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Home My WebLink About09112023 City Council Laydown - Casagranda 601 44 4(6) To the Honorable Council Members of the City of Seward: C A 567f4troctk We, the members of the Electrical Ad-hoc committee, have embarked upon the mission to look at rebuilding, maintaining, and operating our electric utility with wholehearted enthusiasm and with the best interests of the greater Seward Community at heart. We did not take this job lightly. Our first meeting was when we were told what we were to deliver to Council, and we have done that in this presentation. Most, if not all, of the committee members felt this was not what should have been delivered to you, but deliver it we have, to the best of our abilities. During our short tenure on this committee, we have learned much, and have much to offer and recommend. Following is a list of these recommendations along with a proposed budget that encompasses these recommendations. Notes on the Deliverables 1) Salary information was extremely hard to obtain by contacting other utility companies, and salary information is the best estimate that could be obtained by the committee members. No one was able to find comparable salary comparisons for the Railbelt Liaison position. 2) A review of the percentage of salary to be allocated for taxes and benefits from the City of Seward Electrical Budget has averaged 45%. Rob Montgomery told the committee at its meeting of August 21st that he was told to use 17% of salary for this figure. The committee has chosen to use the more conservative number. If 17% were used this would lower the overall costs of the deliverables by $141,400. 3) The Cyber Security position was shown as outsourced per discussion during the August 7th ad-hoc committee meeting discussion with Rob Montgomery. 4) The committee felt that the best location for any new employees would be in the same location where the other utility employees are now, The Annex Building, realizing that the Parks and Recreation employees now using that space may need to be relocated. 5) Per information from Rob Montgomery, no new vehicles and equipment were immediately needed so a token amount of $10,000 was added. Recommendations to the Council from the Ad-Hoc Committee 1) Start charging customers a Power Factor Fee and attempt to get our line loss percentages in line with national averages of around 5%. Ours are in the neighborhood of 9%. We estimate this will increase revenue approximately $250,000. 2) Complete the automation for the back-up generator to save on overtime. 3) Create a Utility Board to oversee the operation of the utility with a minimum of five members to include utility-paying residents from the entire service area. 4) Restore the meter reader position. 5) Advocate for legislation that would require cruise ships to use shore power while in port. 6) Hire someone or have a committee investigate grants for cybersecurity to include but not limited to Homeland Security, FEMA, and Dept. of Energy 7) Look into contracting out the management of the electric utility for one to three years. I I uenveraoies as requestea oy k.ouncii P 1) Estimates New Positions -Salaries Business Operations Manager $ 140,000 Railbelt Liaison (Government Liaison) $• 90,000 CR/Comm $ 90,000 Lineman $ 110,000 Apprentice Operator $ 75,000 TOTAL $ 505,000 New