HomeMy WebLinkAbout09252023 City Council Laydown - Casagranda September 25, 2023
Dear Honorable Seward City Council,
We, members of the City of Seward Electric Ad Hoc Committee, volunteered for this committee
under the mission stated by the City Council to research and compile the costs of rebuilding
Seward's electric utility. As a body of eight, we were fortunate to collectively have well over 100
years' experience with finance and Alaska utilities. Within our membership we had individuals
with service on utility boards and city councils and with careers in banking, utility operations,
and energy science and engineering. A former Seward city manager, a finance expert, and
several Seward Electric employees regularly attended our meetings and provided valuable
information and insight. At our first meeting, we learned that our"deliverables" to Council had
been limited to providing costs for a list of additional expenses/resources that were requested
by the Seward Electric System Interim General Manager. His list consisted primarily of an
increase in staff from 10 to 17 and investments in cybersecurity and in future maintenance and
capital projects. We surveyed Alaska electric utilities similar in size to Seward Electric System
(SES) in completing our cost estimates. Our estimate for the additional resources on the Interim
General Manager's list is $1.5M.
Our Ad Hoc committee did not agree that all additional staff requested by the Interim General
Manager were absolutely essential to function of our utility. We put together a proposed 2024
balanced Electric Re-Build budget that combined staff duties to limit additional personnel as
illustrated in the attached diagram. Our budget also highlighted additional sources of revenue
and added $ 500 K to the Major Repair and Replacement Fund. We were able to create a
balanced budget with a base rate increase of 1.7 cents/kWh across all rate classes for 2024,
which we provided to Council at its September 11, 2023, meeting.
Our cost estimates and the deliverables that the Council asked for and our Rebuilt 2024 Budget
can be found in the packet that is attached to this letter.
Our committee's proposed rate increase of 1.7 cents/kWh is less than one-third of the 6.4
cents/kWh rate increase proposed in the draft Rate Study presented by Mike Hubbard at the
September 11 Council meeting because the city's Rate Study is based on the Interim General
Manager's wish list. Our committee has several unanswered questions regarding the numbers
used in the rate study. As of Monday, September 25th, 2023, our committee is still awaiting an
answer to the request to hold a work session with Council. As the chart below demonstrates,
our committee's Rebuilt 2024 Budget has a 78% higher net operating income than the approved
2024 budget, thereby providing a significantly larger cushion against unanticipated expenses.
The following table compares the operating income of the 2024 approved SES budget with the
Ad Hoc Committee's Rebuild Budget.
2024 City Electric Utility -_Electrical Ad Hoc Rebuild Budget
Approved Budget Adjustments Rebuilt Budget
Revenues: $1332 M $1.27 M $14.59 M
Expenses:
Personnel & Ovhd $ 1.97 M $0,49 M $ 2.46 M
All Other Expenses $11.26 M $0.71 M $11.97 M
Total Expenses: $13.23 M $120 M $14.43 M
Net Operating Income $ 90,000 $70,000 $160,000
* Operating Income excludes PILT/ROW which for Cash Flow forecast is offset by
Depreciation of$1.6 M. Therefore, the Budget Cash Flow balances.
Our committee has spent many hours researching our electric utility with the best interests of
the greater Seward community and ratepayers at heart and has made numerous
recommendations to Council, the first two of which are incorporated in our proposed budget:
1. Reinstate a charge to industrial/large general service customers for Power Factor, to
cover system line losses for customers who are using inefficient machinery or inadequate
technology. They are likely contributing to our line loss of 9%, almost double the national
average (5%). Jeff Estes, former SES General Manager informed us he had been charging
for Power Factor during his tenure, but that tariff was not enforced subsequently. Currently,
these excessive line losses are being covered by all rate payers, not just the "cost
causers°. We estimate this will increase revenue $250,000.
2. Make changes in staffing to fill essential needs and make changes in salaries to attract
and retain qualified employees: Increase the salary of the General Manager position, add a
Business Operations Manager and a lineman, contract a Cybersecurity specialist, and
contribute money to a citywide Customer Relations/Communications position.
3. Complete the automation for the back-up generator to decrease the time it takes to
restore power.
4. Reinstate the meter reader position. Lack of staffing to verify what appear to be
unrealistic power factors is the reason given by the Interim General Manager for not
charging the Power Factor fee. Additionally, approximately 200 meters are not automatically
read or need verification. Currently, these meters are being read by the building inspector
and other city employee when they can find time.
5. Officially suspend efforts to sell the utility for a period of 3-5 years. It will continue to be
difficult, if not impossible, to attract and retain staff at SES if the sale of the utility is placed
on the ballot repeatedly.
6. Create a Utility Board. To further enhance stability, we recommend that Council creates
a Board of Directors (minimum of 5 seats) that will be able to develop expertise and
historical knowledge by focusing their time and energy on utility-only issues. This Board
would then be equipped to make sound recommendations and review the actions of the
Seward Electric General Manager.
7. Advocate for legislation that would require cruise ships to use shore power while in
port. With the added usage from the cruise ships, we may be able to better negotiate the
cost of power (COPA) that Seward pays to Chugach Electric each month.
8. Hire someone or have a committee investigate grants for cybersecurity from Homeland
Security, FEMA, Dept. of Energy, and other potential sources.
9. Look into contracting out the management of the electric utility for one to three
years. We are aware of at least one Alaska firm that does such work.
Our committee has concluded that, by filling only the essential needs of our electric utility,
Seward Electric can operate with a balanced budget in 2024 by increasing the base rate 1.7
cents/kWh across all rate classes. We welcome the opportunity to work cooperatively with the
Council and the current General Manager to implement a solution that will keep our utility
financially viable and locally owned. Doing so will allow continuation of the utility's annual
payment of$2M into our city's coffers ($1 M in administrative fees and $1 M of Payment in Lieu
of Taxes) and help keep other taxes in abeyance.
Members of the City of Seward Electric Ad Hoc Committee:
Rissie Casagranda, chair
Lori Draper
Kevin Dunham
Kelli Hatfield
Phil Kaluza
James McKracken
Linda Paquette, vice-chair
Megs Testarmata
Deliverables as requested by Council
1} Estimates Ad-hoc recommendation
New Positions - Salaries
Business Operations Manager $ 140,000 $165,000 asst dir.
Railbelt Liaison (Government Liaison) $ 90,000
CR/Comm $ 90,000 $30,000 add to gf
Lineman $ 110,000 $110,000
Apprentice Operator $ 75,000
TOTAL $ 505,000 $305,000
New Positions - Taxes & Benfits ,
Business Operations Manager $ 63,000 $74,250
Railbelt Laison (Government Liaison) $ 40,500
CR/Comm $ 40,500
Lineman $ 49,500 $49,500
Apprentice Operartor $ 33,750
TOTAL $ 227,250 $123,750
Contract Services
Cybersecurity $ 125,000 $125,000
Increase salary & benefits for director $116,000
Total Personnel &contractors $ 857,250 $544,750
2)
Costs for Office Space $ 50,000 $50,000
3)
Cost for new equipment/supplies/vehicles $ 10,000 $10,000
4)
Repair & Maintenance $ 50,000 $50,000
MMRF Contribution $ 500,000 $500,000
5)
Regular Investments in tech/cybersecurity $ 50,000 $50,000
TOTAL- DELIVERABLE Expenses: $ 1,517,250 $1,204,750
ElectriC Re-Build Budget
Most recent 2024 Annual Assumptions/ Re-Build
Revised 9f 7 f 23: V-2 actual 2022 Bud et Deliverables Codes Bud-get
dget
as of 5/26/23
Revenues unaudited
5300 Residential 1,678,200 2,000,000 2,000,000
5302 Residential fuel factor 1,780,206 1,815,187 1,815,1.87
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 LIS 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 ( 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
6001Overtime 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 Meai 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
Most recent 2024 Annual Assumptions/ Re-Build
REV15Ed 9/7� 3: V- actual 2022 Budget Deliverables Codes Budget
7002 Postage and Freight 19,897 17,436 17,436
7003 Bank and Credit Card Fees 12.5,488 -
7004 Insurance 111,002 116,475 116,475
7006 Legal 17,263 90,000 90,000
7009 Contracted Services 949,635 343,000 125,000 3 468,000
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
72.16 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 GF Administrative Fee 1,005,612 1,066,855 .. C,H,K 980,975
7330 P,I,L.T. 1,200,253 1,056,448 1,056,448
7331 Reclass PILT to 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 1,593,677 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
9103 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
Revised 9/7/23: V-2 Most recent 2024 Annual Assumptions/ Re-Build
actual2022 Budget Deliverables Codes Budget
PIN AL CASH FLO �L s
Depreciation 1,861,790 1,585,000 1,585,000
PiLT& ROW Fee (z. " (1,356,448) (1,356,448)
Bond Payment Principal (200, , . (205,0€70) (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) ONLY)
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) (950,0001! 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 Safes $10,000
H Reduce Lobbyist GF Transfer ($45,000)
1 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 `_7S'., $ 36,000
TOTAL-BUDGET ASSUMPTIONS: ($751,880)
NET COST/(PROFIT)from 2024 Budget Rebuild ($68,130)
*Potentially reductions on transfers to the general fund could pay additional costs
or reduce rates
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City of Seward
Electric System
System Line Losses
2018 9.9%
2019 8.9%
2020 8.6%
2021 8.4%
2022 9.3%
February 28, 2023
Seward Electric Demand Increase from Heat Pumps & EV's
By Phil Kaluza
Overview:
This report takes a look at the potential increase in electric utility sales from electrifying
our heating and transportation with heat pumps and Electric Vehicles (EV's). Large
public/commercial buildings are not included, but present a huge potential in added
electric sales. (Schools, AVTEC, Heat Loop Project, Community Bldgs, etc).
