to accommodate the new circuits shall meet the specifications and requirements contained
in this 2022 JU Agreement.
(b) If the change in the character of the circuits requires pole replacements for the sole benefit
of Seward, Seward will be responsible for the setting of such poles and the attachment of its
facilities to the new poles. Chugach will be responsible for the attachment of its facilities to the
new poles, but Seward will reimburse to Chugach the reasonable costs associated with such
attachment.
(c) If the change in the character of the circuits requires pole replacements for the sole benefit
of Chugach, Chugach will be responsible for the setting of such poles and the attachment of
Seward's and Chugach's facilities to the new poles. Seward will reimburse Chugach for the
reasonable costs associated with the attachment of Seward's facilities to the new poles, but not the
costs of setting the new poles.
Section 8. Abandonment and Relocation
(a) If Seward desires at any time to abandon any Seward Pole, it shall give Chugach sixty (60)
days advance written notice prior to the date on which Seward intends to abandon such pole. If at
the expiration of such period Seward shall have no attachments on such pole but Chugach shall
not have removed all of its attachments therefrom, such pole shall thereupon become the property
of Chugach, and Chugach shall hold Seward harmless from all obligation, liability, damages, costs,
expenses or charges incurred thereafter but not arising out of or related to events occurring or
conditions existing prior to Chugach taking ownership of such pole; and shall pay Seward for such
pole an amount as may be mutually agreeable to both Parties. Seward shall further evidence
transfer to Chugach of title to the pole by means of a bill of sale.
(b) Chugach may at any time abandon use of a Seward Pole by giving reasonable notice thereof
in writing to Seward and removing therefrom any and all attachments it may have thereon.
(c) Should any of the Seward Poles have to be relocated at the direction of any authorized
federal, state, or local governmental entity, Seward shall, before making such relocation, give
Chugach reasonable advance written notice specifying the date and time such relocation is to be
completed. Chugach shall at the time so specified transfer its attachments to the relocated pole.
In the event that Seward is reimbursed from any governmental entity for the costs of the relocation
of the pole and the attachments thereon, Chugach will be entitled to a proportionate share of that
reimbursement. Chugach's share of the reimbursement shall be computed as a product of the
amount of reimbursement received from the governmental entity multiplied by the ratio of
Chugach's costs of relocation of its facilities to the total cost to Chugach and Seward for the
relocation of their facilities.
Page 4 of 9
EXHIBIT A
Section 9. Damage Reports, Liability, Indemnification/Contribution
(a) Damage Reports. The Parties shall each make an immediate report to the other of any
damages caused by the reporting Party to the other Party's facilities (and those of any other parties
on the pole).
(b) Limitation of Liability. LIABILITY UNDER THIS 2022 JU AGREEMENT IN TORT
OR FOR BREACH OF CONTRACT OR OTHERWISE AS BETWEEN THE PARTIES FOR
DAMAGES TO PROPERTY OF THE PARTIES, NOT INVOLVING CLAIMS OF THIRD
PARTIES, SHALL BE AS FOLLOWS:
i. SEWARD SHALL BE LIABLE TO CHUGACH FOR THE REASONABLE
COSTS FOR THE PHYSICAL REPAIR OF CHUGACH FACILITIES DAMAGED BY THE
NEGLIGENCE OF SEWARD, BUT SEWARD SHALL NOT BE LIABLE FOR ANY
INTERFERENCE WITH THE OPERATION OF CHUGACH'S FACILITIES OR FOR ANY
SPECIAL INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES TO CHUGACH
ARISING IN ANY MANNER.
ii. CHUGACH SHALL BE LIABLE TO SEWARD FOR THE REASONABLE
COSTS FOR THE PHYSICAL REPAIR OF SEWARD FACILITIES DAMAGED BY THE
NEGLIGENCE OF CHUGACH, BUT CHUGACH SHALL NOT BE LIABLE FOR ANY
INTERFERENCE WITH THE OPERATION OF SEWARD'S FACILITIES OR FOR ANY
SPECIAL INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES TO SEWARD
ARISING IN ANY MANNER.
