HomeMy WebLinkAboutRes2022-114 Homer Electric Association Preferred Buyer CITY OF SEWARD,ALASKA Sponsored by: Bower
RESOLUTION 2022-114
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, SELECTING HOMER ELECTRIC ASSOCIATION AS THE
PREFERRED ELECTRIC UTILITY TO PURCHASE SEWARD
ELECTRIC
WHEREAS, on August 8, 2022, the Seward City Council passed Resolution 2022-087:
Submitting the Question of Selling the City of Seward Electric Utility to the Qualified City of
Seward Voters at a Special Election in and For the City of Seward on May 2, 2023; and
WHEREAS, the resolution directed that prior to voter approval of the proposition to sell
the electric utility, the city issue a Limited Solicitation Request for Proposals from interested and
qualified electric utilities in Alaska to provide electric services; and
WHEREAS, the resolution directed that following receipt of the proposals, the city will
negotiate with, and select, the utility most qualified to meet the electric service needs of Seward
while also sharing the City's community-focused values; and
WHEREAS, the resolution further directs the selected utility be announced to the public
prior to the vote on selling the utility and the selected utility be authorized to provide public
information to City voters; and
WHEREAS,the city received two proposals from qualified Alaskan electric utilities;
WHEREAS, pursuant to Seward City Code 2.10.033 C, the city council met in three
executive sessions to discuss the electric utility proposal and sale negotiations; and
WHEREAS, following the executive session on October 27, 2022, the city council
unanimously passed a motion to direct the city manager to bring a resolution before the council on
November 14, 2022, stating the city council unanimously selected Homer Electric Association as
the preferred electric utility to purchase Seward Electric.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD,ALASKA that:
Section 1. The Seward City Council hereby selects Homer Electric Association as the
preferred electric utility to purchase Seward Electric.
Section 2.The sale of the electric utility will only occur upon the affirmative vote by three-
fifths of the qualified electors voting on the proposition to approve the sale of the municipal utility
at the May 2, 2023 special election.
CITY OF SEWARD,ALASKA
RESOLUTION 2022-114
Section 3. The city manager is hereby authorized to negotiate a sales contract with
Homer Electric Association and to sign all documents related to the negotiations prior to
the May 2, 2023, special election subject to approval by City Council resolution of the
negotiated purchase and sale agreement.
Section 4. If the voters approve sale of the electric utility at the May 2, 2023
special election the city manager is hereby authorized to sign all documents related to the
sale following certification of the May 2, 2023 special election.
Section 5.This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska,this 14th
day of November, 2022.
THE CITY OF SEWARD,ALASKA
Sue McClure, Mayor
AYES: Calhoon, DeMoss, Osenga, Wells, Finch, McClure
NOES: None
ABSENT: None
ABSTAIN: None
VACANT: One
ATTEST:
rends J. Ballo ,MMC
City Clerk
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City Council Agenda Statement
Meeting Date: November 14, 2022
To: City Council
Through: Janette Bower, City Manager
From: Rob Montgomery, General Manager - Electric
Agenda Item: Resolution 2022-114: Selecting Homer Electric Association as the Preferred
Electric Utility to Purchase Seward Electric
Background and justification:
On May 9, 2022, Seward Mayor Christy Terry and Council Member Calhoon introduced and the
council unanimously approved Resolution 2022-067 to develop a timeline and process for examining
the advantages and disadvantages of selling the electric utility and bring recommendations back to
city council for adoption.
On July 25, 2022,the city council held a special meeting the purpose of assessing Seward's electric
utility future. At that meeting, the council directed the city manager to bring forward a resolution to
conduct a special election on May 2, 2023, and a resolution appropriating funds to influence the
outcome of an election.
On August 8, 2022, the city council approved Resolution 2022-087: submitting the question of
selling the City of Seward electric utility to the qualified City of Seward voters at a special election in
and for the City of Seward on May 2, 2023. The resolution language authorized the issuance of a
Limited Solicitation Request for Proposals from interested and qualified electric utility in Alaska to
provide electric services. The city council also approved Resolution 2022-088: appropriating funds in
the amount of $25,000 to influence the outcome of an election.
A Limited Solicitation Request seeking proposals from interested utilities was issued on August 17.
Homer Electric Association (HEA) was one of two utilities that submitted proposals. Following three
executive sessions, including one where the utilities presented to City Council, HEA was selected by
Council as its preferred electric service provider. Council then directed the City Manager to negotiate
a proposed contract with HEA, should citizens vote to approve the sale in the Special Election on
May 2.
Council selected HEA based upon several factors, including:
• HEA's long-term strategic plan and investments already made in its infrastructure and
operations;
• HEA being further along than other Railbelt utilities in its investments in cybersecurity and
other system technologies;
• HEA's plan for integrating into the Seward community;
• HEA ensuring Seward representation on the HEA board of directors;
• Existing synergies between HEA and Seward Electric since both utilities are located on the
Kenai Peninsula and each works closely with the Kenai Peninsula Borough;
• HEA's commitment to freeze consumer rates for at least three years.
HEA also addressed its future strategy for consumer rates. While higher today than four of the five
Railbelt utilities, HEA pointed to the investments it has already made in operations, infrastructure
and technology that are expected to stabilize future rates. HEA discussed how these investments
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have positioned it well, since other Railbelt utilities will be making similar investments in the years
ahead, thus putting upward pressure on their respective rates. HEA indicated that its investments
were strategic, knowing the longer-term benefit of rate stabilization for consumers would outweigh
the upward pressure on rates in the short term.
For the City of Seward, the discussion related to rates is important since Seward Electric is facing
significant rate increases over the next several years. Should voters not approve the sale in May,
Seward Electric will move forward with a rate study that is expected to increase consumer rates by
no less than 10 percent in late 2023 or early 2024. This increase would be followed by future
double-digit increases every two to four years, as the utility plays catch up with its investments in
operations, infrastructure and technology.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan: 3.7.1.4"Continue to upgrade and expand utilities to meet existing needs and
encourage future development."
Strategic Plan:
Other:
Certification of Funds
Total amount of funds listed in this legislation: $ 0
This legislation (✓):
Creates revenue in the amount of: $
Creates expenditure in amount of: $
Creates a savings in the amount of: $
Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
Finance Signature: S
Attorney Review
✓ Yes Attorney Signature:
Not applicable Comments:
Administration Recommendation
e✓ Approve Resolution
Other:
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