Positions -Taxes & Benfits Business Operations Manager $ 63,000 Railbelt Laison (Government Liaison) $ 40,500 CR/Comm $ 40,500 Lineman $ 49,500 Apprentice Operartor $ 33,750 TOTAL $ 227,250 Contract Services Cybersecurity $ 125,000 $ 125,000 Total Personnel $ 857,250 2) Costs for Office Space $ 50,000 3) Cost for new equipment/supplies/vehicles $ 10,000 4) Repair& Maintenance $ 50,000 MMRF Contribution $ 500,000 5) Regular Investments in tech/cybersecurity $ 50,000 TOTAL- DELIVERABLE Expenses: $ 1,517,250 r Electric Re-Build Budget Q 1 Most recent 2024 Annual Assumptions/ Re-Build IRevised 9/7/23: V-2 actual 2022 Budget Deliverables Codes Budget as of 5/26/23 Revenues unaudited) 5300 Residential 1,678,200 2,000,000 2,000,000 I 5302 Residential fuel factor 1,780,206 1,815,187 1,815,187 5303 Residential customer charge 547,658 202,687 202,687 5310 SG Service 1,003,784 1,039,185 72,000 B 1,111,185 5312 SG fuel factor 1,002,547 957,112 957,112 5313 SG Customer Charge 284,413 122,176 122,176 5320 LG Service 965,674 1,648,129 1,648,129 5322 LG fuel factor 2,217,909 2,153,973 2,153,973 5323 LG customer charge 41,923 47,574 47,574 5324 LG demand charge 1,451,554 469,928 469,928 5340 Special Contract Energy (274) - 5350 Harbor Fund Power Sales 223,533 280,831 280,831 5352 Harbor power fuel factor 215,815 268,237 268,237 5360 Street&Yard 76,314 77,877 77,877 5362 Yard Light Fuel 7,809 7,592 7,592 5370 Industrial Service 381,869 858,500 858,500 5371 Industrial Customer Charge 3,372 758 758 5372 Industrial Demand Charge 627,413 1,065,550 1,065,550 5373 Industrial Fuel Factor 1,066,628 126,250 126,250 5801 Turn on Fees 21,175 18,258 18,258 5802 Equipment Rental - 5,484 5,484 5803 Joint Pole Use 10,212 10,314 10,314 5804 Work Order Revenue." 816,556 30,000 30,000 5899 Miscellaneous Revenue 1,278 5901 EF Investment Interest 118,977 35,000 35,000 5905 EF Penalties and Interest 23,090 26,800 26,800 5920 PERS On-Behalf paid by SOA 12,143 - Est of increased revenue from rate study 950,000 A 950,000 Power Factor Fee 250,000 I 250,000 5941 Amort.Bond Premium 13,834 55,741 55,741 Total Revenues 14,593,612 13,323,143 1,272,000 14,595,143 Expenditures Personnel Costs: 6000 Salaries 967,506 1,111,633 355,000 1, L 1,466,633 6001 Overtime 126,443 105,090 (20,000) D,E 85,090 6002 Standby Time 149,120 141,595 141,595 6100 Medicare 18,888 14,881 14,881 6102 Workers'Compensation 18,640 40,107 40,107 6200 Leave Time 16,084 - 6201 Retirement Benefits 235,008 208,147 208,147 6202 Health Insurance 321,482 330,033 159,750 2, M 489,783 6203 In Lieu of FICA 5,100 5,100 6204 Meal Allowance 4,250 7,128 7,128 6205 Electric Union Benefits 2,180 8,520 8,520 Total Personnel Costs: 1,859,601 1,972,234 494,750 45% 2,466,984 Non-Personnel Costs: 7001 Communications 15,691 19,650 19,650 7002 Postage and Freight 19,397 17,436 17,436 7003 Bank and Credit Card Fees 125,488 _ 7004 Insurance 111,002 116,475 7006 Legal 116,475 17,263 90,000 90,000 7009 Contracted Services 949,635 343,000 125,000 3 468,000 P � Most recent 2024 Annual Assumptions) Re-Build • Revised 9/7/23: V-2 actual 2022 Budget Deliverables Codes Budget 7010 Engineering 444,462 51,000 51,000 7011 Testing 1,493 18,100 18,100 7012 Other Special Services 19,166 4,500 4,500 7015 Utilities 175,019 199,920 199,920 7016 Heating Fuel 27,945 36,720 36,720 7017 Rents&Leases 20,916 16,222 50,000 4 66,222 7022 