The rate of any transition will depend on the benefits, risk, and capital investment
required. For those concerned about climate change and reducing their use of burning
oil, heat pumps are one of the most cost effective measures one can make in Seward to
reduce their carbon footprint and save money doing it. Electric vehicles come in
second, but require substantially more investment and may take more time to transition
away from fossil fuels and generate significant additional electrical sales.
Heat Pump Adoption:
Seward's moderate coastal climate, with high cost heating oil, Railbelt generated power,
and a beneficial winter electric rate, make heat pumps a cost effective alternative to oil
space heating for both homes and larger facilities.
With over 60 heat pumps installed in the Seward area in just the past several years,
along with the many hundreds installed across SE Alaska and arctic communities, tens
of thousands installed in northern US states and literally millions of heat pumps installed
in other cold climate countries, the cold climate performance of this new generation of
air source heat pumps is well established and greatly reduces the perceived risk of this
space heating technology.
Capital investment of$4,000 - $8,000 for a residential heat pump is a significant
investment, especially for low to moderate income households. What is coming soon
are substantial heat pump rebates through the Federal Inflation Reduction Act. Lower
Income households in Seward (under approx. $56,000/yr) are eligible for a 100%
instant rebate up to $8,000 with no upfront cost to the homeowner. Moderate income
households (approx. $56,000 - $105,000) are eligible for a 50% instant rebate, up to
$4,000, including a 30% tax credit up to $2,0001yr is available on top of the rebate.
These heat pump rebates to be administered by the State are anticipated to become
available late 2023 or early 2024. A surge of heat pump installations in 2024 and
1
beyond is expected to grow exponentially along with the increased sales of electricity to
operate those heat pumps.
From the heat pump performance research and Alaskan monitoring data gathered to
date, here are some basic assumptions used for a high efficiency cold climate heat
pump operating in Seward's climate:
• 12 kWh is needed to displace one gallon of heating oil with a high efficiency
mini-split heat pump. (13-14 kWh/ gal equivalent for larger and/or less efficient
units.)
• A single residential sized heat pump can displace upwards of 800 - 1000 gallons
of heating oil per year in a larger open space, or as little as 100 gallons when
used to supplement a wood stove or heat a small area. An estimated average of
400 gallons of oil displaced (60%-80% of annual fuel use) on existing homes and
600 to 800 gallons per year on new homes and smaller commercial buildings is
assumed. An overall average of 500 gallons of heating oil displaced by a heat
pump is used in the estimate below.
• Current cost of heating oil (as of 917123) is $4.68/Gal. (auto fill, 500 gal tank,
wlsales tax)
• Estimated a new blended Winter/Summer heat pump electric rate of $0.24/kWh.
• Electric utility revenue (margins) of$0.121kWh.
For example: A heat pump displacing 500 gallons of heating oil per year will consume
an additional 6000 kWh per year.
Heat Pump Annual Savings (includes sales tax):
Heating Oil Displaced - 500 Galfyr X $4.681gal = $2,340/yr
Less added Electric use - 6000 kWh X $0.24 = $1.440/yr
Annual Average Heat Pump Savings = $9001yr (38% savings
Annual Revenue to Electric Utility = $720 per heat pump.
As a result of the fuel savings and heat pump rebates coming soon, there is a
reasonable expectation that over a 10 year period a significant number of heat pumps
will be installed in Seward. The model output below uses a target adoption of heat
pumps over a ten year period of 50%. (Note: A 75% adoption rate would be on the
higher end, while a 50% adoption rate over ten years, a more conservative estimate).
Ultimately, with heat pumps providing a significantly lower cost alternative to heating oil,
2
it is assumed nearly all space heating will transition to heat pumps at some point in the
future.
How quickly the installation of heat pumps over 10 years will occur will depend on oil
and electric prices,. availability of heat pumps, installers, and many other factors will
ultimately determine how quickly we approach the target installations.
I included the electric use of new housing projections and assume the majority will be
utilizing heat pumps for nearly a 100% of their space heating needs.
Seward 10 Yr Heat Pump Adoption Model
For Residential and Small General Service Only
ASSUMPTIONS: '
2022 Residential Electric Meters 2,059
2023 Existing Heat Pumps 60
10 yr New Homes Built 100
. ..........
:Annual non-Heat Pump Residential Electric Use per Meter 7,740'kWh
2022 Small GS Meters 543
10yr Increase in GS Meters 20
Annual non-Heat Pump Electric Use Per New Small GS Meter 13,980,kWh
Average Gallyr Oil Displaced by Heat Pump 500;Gal
kWh Use per Gallon Heating Oil Displaced 12 kWh
10 yr Market Penetration of Heat Pumps (Residential & Small GS) 50%
Estimated Margins on new kWh Sales (Summer/Winter Avg) $0.12 kWh
RESULTS:
4s2034 Total Increase in Heat Pump Installations Residential 1,301
2034 Gal. Heating Oil Displaced( Residential & Small GS) 650,500 Gal.
2034 Annual KWh Sales from Heat Pumps (Residential & Small GS) 7,806,000 kWh
2034 New Housing non-Heat Pump Annual kWh 774,000 kWh
... .. ..... .......... ...... .
2034 New Small GS non-Heat Pump Annual Kwh 279,600 kWh
2034 Annual kWh Increase in Residential and Small GS 8,859,600 kWh
2034 Annual Utility Margins Earned on Increased Sales $1,063,152 per year
3
Here is an example of a potential growth in heat pump installations. The rapid increase
is due in part from the large rebates available for the next few years.
Example- New Heat Pump Installations
250
200
Cn v
150
}� F
100
50
0
rho r� rp �� rL0 O ef> rp "I rL0 `tiQ rp
Year
Another measurement of the potential of heat pumps is to estimate the total gallons of
heating oil currently used for space heating requirements that can be effectively
displaced with heat pumps, be it residential, commercial, and public facilities. Is it 2
million gallons per year? 4 million gallons? Multiply those total gallons by the 12 kWh
required for a heat pump to displace a gallon of oil, for a future increase of 24 to 48
million kWh of new sales.
Capital investment of the electric utility to supply the power to these distributed heat
pump loads will be minimal as compared to the tens of millions of dollars that must be
invested to supply shore power to the cruise ships. Heat pumps are a win to building
owners in fuel cost savings, a win for the electric utility in new sales, and a win for the
environment by reducing carbon emissions by nearly half over burning oil.
4
Electric Vehicles (EV's):
EV adoption rates will likely be significantly slower due to the higher capital costs
involved and somewhat lower savings potential than heat pumps offer. Eventually,
most vehicles will be EV's as the economics of ownership and operating costs become
less than internal combustion vehicles and the environmental benefits of EV's are
factored in. For this report, I offer a simple analysis of kWh sold, per million miles
displaced, as one way to evaluate EV's future electric demand. (100 EV vehicles @
10,000 miles per year, would equal 1 million miles).
Using the national average, an EV gets 3.5 miles per kWh:
1,000,000 EV miles divided by 3.5 miles/ kWh = 286,000 kWh per year of additional
electric sales. Assuming the $0.12/kWh utility margin = $34,320/yr utility revenue for
every million miles (100 EV's @ 10,000 miles per year) . In addition to local EV
owners, there will be an increased number of visitors topping off their EV's in Seward.
If in ten years, 1000 EV's are locally owned and average 10,000 miles/yr, the additional
kWh sales, not including visiting EV owners charging up, would be an additional 3
million kWh sales per year. For an additional $360,000 in annual profits to the electric
utility.