(c) Indemnification. Each Party (as "Indemnifying Party") shall indemnify, defend, and hold
harmless the other Party, and its managers, officers, directors, representatives, agents, employees,
contractors, affiliates, successors and assigns (collectively, "Indemnified Party") against any and
all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest,
awards, penalties, fines, costs, or expenses of whatever kind, including professional fees and
reasonable attorneys' fees, that are incurred by Indemnified Party (collectively, "Losses"), to the
extent arising out of any third party claims alleging:
i. material breach by, or non-fulfillment of any provision of this Agreement binding
on, the Indemnifying Party or Indemnifying Party's representatives, as applicable;
ii. any negligent or more culpable act or omission of Indemnifying Party (including
any reckless or willful misconduct) in connection with the performance of its obligations under
this 2022 JU Agreement;
iii. any bodily injury, death of any person, or damage to real or tangible personal
property caused by the negligent or more culpable acts or omissions of Indemnifying Party
(including any reckless or willful misconduct); or
iv. any failure by Indemnifying Party to comply with any applicable federal, state, or
local laws, regulations, or codes in the performance of its obligations under this Agreement.
Page 5 of 9
EXHIBIT A
Section 10. Collective Bargaining Agreements
Neither Party will cause or require the other Party to violate any applicable collective
bargaining agreement.
Section 11. Insurance
Each Party agrees to use its best efforts to obtain and maintain in full force and effect
during the term of this 2022 JU Agreement, adequate insurance with responsible insurers as may
be required by law.
Section 12. Force Majeure
No Party shall be liable or responsible to the other Party, nor be deemed to have defaulted
under or breached this Agreement, for any failure or delay in fulfilling or performing any term of
this Agreement (except for any obligations to make payments to the other Party hereunder), when
and to the extent such Party's ("Impacted Party") failure or delay is caused by or results from an
Uncontrollable Force. The Impacted Party shall give notice to the other Party within three (3) days
of the Uncontrollable Force event,stating the period of time the occurrence is expected to continue.
The Impacted Party shall use diligent efforts to end the failure or delay and ensure the effects of
such Uncontrollable Force event are minimized. The Impacted Party shall resume the performance
of its obligations as soon as reasonably practicable after the removal of the cause. In the event that
the Impacted Party's failure or delay remains uncured for a period of 30 consecutive days following
written notice given by it under this Section 12, the other Party may thereafter terminate this
Agreement upon 30 days'written notice.
"Uncontrollable Force" means any cause beyond the control of a Party hereto and which
by the exercise of due diligence that Party is unable to prevent or overcome, including but not
limited to an act of God, fire, flood, volcano, epidemic, pandemic, earthquake, explosion,
sabotage, an act of the public enemy, civil or military authority, including court orders, injunctions
and orders of governmental agencies of competent jurisdiction, insurrection or riot, an act of the
elements, failure of equipment, or the inability to obtain or ship equipment or materials because of
the effect of similar causes on carriers or shippers. Strikes, lockouts, and other labor disturbances
shall be considered Uncontrollable Forces, and nothing in this Agreement shall require either Party
to settle a labor dispute against its best judgment; provided, that during any labor dispute all parties
shall make all reasonable efforts under the circumstances, including, to the extent permitted by
law, the use of replacement personnel and/or management personnel and/or other personnel under
the provisions of a mutual aid agreement, to ensure, if possible, the continued ability of the parties
to perform under this 2022 JU Agreement.
Page 6 of 9
EXHIBIT A
Section 13. Miscellaneous
(a) Waiver. Any waiver at any time by any Party to this Agreement of its rights with respect
to any default of the other Party hereto, or with respect to any other matter arising in connection
with this Agreement, shall not be considered a waiver with respect to any prior or subsequent
default, right or matter.
