HomeMy WebLinkAboutAM 2023-012 Why HEA is preferred buyer City of Seward
Action Memorandum 2023-012
Meeting Date: August 14, 2023
To: City Council
From: Council Members DeMoss and Wells
Subject: Action Memorandum 2023-012: Clarifying the Reasons Homer Electric
Association is the Preferred Electric Utility to Purchase Seward Electric
Background and justification:
On May 9, 2022, the Seward City 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. Subsequently to this, the City has
undertaken a thorough process to determine the pros and cons of selling the utility as well as
whether to sell the Electric Utility to Homer Electric Association or Chugach Electric.Both entities
submitted proposals to the City Council. After several meetings to discuss and review the
proposals, the City Council voted unanimously on Resolution 2022-114 during the November 14,
2022 meeting; which selected Homer Electric Association. The public has recently asked the City
Council to provide clarification on the reasons that Homer Electric Association was selected. This
action memorandum serves as a formal mechanism to communicate those reasons.
City Council believes the following reasons are primary motivating factors for selling the Electric
Utility to Homer Electric Association:
• 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.
• A merger between HEA and SES makes the Kenai Peninsula stronger.
• HEA's commitment to freeze consumer rates for at least three years.
• HEA effectively outline its long-term rates strategy.
• We are comfortable with the leadership stability of HEA.
• We are comfortable with the financial health of HEA.
• HEA offers grant opportunities not available with other utilizes.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with(citation listed):
Comprehensive Plan:
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 $
x Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
x Not applicable
Fund Balance Information
Affected Fund(✓):
General SMIC Electric Wastewater
Boat Harbor Parking F1 Water F1 Healthcare
Motor Pool Other
Note: amounts are unaudited
Fund Balance/Net position—restricted $
Fund Balance/Net position—unrestricted/unassigned $
Available Unrestricted Cash Balance: $
Finance Director Signature: No fiscal impact
Attorney Review
RxYes Attorney Signature:
Not applicable Comments:
Administration Recommendation
rq Adopt AM
Other:
City Council Approved Action Memorandum 2023-012 on August 14,2023—Kris Peck City Clerk