Summary:
Seward could nearly double kWh sales of the electric utility within 10-20 years from the
adoption of heat pumps, EV's and future shore power to cruise ships. These increased
sales will help keep Seward's electric rates lower and benefit all ratepayers.
The only question is how quickly can these new sales be realized through education,
incentives and continued affordable winter electric rates?
5
Seward Electric Utility Ad Hoc Committee
Monday, July 17, 2023
Ad Hoc Agenda
(These are suggestions provided by the clerk's office)
1. Introductions
2. Select a chair and a vice chair
3. Review binder of materials provided by administration
4. Review documents provided by clerk's office regarding Open
Meeting Act
5. Discuss the best way to keep council informed of progress made-
written reports in council packets and/or comments and
presentations at council meetings
6. Discuss how future meeting agendas and packets would be
created/distributed
7. Discuss what information will be needed from the Electric Utility
and how the Ad How will interact with the Electric Department
8. Discuss meeting dates and times that would be best for everyone
a) Set upcoming meetings: Mondays on July 31? August 7 "?
August 21?
b) After the meeting have the chair notify the clerk so we can
publicly notice the meeting schedule: clerk@cityofseward.net
c) Discuss any time limits for meetings
The City of Seward, Alaska
ELECTRIC UTILITY AD HOC COMMITTEE
City Council Chambers, 410 Adams Street
Please silence all cell phone and devices during the meeting
Ristine Casagranda, chair Phill Koluza lames McCracken Kevin Dunham
Lynda Paquette, vice chair Megs Testarmata Kelli Hatfield Lori Draper
Monday, August 21, 2023 at 7:00pm
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. CITIZEN COMMENTS(time is limited to 3 minutes per speaker)
5. APPROVAL OFAGENDA AND CONSENTAGENDA
6. SPECIAL ORDERS, PRESENTATIONS AND REPORTS
a. Proclamations and Awards- None
b. Reports-None
c. Announcements-None
d. Presentations(presentations are limited to 10 minutes)
i. Presentation by Curtis Thayer with the Alaska Energy Authority
7. UNFINISHED BUSINESS
a. Council deliverable#1- "Cost estimate for the salaries/benefits of the additional
personnel as outlined on the organizational chart provided"........................Page 2
8. NEW BUSINESS- None
9. CITIZENS'COMMENTS
10. COMMITTEE AND ADMINISTRATION COMMENTS AND RESPONSES TO CiTiZEN COMMENTS
11. ADJOURNMENT
Electric Utility Ad Hoc Committee August 21, 2023 Page 1
The City of Seward, Alaska
ib
ELECTRIC UTILITY AD HOC COMMITTEE
Seward Community Library Meeting Room, 239 Sixth Avenue, Seward
Please silence al/cell phone and devices during the meeting
Ristine Casagranda, chair Phill Kaluza James McCracken Kevin Dunham
Lynda Paquette, vice chair Megs Testormata Kelli Hatfield Lori Draper
Tuesday, September 5, 2023, at 7:00 pm
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. CITIZEN COMMENTS(time is limited to 3 minutes per speaker)
5. APPROVAL OF AGENDA AND CONSENT AGENDA
6. SPECIAL ORDERS, PRESENTATIONS AND REPORTS
a. Proclamations and Awards- None
b. Reports-Electric Utility Manager, capital Improvement list for Electric Utility
c. Announcements-None
d. Presentations(presentations are limited to 10 minutes)-None
7. UNFINISHED BUSINESS
a. Council deliverable#1, "Cost estimate for the salaries/benefits of the additional
personnel as outlined on the organizational chart provided"
b. Council deliverable#4, "Cost estimate for regular investments in system maintenance
and capital projects"
8. NEW BUSINESS
a. Council deliverable#5, "Cost estimate for regular investments in technology/
cybersecurity"
b. Discuss spreadsheet and Electric Utility Ad Hoc Committee proposed budget
c. Discuss the Electric Utility Ad Hoc Committee "Wishlist"
d. Discuss the Electric Ad Hoc Committee presentation of deliverables to council and
timeline
9. CITIZENS'COMMENTS
10. COMMITTEE AND ADMINISTRATION COMMENTS AND RESPONSES TO CITIZEN COMMENTS
11. ADJOURNMENT
Electric Utility Ad Hoc Committee September 5, 2023 Page 1
The City of Seward, Alaska
i$'
ELECTRIC UTILITY AD HOC COMMITTEE
Seward City Council Chambers, 410 Adams Street, Seward
Please silence all cell phone and devices during the meeting
Ristine Casagranda, chair Phill Kaluza James McCracken Kevin Dunham
Lynda Paquette, vice chair Megs Testarmata Kelli Hatfield Lori Draper
Tuesday,Septemberll, 2023, at 12:00 pm
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. CITIZEN COMMENTS(time is limited to 3 minutes per speaker)
5. APPROVAL OF AGENDA AND CONSENT AGENDA
6. SPECIAL ORDERS, PRESENTATIONS AND REPORTS
a. Proclamations and Awards- None
b. Reports-Nonetheless,
c. Announcements-None
d. Presentations(presentations are limited to 10 minutes)-None
7. UNFINISHED BUSINESS
None
8. NEW BUSINESS
a. Discuss the Electric Rate Study results.
3. CITIZENS'COMMENTS
10. COMMITTEE AND ADMINISTRATION COMMENTS AND RESPONSES TO CITIZEN COMMENTS
11. ADJOURNMENT
Electric Utility Ad Hoc Committee August 21, 2023 Page 1
The City of Seward, Alaska
I$-
ELECTRIC UTILITY AD HOC COMMITTEE
Seward City Council Chambers, 410 Adams Street,Seward
Please silence all cell phone and devices during the meeting
Ristine Casagrando, chair Phill Koluzo James McCracken Kevin Dunham
Lynda Paquette, vice chair Megs Testarmata Kelli Hatfield Lori Draper
Monday, September 18, 2023, at 6:00 pm
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. CITIZEN COMMENTS(time is limited to 3 minutes per speaker)
5. APPROVAL OF AGENDA AND CONSENT AGENDA
6, SPECIAL ORDERS, PRESENTATIONS AND REPORTS
a. Proclamations and Awards-None
b. Reports-None
c. Announcements- None
d. Presentations-None
7. UNFINISHED BUSINESS
a. Schedule a presentation to the council
8. NEW B USI NESS
a. Discuss the report provided to committee on September 12 by Mike Hubbard
b. Review and Discuss Electric Ad Hoc Committee's proposed budget
c. Discuss the formation of on electric utility board
d. Approval of the September 5, 2023 meeting minutes
e. Approval of the September 11, 2023 meeting minutes
_f. Discuss letters to council and Curtis Thayer
g. Discuss draft of Ad Hoc Committee's work for the public
9. CITIZENS'COMMENTS
10. COMMITTEE AND ADMINISTRATION COMMENTS AND RESPONSES TO CITIZEN COMMENTS
11. ADJOURNMENT
Electric Utility Ad Hoc Committee August 21, 2023 Page 1
Seward Electric Utility Ad Hoc Committee July 17, 2023
Meeting Report and Requests written by Lynda Paquette
Ristine Casagranda was voted chair and Lynda Paquette was voted vice-chair.
Kelli Hatfield offered to be the secretary for the committee.
We will meet every Monday when there is no Council Meeting at 7 PM in Council Chambers.
We will coordinate with Clerk's office to notice our meetings and provide Council reports via the Clerk.
We didn't set a frequency for our reports, but we will be an active committee, and we suspect you'll
hear from us frequently.
We will meet for two hours and notify the Police Dispatch office when we finish.
We used the Ad Hoc Agenda that the Clerk presented. We discussed the binder on Utility Background
provided by Rob and the Memorandum regarding the Ad Hoc Committee Meeting Information provided
by the Clerk.
We understand that our term is open-ended. However, these deliverables are timely,and we hope to
produce them quickly.
We are now a board of nine; we understand we need five people for a quorum.
We have come up with the following requests:
1. We want Rob Montgomery to attend our meetings. We were surprised he was not therefor our
first meeting. He is critical to our success.
2. We want to modify our mission statement:
a. To research and compile the costs of operating(strike "rebuilding") Seward's electric
utility to successfully meet future financial and regulatory challenges through (strike
"expanded") staffing and regular system and technology investments while striving to
maintain competitive rates and system reliability. <Grammorly cleaned some of the
wording up, but the only substantive changes are changing "rebuilding"to
"operating"and removing the word "expanded"before "staffing.">(We are
concerned about the apparent insistence on additional staffing. It seems like a foregone
conclusion; we want to come to it ourselves.)