Software/SaaS Subscr 30 15,200 15,200 7101 Chugach Power Purchases 3,457,916 2,393,000 10,000 G 2,403,000 7102 Power Fuel Costs 2,893,156 3,708,000 3,708,000 7103 Fuel for Generators 46,499 185,000 185,000 7210 Vehicle Supplies 25,713 20,000 20,000 7211 Gas&Lube 40,527 35,700 35,700 7212 Uniform Allowance 7,788 12,700 12,700 7213 Safety Equipment 14,144 23,400 23,400 7215 Operating Supplies 391,702 86,000 10,000 5 96,000 7216 Maintenance&Repair 4,537 40,400 50,000 6 90,400 7217 Small Tools&Equipment 10,060 23,500 50,000 7 73,500 7221 Operating Materials 300,000 300,000 7300 Advertising 7,244 10,000 10,000 7301 Subscriptions&Dues 27,074 81,500 81,500 7302 Travel&Subsistence 12,530 24,500 24,500 7303 Education&Training 12,361 14,250 14,250 7304 Equipment Rent 405 6,500 6,500 7307 GE Administrative Fee 1,005,612 1,066,855 ($85,880) C,H,K 980,975 7330 P.I.L.T. 1,200,253 1,056,448 1,056,448 7331 Reclass PlLTto Transfer-Out (1,200,253) (1,056,448) (1,056,448) 7808 Bad Debt Expense 23,081 25,000 25,000 7810 Miscellaneous Expense - - 7900 Depreciation Expense 1,583,677 1,585,000 1,585,000 8001 Unrealized Loss on Investments 278,113 - 8010 Utility Deposit Interest 964 1,500 1,500 8012 Debt Service Interest Expense 465,852 576,700 576,700 8013 Amortization of Deferred Loss on 20,903 20,903 20,903 Bonds 8014 Amortization of Bond Issue Costs - 4,500 4,500 8101 Infrastructure(MRRF) - 500,000 F 500,000 8103 Capital Equipment 30,144 - 8104 Motor Pool Rent 299,780 85,000 85,000 8200 Work Order Sal/Benefit credits - _ 8201 Work Order Operating Supply credits - 9202 Work Order Oper-Supply Credits 8300 Debt Service Principal - - Total Non-Personnel Costs: 12,587,289 11,258,131 709,120 11,967,251 Total Expenditures 14,446,890 13,230,365 1,203,870 14,434,235 NET INCOME 146,722 92,778 68,130 160,908 FINAL CASH FLOW (estim) Depreciation 1,861,790 1,585,000 1,585,000 PILT& ROW Fee (1,500,253) (1,356,448) (1,356,448 Bond Payment Principal (200,000) (205,000) (205,000 . ' 2024 Bond Principal Debt Payments to be updated by City. NET CASH FLOW(estimate) 308,259 0 116,330 68,130 0 184,460 2024 Rebuild Budget Assumptions(Codes) (ESTIMATES ONLY) U/f • 1 New Positions-Salaries ** Assistant Director $ 165,000 Lineman $ 110,000 TOTAL $ 275,000 2 New Positions-Taxes& Benefits ** Assistant Director $ 74,250 Lineman $ 49,500 TOTAL $ 123,750 3 Contract Services. ** Cyber Security $ 125,000 $ 125,000 4 Costs for Office Space ** $ 50,000 5 Cost for new equipment/supplies/vehicles ** $ 10,000 6 Increase Repair& Maintenance** $ 50,000 7 Cybersecurity Tech equipment** $ 50,000 TOTAL- Expenses: $ 683,750 A 2024 Rate Increase Revenues(Rate Study increase) (950,000) 15%increase estimate includes SG, LG, Res.& Industrial B New Power Sales(new homes, DRP's) ($72,000) C GF Sales Tax Increase(Credit) from REVENUE Increase ($40,880) D Lineman Overtime Reduction -addt'I Lineman ($50,000) E Contribution to general fund for comm personnel $30,000 F MRRF Contribution $500,000 G Wholesale Power Cost Increase, NEW Sales $10,000 H Reduce Lobbyist GF Transfer ($45,000) I Line Loss Savings(reduce to 5%) (250,000) (Power Factor Fee) J Eliminate ROW Fee to GF Transfer* K Reduction of GF Transfer to pay into MRRF and MP* L Director Salary Increase $ 80,000 M Director Tax& Benefit Increase $ 36,000 TOTAL-BUDGET ASSUMPTIONS: ($751,880) NET COST/(PROFIT)from 2024 Budget Rebuild ($68,130)