(b) Severability. If any term or provision of this Agreement is invalid, illegal, or
unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that any term or other provision is
invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effectuate the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
(c) Assignment.
i. General. Neither Party may assign any of its rights hereunder without the prior
written consent of the other Party, which consent shall not be unreasonably withheld, conditioned,
or delayed. Any purported assignment in violation of this Section shall be null and void. No
assignment shall relieve the assigning Party of any of its obligations hereunder.
ii. Assignment for Security. Notwithstanding Section 13(c)(i), a Party, without the
other Party's consent, may assign, transfer, mortgage, or pledge its interest in this Agreement as
security for any obligation secured by an indenture, mortgage, or similar lien on its system assets
without limitation on the right of the secured Party to further assign this Agreement; provided,
however, that no such assignment shall relieve such Party of any obligations hereunder.
(d) Successor and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
(e) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto
and their respective successors and assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of
any nature whatsoever under or by reason of this Agreement.
(0 Notices. Except as provided in Section 5(a)(iv), all notices, requests, consents, claims,
demands, waivers, and other communications hereunder (each, a "Notice") shall be in writing and
shall be deemed to have been given (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier
(receipt requested); (c) on the date sent by facsimile or email (with confirmation of transmission)
if sent during normal business hours of the recipient, and on the next business day if sent after
normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or
registered mail (in each case, return receipt requested, postage pre-paid). Notices must be sent to
the respective parties at the following addresses (or at such other address for a Party as shall be
specified in a Notice given in accordance with this Section 13(f)):
Page 7 of 9
EXHIBIT A
If to Chugach: Chugach Electric Association, Inc.
5601 Electron Drive
Anchorage, AK 99518
Email: Lee_Thibert@chugachelectric.com
Attention: Lee Thibert, Chief Executive Officer
with a copy to: Chugach Electric Association, Inc.
5601 Electron Drive
Anchorage, AK 99518
Email: Matthew_Clarkson@chugachelectric.com
Attention: Matthew Clarkson, EVP, General Counsel
If to Seward: City of Seward
PO Box 167
Seward, AK 99664
Email: rontgomery@cityofseward.net
Attention: Rob Montgomery, Director, Seward Electric
with a copy to: Boyd, Chandler & Falconer, LLP
911 W. 8tn Ave #302
Anchorage, AK 99501
Email: Bchandler@bcfaklaw.com
Attention: Brooks Chandler, Seward City Attorney
(g) Amendment and Modification. This Agreement may only be amended, modified, or
supplemented by an agreement in writing signed by each Party hereto and approved by appropriate
governing boards and regulatory agencies.
(h) Entire Agreement. This Agreement, together with any other documents incorporated
herein by reference and all related exhibits and schedules, constitutes the sole and entire agreement
of the parties to this Agreement with respect to the subject matter contained herein and therein,
and supersedes all prior and contemporaneous understandings, agreements, representations, and
warranties, both written and oral, with respect to such subject matter.
(i) Headings. The headings in this Agreement are for reference only and shall not affect the
interpretation of this Agreement.
0) Cumulative Remedies. The rights and remedies under this Agreement are cumulative and
are in addition to and not in substitution for any other rights and remedies available at law or in
equity or otherwise.
(k) Governing Law. This Agreement and all matters arising out of or relating to this
Agreement shall be governed by and construed in accordance with the laws of the State of Alaska
Page 8 of 9
EXHIBIT A
without giving effect to any choice or conflict of law provision or rule (whether of the State of
Alaska or any other jurisdiction).
(1) Relationship of the Parties. Nothing herein shall be construed to create a j oint venture or
partnership between the parties hereto or an employer/employee or agency relationship. Neither
Party hereto shall have any express or implied right or authority to assume or create any obligations
on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement,
or undertaking with any third Party.
(m) Regulatory Approval. This Agreement shall only become effective upon approval by
the RCA and shall at all times remain subject to revision by the RCA.
(n) Taxes. Each Party shall pay all taxes and assessments lawfully levied on its own property
upon the Seward Poles, and the taxes and assessments which are levied on the Seward Poles shall
be paid by Seward, but any tax, fee, or charge levied on Seward's Poles solely because of their use
by Chugach shall be paid by Chugach.
(o) Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall be deemed to be one and the same agreement.
A signed copy of this Agreement delivered by facsimile, email or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
In witness whereof, the Parties have executed this 2022 JU Agreement the date first written above.
Chugach Electric Association, Inc.
City of Seward d/b/a Seward Electric System
Page 9 of 9