3. In the first three Deliverables, we would like to strike the word "additional." So they would
now read:
a. Cost estimates/benefits of the personnel as outlined in the organizational chart
provided
b. Cost estimates for the expanded office space required by the staffing
c. Cost estimates for the vehicles, equipment, and supplies, as needed.
A. The two additional deliverables would remain unchanged.
We have the following questions( I apologize for the random order):
1. What is the current average cost per kilowatt?
2. Is the power factor measured?
a. If so, are we billing for it?
A. If not, why not?
3. What is the story of providing cruise ship power, and is there a future market for us?
4. What happens with street lights? Who pays for them or how are they billed?
5. What percentage of electric utility customers are inside vs. outside city limits?
6. What is the bulk power price?
7. What is the length of the contract with Chugach?
We would also like to request the following documents:
1. Are there any rate case studies we can get copies of?
2. Can we get a copy of the audited final statement of the Enterprise fund?
3. Can we get a copy of the previous Electric Department budget and the proposed budget?
4. What is the current cost of our cyber security technology, and what more is needed?
5. Can we get a copy of the current Chugach contract?
6. We'd like to see reports that capture total purchases from Chugach (wholesale)for ten years
7. We'd like to see reports that capture total sales (retail)to customers for ten years.
8. We'd like to see the breakdown of Residential,Commercial, Industrial, etc. sales.
9. We want some wage studies and reports summarizing current staff salaries, benefits, and future
salary projections.
10. We'd like to see the union contract,
11. We'd like to see job descriptions, both current and desired.
This compilation summarizes our meeting and provides everyone with the list of materials we will need
to move forward.
Warmest Regards & Much Love,
Lynda
Roil Call
Present - Kaluza, Draper, Tustamena (on phone), Casagranda, Hatfield, Paquette,
Dunham, McCracken
Absent - Stauffer
Agenda - how were we going to compile items for the future agendas?
Agendas will be made at each meeting for the following meeting
Agenda for 7/31/23
Unfinished business -
Introductions because recordings weren't functioning last meeting
Rob answers all the questions we submitted to council
Discuss council's direction
Discuss Timeline for delivery of documents submitted to ad hoc committee on 7/31/23
Discuss next Agenda for 8/7
Introductions -
Tustemena - engineer retired from DOT and background education in power and electricity
Draper- background in finance
Dunham - Worked for Chugach Electric for 12 years, involved in electric utilities most of his
career, about 40 years (which included time with MEA, HEA, CEA and other utilities in their day
to day operations)
Paquette - 30 year resident, outside city with 5 meters, involved in PACAB
Kaluza - 6 years as an elected Nome joint utility board member and 6 additional years on Nome
city council that had oversite of the Nome utility.
Casagranda - Been in Seward all her life, served on city council, dad ran the Ft. Richardson
power plant, serving as an opportunity to learn more in electricity
McCracken - Here for the rate payers, been on fish and game committees and rate committees
Hatfield - lived in Seward 10 years, 3 years on Seward's PNZ
Questions Answered by Rob Montgomery
Motgomery answers to committee questions had been sent via email in the morning of 7/31
Avg cost per kilowatt -A little over .12 for summer rates, COPA was a little over .11 so .23 cents
per kilowatt for the summer for residential.
Kaluza asked for an average of costs and Montgomery responded that he can get it to the
committee after the rate study is completed.
McCracken pointed out the rate comparisons on page 245 of the packet between Chugach,
Homer, and Seward.
Casagranda asked for a definition of rail belt — Motgomery replied it is the area from Seward to
Fairbanks (where the railroad runs) including Homer Electric
Dunham pointed out the Chugach South includes Moose Pass, Cooper Landing who pay lower
rates than SES. Chugach South rate is .08
POWER FACTOR
SES measures it, but does not bill for it for about 30-40 customers who have meters that read
power factor. In order to read the power factor meters, personnel have to be near the meter to
read them with the remote. Montgomery thinks that the numbers seem inaccurate and with the
problems the utility has had with dealing with net metering for solar power, he feels it would be
biting off more than the department could chew at this point. If there were more resources (staff)
they could take that on.
Dunham asked if we could get the data from the 30-40 customers who had power factor meters.
We buy a full amount of power from Chugach and if our large corporations are doing something
to incur losses within the Seward system which may account for some of the losses that the rest
of Seward is paying for. Commercial operations that have old machinery or inefficient electrical
usage could be the reason that Seward has nearly the double amount of line losses than the
national average.
The company that was chosen to outsource billing uses the same software that Seward uses so
they can work within that system.
Large companies are required to track their own power factor, but Montgomery confirmed that
no company has been tested to ensure their power factor was adequate.
Dunham asked if the significant 8-9% line losses that were reported included places that were
not being metered (i.e. city buildings, etc.) and Montgomery said he was unsure and would get
back to the committee. Dunham stated that those losses, if they were there, were just being
passed on to the consumer base without anyone knowing. Montgomery replied that in order to
test and bill for the power factor the department would need more resources.
Montgomery's first priority when hired was safety - cleaning up the power lines and removing
trees, deteriorating power poles on Nash Road. By focusing on those things first he has cut
down on power outages by 75%. The other thing was to be interconnected, which he has made
strides with but still has far to go. But he still has a lot of things to deal with in billing. Outsourced
billing begins this month. Also had to renegotiate the contract with Chugach that was supposed
to be done in 20 15 but had not been completed -that has currently been updated.
Montgomery will look into getting data from several large commmercial operations so we can
see if this is a true issue - suggested consumers to look at were SMIC when they lift a ship; OBI,
a school, and city buildings.
If there are unmetered city buildings and we sold the electric ulitiliy it could result in much higher
costs for the city after the sale because the new company will want everything metered.
Casagranda clarified that lights on 3rd ave are metered, but it was unclear if the other lights in
the city were.
CRUISE SHIP POWER
City is not leading the charge, the railroad is. Conference calls were held about getting power to
the cruise dock. Montgomery thinks that at some point there will be cruise ship power, but he
can't determine when. He sees the industry moving that way and requiring ships to use shore
power. Montgomery said that the city is well set up to make that happen in the future and it's not
a huge project. The plan is to be ready to run the line to the cruise dock from Fort Raymond
using the railroad easements. The 4-5 million dollar project to run lines to the dock was
cancelled until it can move forward.
Citizen Becky Dunn asked for an estimate on how much power the ships would use.
Montgomery had an estimate done and was looking at a gross of$2 million and net of around
$1.2 million. Typical load for a ship is typically 7-10 mega watts which is about double the load
of the entire city of Seward.
Casagranda asked if we can require that the ships plug into shore power. Kaluza suggested to
get the state involved so that if the ships didn't want to plug in, they might go to Whittier or
elsewhere. It was suggested that electric is cheaper for them than diesel.
Reierson asked how many communities for the state require ships to hook up to shore power?
How many towns have it? What is the cost to electrify one cruise ship dock? Approximately $12
million for the overall project, which includes transmission line upgrade, per Juneau's recent
project. Montgomery said if that was made a requirement, the RR, Seward and the cruise
companies would be able to work together to come up with the funds for the project.
McCracken said the cruise ships should put the infrastructure in - Montgomery responded that
that was part of the hiccup with the project is that the ships weren't able or willing to make it
work.
STAFFING
Earnings for other communities' staff is included in the packet. Dunham said that he would like
to see some communities that are absent such as Cordova.
Discussion ensued about the necessity of having a dedicated position for a liaison. Montgomery
said that SES is sitting on many committees and boards with the other rail belt utilities and there
is currently one person trying to participate in all those meetings. Dunham replied that typically
that person is the GM, or a couple other people (council members or a volunteer) to take that on
and asked Montgomery why that couldn't be the case for Seward. Montgomery responded that
some committees need someone with a specific background in electrical utilities. Casagranda
asked if Montgomery had an alternate for the committees. He responded that he did not.
Dunham asked if any other company has made an employee a railbeit liaison. Montgomery
responded that other companies are thinking about it. The liaison would be tracking state and
federal legislation, writing reports, and more. He sees it as being an expanded government
relations position. Dunham said that price is going to be around $100k and Montgomery agreed.
Paquette asked if there was another community we could share that position with? Montgomery
responded that they already have them. Also, with the constraints of the union contract, SES is
not able to add responsibilities to someone's position without an increase in pay or renegotiating
with the union.
Montgomery made the point that although we're not like the other railbelt utilities, we are tied by
a contract to the other utilities and Seward has to participate. Currently Dave Burlingame, owner
of Electric Poweer Systems, has been volunteering approximately 12 hours a week as a
representative for Seward. While Montgomery hopes to use volunteers in a lot of the
committees he mentioned the RRC will need to be a paid employee, there was some discussion
As, to whether that should be the GM or a volunteer or an added position.
Montgomery stated that a part of the problem the entire city has had is a revolving door of staff
in key positions. Seward will need to pay enough to get people to be interetested in Seward and
then stay.
IN VS OUT CITY LIMITS
52% inside city limits and 48% outside city limits. Likely there are more KW being used inside
city limits with the commercial usage.
Chugach is asking for a 6.5% increase which will translate to approximately $5/month for
residential customers using OOOkW or less.
CHUGACH CONTRACT
Every 3 years, expires in 2025. T o terminate the contract you have to give a year's notice.
Chugach has always had the lower rate for a wholesale power contract. If the sale to Homer
goes through this fall, we wouldn't end up with HEA until Jan 1, 2025.
Seward owns 1.2% of Bradly Lake because they went by the total system load at the time the
sale went through, which gives Seward a credit of approximately $200-$300k per year.
Montgomery says that to rebuild we should have someone at the table to work with the other
utilities for the Bradley Lake Project.
CYBER SECURITY
Seward isn't subject to all the cyber security standards, but there is some monitoring that we are
subject to. There will be documents that are needed to be filled out and turned in to comply with
new regulations. Seward doesn't have 24 hour monitoring of our substations, and that is one
thing they are deciding on whether or not we would have to do.
Motgomery stated although the IT department of Seward has doubled in the past few years,
Dustin, the head of IT, sat in on a few meetings and determined that cyber security was over his
head and he was unable to do that. Montgomery said that he didn't think it needed to be a FT
position and it could be outsourced if that made the most sense, but it did need to be a person
familiar with the electrical utility.
Citizen Dunn asked if we could get a cost from the outsourcing company for that position from
the company that we are currently outsourcing our utility billing to and Montgomery said he
could ask them.
McCracken asked if other utilities (water/sewer) are also coming up against these cybersecurity
issues to perhaps share a position. No one thought that they had and it was suggested that
admin ask public works.
Seward has responsibiities due to contracts- with Bradley Lake and a memorandum of
understanding with the RRC. Montgomery suggested that we hear from Burlingame (owner of
Electric Power Systems and SES current RRC representative) via zoom, Curtis Sayer
(executive director of the AK authority) in person, Mike Hubbard (rate study) could possibly
attend via zoom about rates. Dwayne Atwood (Alaska Railroad) could be a good person to
speak on the railroad. It was decided that these people would be scheduled one per meeting up
to 20 minutes to present their perspective.
DISCUSSION OF COUNCILS DECISION TO NOT ALTER THE MISSION STATEMENT
Kaluza mentioned that he wished he could have seen the mission statement before he
volunteered.
McCracken stated that the volunteers for the ad hoc committee were approved and then the
mission statement was approved after that, so it wasn't possible for any of the volunteers on the
ad hoc committee to know what they were signing up for,
The committee decided that they will stay on the council's mission covering the cost of
rebuilding.
DISCUSS THE TIMELINE OF DOCUMENT DISTIBUTION
Paquette wanted to make it clear that the documents were not held up for any reason except
general growing pains involving the creation of this new committee. Going forward, there
shouldn't be any problem getting things and info we need in a timely manner (not the day of) to
produce the deliverables.
Paquette asked Montgomery if we had everything we needed to create the deliverables and
there was a resounding "no". We need more info concerning office space, vehicles, etc. among
other things.
Paquette proposed that we tackle the first deliverable. Motion was made by Dunham and
seconded by Hatfield.
AGENDA FOR NEXT MEETING
1. Discuss where can we go to find information on each deliverable.
Although Montgomery has done extensive research on each of these deliverables,
council would like the committee to come up with their own research.
2. Presentation by Curtis Sayer (if available)
3. Discuss packet provided at last meeting - questions, important pages, etc.
4. Dicuss next meeting agenda
5. Citizen comments
6. Committee comments
CITIZEN COMMENTS
Reierson thought it might be worthwhile to create a board of 5 members to help run the utility, a
board of directors. Board could be responsible to communicate with the council to make sure
priorities are being met and can track. Make a more efficient and streamlined practice. This could
be added to the org chart. Because city government turns over every few years, this type of
board would give some continuity to the city for a complicated task of running a utility.
Becky wanted to reiterate that we need a finance director. Where is it being advertised and why
is it taking so long to fill positions in the city. Why are we fixing up the utility if we're going to sell
it? Get the Canadian company to give us a quote for cybersecurity.
Dunham asked for a table of contents for the packet - Casagranda said she'd talk to the clerk
about it. And can we get the password for the internet in the council chambers.
COMMITTEE COMMENTS
McCracken is looking forward to making some headway on this topic.
Kaluza hopes we keep in mind what it will cost the ratepayers whatever is decided.
Dunham would like to do a presentation on how the interconnected system works.
Hatfield thanked Montgomery for putting together all of the information
Draper asked if Jaffa's question about staffing in other communities' utitiliy departments.
Montgomery said the best place to start is the AK Power Association. We may need to call each
utility to learn a lot of this information about other communities and how they are organized. But
there's a need to make sure that other communities are a part of the railbelt to make a clear
comparison. Copper Valley could be a good comparison because they have distribution and
transmission lines. They have a similar problem getting staff as well, although they're not on the
railbelt.
Paquette thanked everyone for their participation and 'hoped that we can assume that everyone
is doing the best they can.
MINUTES FOR 8ri123
AGENDA FOR NEXT MEETING
1. Presentation by Mike Hubbard
2. Discuss where can we go to find information on each deliverable.
Although Montgomery has done extensive research on each of these deliverables,
council would like the committee to come up with their own research.
3. Discuss packet provided at last meeting - questions, important pages, etc.
4. Citizen comments
5. Committee comments
Meeting called to order at 7pm
Pledge of Allegiance
Roll Call -
Present - Kaluza, Draper, Testarmata, Casagranda (via Phone), Hatfield, Paquette, Dunham,
McCracken
Absent- Stauffer (resigned)
Citizen's comments:
McDonald -Worried that no matter what happens in selling, he feels we're giving all our power
to an entity outside of the city. Offered an option for a micro nuclear reactor (eVinci from
Westinghouse Nuclear) that he said would cover 90% of our energy needs. Not available until
2025. Offered an option to use El Dorado Narrows tides as a source of energy for the city.
Sources of Info for each deliverable:
Montgomery offered a good place to start would be The Alaska Power Association(APA) with
Crystal Linkfast (sp?) and Michael Rovita (sp?) about salaries. Montgomery offered to send
contact info for these contacts. We already received salary info for Copper Valley Electric - their
CEOs and about 35 employees. CVE is one of the most comparable to Seward, but they aren't
on the railbelt like Seward is -the railbelt generates 80% of AK's electric.. CV is not connected
to any bigger companies like Seward is (Seward buys power from Chugach)
Kaluza looked up Nome and found them to be comparable to Seward - similar size, getting
energy from a local wind farm, not buying energy from any other source, but is also billing for
water and sewer.
Montgomery reiterated that Seward is connected to the railbelt and needs to have a seat at the
table with the bigger players in the railbelt (Chugach, Homer)
Dunham suggested we start one sheet to compile salaries for all the positions we research are
in one shared sheet. It was mentioned that would probably have to go through Kris Peck - check
on this? Paquette suggested we each sign up to reach out to each organization so that multiple
people aren't calling the same organizations over and over again. Draper sent Peck an email
clarifying if we could share a Google Sheet in Drive to compile information with no discussion
attached so as to not be in violation of the open meetings act.
APA- Draper
Golden Valley - Dunham
Copper Valley - Paquette
Nome - Kaluza.
McCracken -AK Power and Telephone - may have as large of a service area to get an idea.
Have all salary data for next meeting.
Montgomery rioted that Seward is the only Dtiiity that buys from a larger company.
Comparables should be by number of meters, not amount of sales. Need to compare
communities that are on the road. It's important that we have a say in the decisions that are
being made at the higher level for the railbelt. Being a part of the railbelt comes with some
responsibilities that Seward will have that other communities may not have.
Street lights on 3rd avenue are paid by the state of AK, street lights in residential areas are
billed to the residents that have street lights on their properties (a $5 charge on their bills).
Decorative lights downtown are metered off the city hall -the switch is in city hall to turn them on
and the meter is out front of the police station. Dunn stated that anyone can get a street light
and then will be billed to have it. Ebberson guessed there were maybe 20-25 lights being fed by
the power system that may not be metered.
Dunham offered that it would be worthwhile to put $100k into a study to see why our line losses
our nearly double the national average. Offered Burlingame could help figure out someone to
hire for that. There is no plan in place to change out old lights with newer more efficient light
posts (not bulbs).
Presentation by Mike Hubbard with the Financial Engineering Company (Maine)
Oversees the rate study the city is working on. Has been working with the city from 2008.
Gives a quick overview of cost of service studies. The parts are: Generation, transmission,
distribution, admin costs. Need to look at whether those costs are fixed or dependent on
customer base. Most of Seward's costs are fixed - depreciation, interest on debt, maintenance,
transmission depreciation; maintenance, etc.
All costs are fixed and don't vary by the amount of sales we have (outside of very small variable
costs like fuel).
Need different rates for different customers - if one large customer uses a small amount of
energy all the time is less demand than a large customer that uses a large amount of energy for
a short while. The rate study makes sure that the cost "causer" is also the cost payer. Large
utilities determine costs based on load research, which is expensive to do, but for smaller
utilities like Seward, our rates are based on other utilities' loads. Usually used Golden Valley,
Homer, Chugach, or old Muni Llght and Power. Hubbard usually uses MLP to compare Seward
even though it's been swallowed by larger utility.
There is a process that must be followed to determine rates -the Regualtory Commission of AK
is the regulatory body of the large utilities.Seward is not rate regulated because it's so small, but
the process is used to regulate rates so that the cost causer is the cost payer and to ensure
fairness.
Hubbard is investigating 2 scenarios in regards to rates.
1. Keep the utility and update it with consideration of expanded staff with higher salaries,
capital expenditures
2. Sell the utility without the salary increase, staff increase no capital expenditures,
however rates will still have to be raised.
Numbers will be provided fairly soon and all will be brought to the council within the next month
or
Montgomery said that he was hoping to bring the rate study to council in September with a goal
of introducing the new rate with the rate changeover to winter rates on October 15th. He had
hoped that the organization chart would be a starting point for the committee to see if he has put
together an org chart that can be successful and serve the people. Would like to see the council
use some of the tools in their tool belt to adjust rates - look at the general fund, etc. His opinion
was that rates should be a whole separate conversation after deciding what money would be
needed to make this a viable utility.
Dunham asked if Homer electric builds a 5 MW power plant in the middle of the Seward
transmission line at Grant Lake wouldn't they be paying Seward to transmit energy on our lines.
If Seward doesn't sell to them, Homer will need to pay to use the transmission on Seward's line
which will bring in more revenue to the city. Hubbard countered that he wouldn't see that as
being a huge amount.
Kaluza asked how the future might look in regards to a demand in sales with the increase of
heat pumps. HUbbard is using 2022 sales to see the increase, which he says is much lower
than 10 years ago. In the long term, Seward will see an increase in sales, but it won't happen in
the next year or so.
Montgomery said that the current rate study is oniay looking forward for 3-4 years. Hubbard
suggested that every 2-3 years the rates should be looked at for a small utility.
McCracken asked what a normal fee for a study of this size and Hubbard answered that his
budget depends on how many trips he has to make to present to Seward council, but it's around
$30-40k. Montgomery clarified the budget is around $50k, which included 2 trips to Seward.
Other firms are much higher.
Kaluza said the math in his head for the bond sale would be an increase of about 1.3 cents to
each rate payer. Hubbard responded that there's depreciation that has to be recovered as well
as inflation that has soared over the past 2 years, so that was incorrect. Montgomery also
clarified that construction season brings a big increase in materials to buy and the cost of those
materials has increased almost 3x after the pandemic.
Seward's total sales are approximately what they were in 2015. From 2012-2022, 2012 was the
highest revenue (because of the coal terminal?) Paquette asked if the dip might be explained by
what the sea life center did with using heat pumps. Kaluza mentioned the old utility manager
mentioned a lot of efficiency upgrades that were made in the 2000- teens.
Rieirson asked if the money tranferred to the general fund was included in his analysis and
Hubbard responded that yes it was. Montgomery replied that the city has a formula for setting
the rate that the city charges the utility from the total revenue.
Paquette wanted to reiterate that the expenses for the utility are fixed, so we have to get the
numbers to see what needs to be spent to fix the utility so that it works. MOntgomery responded
that we're playing catch up because money wasn't set aside to do maintenance, which kept
Seward's rates artificially low. We start making payments on the bond payment in 2024. We
shouldn't be so focused on rates but instead figure out what it will take to make this a viable
utility. Worry about rates later.
Rieirson said he struggles listening to conversations from the professionals and was wondering
why no one has mentioned that our utility has all of these needs when we're getting rate studies
every 2 or 3 years. Montgomery replied that he was told by Jack Anderson and the Seward
linemen when he started to drive out Nash and check out the poles and the dated equipment in
the substations. Dunham asked once these projects are wrapped up if our utility would be in
good shape? Montgomery said our transmission system coming from Moose Pass is in great
shape, but there are some parts of the distribution system that need work and replacement.
Generators are in great shape - although they're older, we don't ask a lot of them as far as use,
so they're in great shape. The fact that we can produce 15.6 MW when we lose power from
Chugach is huge. Montgomery stated the nuclear is still 12-15 years out before it starts being
viable. Rieirson said there's a gap between everything running just fine to tf ie "wheels coming
off the bus" so quickly and its unclear to the citizens how that happened so fast.
McCracken asked if the 2 million dollars that was sent to the city was used to pay down a lot of
the bond and maintenance, would that take care of the increase that's being proposed. Hubbard
responded that it would help a lot but probably not take care of the expanded staff that would be
needed to make the utility viable. Also, the city then would have to recoup that money from
taxes, water rates, sewer rates, etc.
McCracken asked if it would be fair to say that outside city limits is generating about i million
dollars that is being "dumped" into the general fund. Hubbard agreed.
Tustarmata asked Hubbard to explain more about using ML&P as a study for Seward when it
didn't even exist anymore. Hubbard explained that he needed to look at the different load
patterns of small general service, harbor, large general sercive, etc. What is needed is to put
meters on each of those customers to monitor each rate payers load patterns. This is an
expensive process, so the research that was done for ML&P is similar to Seward in that it isn't
very spread out, a smaller customer base. Those load patterns from ML&P haven't changed
much from the last 2 rate studies, so he has continued to use the same load studies for
Seward's rate. He said there is nothing else that is close to nompara!ble to Seward and his
calculations seem to be reasonable.
Kaluza asked if Hubbard knows what Sewards average peak is - he responded that yes he
does.
Hubbard clarified that Montgomery has come up with his estimate of what was needed to make
the utility is viable and our committee is tasked with seeing if that estimate is accurate or not.
His rate study will be based on Montgomery's estimate -our reasearch may be different.
Council member Barnwell asked how Seward compared with rates of small villages in AK.
Montgomery wishes that he would have pointed out that some of those communities are getting
subsidies that Seward doesn't qualify for.
Draper asked for a run down on the position descriptions for new positions that Montgomery
was requesting. Suggested that when committee calls around to all the organizations, to ask
them how they recruit.
Business Manaaer - Succession planning - could move into the GM role.
Business Operations - program administration, billing functions, community information (posts
on FB, etc), representing Seward on the railbelt organizations.
Cyber Security - may be outsourced, but still needs to be budgeted for. Dustin (City IT) said he
doesn't think his organization has the capacity to take it on. He will be here next meeting.
Liason -would be taking part in the meetings highlighted on the calendar. Write press releases,
reports to share with city manager, council, etc.
Lineman - definitely needed, but apprentice could go. Dunham asked why we couldn't automate
the generators to eliminate this position, but Montgomery said that he's gotten pushback in the
past. In the future, there won't need to have 2 operators and an apprentice.
Testarmata suggested that we make a presentation to the council about our findings on line
loss, remote start operations and power factor. Montgomery said we should share our findings
with council if we think it's in the best interest of the utility.
vunham asked if we had gotten the budget for 2023, Montgomery said it's available on the
website. Cost estimate for vehicles, etc should be in the budget. Deliverable 2-4 should be
available in the budget.
Kaiuza mentioned that he wanted to see what the workload for an additional lineman would be.
Montgomery said he would provide that for the next meeting.
Testarmata said it's important to distinguish between wants and needs. Does Seward really
need a representative for little Seward to play with the big guys who aren't going to listen
anyways. Also questioned why we have all these natural resources we aren't using, but figuring
out how we can be more independent and not have to rely on outside sources. What is the
vision of Seward for the next 100 years.
Agenda for Next meeting 8/21
1. Curtis Tlhayer- Executive Director of the AK Energy Authority - Importance of Bradley
Lake and the role that Seward plays. Give committee an understanding of the types of
commitments Seward has to the organizations.
2. Look at the first deliverable
3. Citizen's Comments
4. Committee Comments
8/21/23
Meeting Called to Order at 7pm
Pledge of Allegiance
Roil Cali
Present - Kaluza, Draper, Testarmata, Casagranda, Hatfield, Paquette, Dunham, McCracken
Absent- None
Citizen's Comments
Marie Gage - inside city limits - overheard a conversation in the electrical department saying
that there was $300k spent that they didn't want the ad hoc committee to know about, and that
they didn't want the wages of employees known until closer to the election.
Agenda -
Dunham moved to add Jeff Estes to the presentations.
Draper moved to add (a) under new business to add the budget iaydown for discussion
Paquette moved to add (b) under new business to discuss first meeting in September
Paquette moved to add a report from Electric Utiltiy Manager, Rob Motgomery under reports
Casagranda moved to add (c) under deliverables to discuss deliverable#2 & #3
Casagranda moved to strike the presentation from Curtis Thayer with the Alaska Energy
Authority
Casagranda moved to add (d) under new business to approve the minutes from Aug 7 meeting
Agenda was approved as amended.
Presentations
Jeff Estes -Power Factor
It's important to reduce power factor. As Seward grows industrially it will be more and more
important. The ship lift has a bad power factor and doesn't push load effectively. They could put
in capacitors to manage that load effectively, but it'll cost them up front. Their equipment is
being damaged by the power factor due to low voltage and if they put the money up front, it will
actually save them money in the long run. Seward used to charge for the power factor, but
someone in the city decided to not do it around 2017.
Montgomery said in 2010, he was contacted by John Foust about charging for the power factor,
but it was determined that there wasn't enough manpower to charge for it and do it accurately.
Dunham said that charging for the power factor would help cover some of the losses that
Seward is experiencing.
Estes clarified that companies who had bad power factors that they will be charged by a certain
date if they don't take control of their energy usage.
McCracken pointed out the losses could amount to over$400k in revenue that the city is
missing out on.
IVIOntgomery clarified that there needed to be an audit for those power factors over 1, which
seem "out of whack".
Estes stated that all the power factor info is already in the city code and they were billing for it
when he was working for the city - approximately 10 companies were being charged back then.
There are close to 70 that have questionable power factors now.
Montgomery reiterated that it was the capabilities within the billing department that kept them
from charging for power factor in 2019.
MOntgomery is going to check that no matter who we sell to, power factor will be charged?
Dustin - City 1T
The committee had asked previously if the city IT department had the capability to take on the
IT for the electric department.
Dustin said that his team would need more training to be able to take that on, as well as deal
with the added workload for his team of 3. Cybersecurity if something that is growing in every
department he is working with in the city. He could see that position could possibly be mixed,
part time between the electrical department as well as helping out with the city IT team.
P aquette asked about the contract we have for support of the SKADA system {that shows
what's going on with the generators remotely} that the city IT is using. Montgomery said they are
looking into using the SKADA system to offer some remote capabilities with the plant. A couple
times a year, the contractor comes into Seward to help with the technology.
Kaluza asked if Dustin's team had been assisted in the billing side and he agreed.
Dunn said that the IT department needs more office space if they're given more workload.
Darryl said the finance department has been having trouble reading meters because they did
away with a contracted meter reader in the past year. The finance department has to read
around 200 meters individually.
Montgomery said they currently have one person who is reading meters on top of their regular
workload above and beyond their normal job. -Here is someone in the building department is
being trained. But there's no normal schedule for reading meters because it depends on each
person's workload in their regular job.
Paquette suggested that the meter reader workload be added to the organizational chart that
Montgomery provided. MOntgomery recommended that if the billing stays with the city, that the
billing move into the electric department and separate from the water and the sewer.
Deliverable #9 -
Committee spent time organizing the excel spreadsheet and information gathered since the last
meeting. See Spreadsheet for additions.
McCracken and Dunham asked for Draper to enter their info into the spreadsheet when they get
it.
New Business -
1. Lori Draper - What she and Skip Rieirson put together are the 2022 actual numbers
which are changing regularly. 2024 annual budget is the next column, and the final
column is a budget for rebuild that the committee would like to include in the deliverables
even though it wasn't asked for.
Payment In Lieu of Taxes (PILT) - Generally a percentage of the operating expenses.
About 8% of revenues. Around $300k ROW fee to city that poles are sitting on city property. If
the utility was sold to a for-profit company, the city would continue to get their ROW fees. if we
sell, we will continue to enjoy sale tax.
Draper asked Montgomery why the 2022 line item for "Work Order Revenue" was over$800k,
but it was budgeted to be only $30k. Montgomery said he'd get back to us.
Rieirson said the audited financial statements may be available shortly. We are likely waiting for
the Providence audit and the state.
2. Schedule next meeting in September
Paquette said the first Monday in Sept is Labor Day, and she asked if we could move it to
Tuesday, but PNZ is using the conference room on that day. McCracken suggested moving it
to the library on the Tuesday, the 5th might work for everyone. Casagranda will secure the
library for the same time if possible.
Discuss Deliverables:
Deliverable #2
Montgomery said the department has adequate space for the positions that they have now, but
adding any more resources/staff will dictate the need for more space. Open to moving into any
number of existing spaces - i.e. if the police or fire departments get new buildings, there would
be space available there.
McCracken said the office trailers may be used for a short time. Montgomery said the electiric
building has possibility to add office space - could look into that. Seems that space will be open
up and possibility of moving Parks and Rec out of the Annex building to give the ELectric
Department more space.
Line item for deliverable#2 would be approximately $50k for desks, computers and partitions.
There's plenty of space in the Annex if we can find another space for Parks&Rec.
Deliverable #3
Cost estimate for additional supplies, vehicles, etc.
Montgomery said that there's not a need for more vehicles.
Equipment - computers for staff, etc. are included in Deliverable #2.
deliverable 44
Cost estimate for regular maintenance, infrastructure, etc. (MRRF)
Harbor is the only one adding to their MRRF for upkeep and maintenance for big ticket items. it
comes partially from slip fees?
MOntgomery think that should be the responsibility of the department heads. Current electric
MRRF fund is around $900k. We used to add $450k every year to the electric MRRF, but that
now goes to the general fund.
Montgomery said that the rate study is including a small amount in rates that would go into the
MRRF ($500k/yr) to replenish the maintenance budget after $3.5 million cost to refurbish the
Spring Creek substation.
Dunham asked Montgomery for a copy of his project timeline, capital improvements list and
estimates.
Dunham asked if Montgomery was involved in a pool of electrical utilities that bought equipment
in bulk together. Montgomery said he was not, but was willing to look at it.
Citizens Comments
Rieirson wanted to clarify that he's not an expert, but he's trying to help explain some of the
financial side of things, since the new finance director is working on getting up to speed. Also,
we're not here to talk about the sale, if the sale doesn't go through, it's important that the
committee gives a warranty of a set number of years to try to run our own business instead of
continuously putting it back on the ballot.
Darryl suggested that their were a lot of options concerning the enterprise fund in order to help
the utility to continue to operate, albeit not perfectly, but Chugach and Homer are not operated
perfectly either.
Dunn reiterated how discouraged everyone was that the council put the sale back on the ballot
before the committee even had a chance to dive into the deliverables. She hoped that the
committee would look into what a sale would cost the city as well.
Montgomery wanted to address the comments that Marie Gage made. He was having a
meeting with the acting city manager about what he was ready to bring to council or not.
Dunham suggested that we turn the utility into a co-op so that the outside residents can have a
say.
McCracken reminded us about a board of directors that could play into a co-op.
i estarmata wants to make sure that it's clear we are not rubber stamping all these positions just
because we're doing the research.
Kaluza thanked Skip, Darryl and all the citizens who have been showing up.
Paquette offered the analogy that the utility is like an old house with leaky siding and shingles
that we have been taking care of to make it look pretty, but the inside of the house is in
shambles and there is so much else that needs to be fixed. Because we've delayed
maintenance for so long, we do finally have to take care of the inside.
Casagranda thanked SAK town for recording and showing up each meeting. Casagranda added
she chooses to update old houses.
915f23
Roll Call
Present - Casagranda, Paquette, Kaluza, Testarmata, McCracken, Hatfield, Dunham, Draper
Absent- None
Citizen Comments
Jaffa
Hopes that the ad hoc committee gets a chance to submit a narrative that the council can use_
Pointed out that there are many opportunities to educate yourself about electric utilities and that
you'll find that every step forward for the Seward utilities can be done in town, with a locally
owned utility.
Approval of Agenda
Paquette added discussion of timing of meetings to adjust start time.
Dunham added something about submitting info to council. Casagranda said it's already in
section "D".
Reports
Montgomery - Capital Improvement Plans
Printed a capital improvement plan for 2022-2027. We were approved for a bond of$10M, but
the improvements are going to come to about $15M which will come out of the. Enterprise Fund.
Balance of the EF is around $8M, which would leave us with about $2.5-3M in the fund.
McCracken pointed out the that $1.5M loan that SMIC has isn't counted in the $8M in the EF.
Montgomery agreed, there would be $1.5M coming into the EF.
Paquette asked what else was done in 2022, MOntgomery said that projects that were
completed were taken off the list, so more was accomplished than what is on the list.
Casagranda pointed out that the power for cruise ships isn't necessarily something that will be
happening so that could be subtracted from the total dropping it from $21 M to around $17M.
Montgomery said the cruise ships could bring in $1.2-1.4M in profits. There could also be some
cost savings if the RR allowed us to use their easements.
UNFINISHED BUSINESS
Deliverable#1 - Salaries
Discussed that it would be best to present the average of the 5 utilities that we talked to so that
anonymity is preserved.
Linda presented the data she received from the 5th company to see if it affected the averages
that Draper came up with. THey didn't have a government liaison position. All other positions'
salaries seemed similar to what the ad hoc committee had come up with except the apprentice
(which Montgomery said wasn't necessarily needed)which was bumped up from $60k-$75k.
Draper added benefits at 45% but Montgomery had mentioned they should be calculated at
17%, which would save approximately $83k. No other utilities we investigated had a liaison.
Paquette asked what happens if we choose to not have a government liaison. MOntgomery
stated that that person would be attending all the meetings and be a board member for the APA,
tracking grant opportunities (which could pay for itself)_ Currently, there's too much workload for
any position to take on these activities. Paquette asked if there was anyone in the city that could
take on some of those tasks for at least a short term. Montgomery relied that the city employees
are stretched so thin that it would be nearly impossible to add that to someone's workload on
the city's side of things.
Based on the organizational chart that council tasked us with the positions to be added by
Montgomery comes to a total of$857,250 in additional personnel.
Motion to accept this data to present to council - passed 7 yes and 1 vote of no by McCracken
Deliverable#2 and #3 - Montgomery stated that there was very little need for equipment in
these deliverables.
Deliverable 42 - $50k
Deliverable #3 - $10k
Deliverable#4 - Regular investments in system maintenance and capital impovements.
Dunham stated that he thought the utility should put another$200k into an additional fund for
repairs and maintenance. Montgomery stated that the rate study is putting $500k into the MMRF
for at least a few years. Dunham clarified that they recommend putting an additional $200k
towards repairs and maintenance (a different line item than MMRF). Montgomery stated that the
current budget for repairs and maintenance is currently less than $50k. The committee decided
that the $500k contribution to MMRF should stand and the current repairs and maintenance
allowance that is budgeted is adequate for a total of$550k set aside for repairs, maintenance
and capital improvements.
NEW BUSINESS
A_ Deliverable #5 - Investments in tech no logy/cybe rsecurity
It was thought that$20k would be an adequate number for technology/equipment. Because
these are new requirements, it's unclear what this number should be for software and other
things needed. Grants are available for this kind of technology, so it's difficult to ascertain an
exact number for this. It will depend on what FEMA and Homeland Security will provide. This
will roll out slowly, so the committee decided to start with a $50k for a year one investment in
technology until it's more clear what changes will be required of Seward Electric.
B. updating the committee's rebuild budget
Rate increase is approximated at 15% - this number may change when the rate study numbers
are released publicly. A question was brought up why the actual number for line item 5303 -
Residential Customer Charge is $547,658 but there is only $202,687 budgeted for 2024. We
have questions about the budget line items as several do not make sense between the actual
numbers from 2022 and the upcoming budget for 2024.
Line item 7 lu1 and 7102 for 2024 seem to be switched in the city's financial data that was given
to us.
Committee updated the items on the "2024 Rebuild budget Assumptions" page with numbers
that had been discussed in the meeting.
Casagranda moved to combine the Business Ops Manager and the Railbelt Liaison into one
position named Assistant Director and offer a salary and benefits of$165k. This person would
be an alternate with the Director on the committees. And contribute $30k to the general fund to
help fund a Public Relations Officer for the city as a whole that would offer communications
services and grant writing for the city and Electrical Department. Hatfield seconded.
Dunham clarified that some of our linemen are trained as operators in case of an emergency
where operators are not available to start the generators.
Motion passed with no objections,
C. Reviewed Recommendations to the council from the Ad Hoc Committee. Discussed
hiring a meter reader - it's going to be paid out of finance. Leave the item to restore the
meter reader position passed by vote 5-3.
Dunham suggested adding to hire or make a committee to investigate grants for cyber security.
Dunham suggested looking to contract someone out to manage the utility for a short contract (1-
3 years) to keep consistency in the utility and to help reorganize the business.
Jim McCracken left at 1 Opm.
D. Paquette will call in the morning to make sure we can get on the next council agenda as
a presentation. Montgomery said to ask for an extension if Draper needs more time.
c. Discuss meeting schedules - meet at 6pm in 2 weeks
Dunham left at 10:12pm. He wanted to thank Skip Rieirson for all the hours he had put into the
ad hoc committee. He expressed his dismay that the council didn't seem to appreciate
Rieirson's efforts to help.
Citizens comments -
Wolf apologized for his diatribe earlier and thanked the committee for their work.
Dunn wanted everyone to see James Unrien's drone footage on his facebook page for
photos/video of the improvements.
Draper expressed thanks to everyone working together to build a budget.
Casagranda said we've asked to be continued as a board.
Meeting adjarned at 10:17pni.
September 11 Electric Ad Hoc Committee minutes
Meeting called to order at 12.42pm (meeting was delayed because Megs and McCracken were both
stuck in construction traffic)
Role call-
Present- Kaluza, Draper,Testamata,Casagranda, McCracken
Dunham was in attendance by phone
Absent- Paquette and Hatfield
Citizens comments-
Rierson and Daryl S. were present and commented
Agenda-
McCracken moved to approve the agenda; Kaluza seconded.
Committee and citizens discussed the 2023 rate study
Rierson helped the committee understand the various charts and percentages presented within the rate
study.
The committee compared the numbers from the committee's proposed budget with those of the rate
study.
Citizen Comments-
Rierson thanked the committee for their service and suggested the conirnittee write a letter to Curtis
Thayer to invite him to the next regular meeting and explain the committee's commitment to deliver the
council their deliverables and now that the business required is complete,the committee feels it has
time to welcome presentations again.
The committee agreed with Rierson's suggestion and directed the Chair to write a letter.
Daryl also thanked the committee for their service
Committee member comments-
McCracken questioned the personal actions taken by the vice chair to schedule a WS with council.
Kalouza shared a draft of a study he is compiling to study the increase electricity usage by the increased
amount of heat pumps installed and being used and the effects of future rebates and tax credits to
encourage more heat pumps and how this could mean even more revenues for our utility.
Megs commented
Draper shared with the committee she would not be available to present the committees financials after
the 15t'of September
The committee directed the chair to try to reschedule the council work session for a date prior to
September 15 and shared their schedules.
Casagranda reiterated the items she was tasked to complete per the meeting, to write a letter to Curtis
Thayer and try to reschedule the 9/18 work session with council to a date prior to 9/15.
Meeting was adjourned at 1:40pm
Meeting called to order at 6:15 on 9/18i23
Pledge of Allegiance
Roll Call
Present - McKracken, Kaluza, Dunham; Hatfield; Casagranda. Testarmata arrived at 6:53
Absent - Draper, Paquette
Agenda approved - moved by Kaluza, Second by McKracken
McKracken asked to add item H - Investigate dissolving the committee
Dunham Seconded, no objections
Old Business
A. It was recommended that a letter for laydown be presented at council outlining our work.
We had discussed a presentation but there were no opportunities to present before the
election. DUnham stated that he would like to see a presentation so that there was a
record of all the hard work we had done. Casagranda said it's been common in the past
for people to read/present their thoughts in the citizens comments and if they don't finish
to finish at the citizens comments in the end. She also stated she had no time to take on
creating a letter, but was willing to read what was created.
B. Citizen Darryl Schaffermeyer said that it's odd that a committee wasn't allowed to speak
in a special meeting. Casagranda offered to contact the mayor or city manager to
coordinate a special meeting. This passed with no objections. It was decided if there was
no special meeting, a laydown would be presented.
New Business
A. Council member Wells clarified that no one on council had the rate study document (135
pages) before we did. We all were under the assumption that they had had it ahead of
time (because they had said they did) but what they were actually referring to was the 20
page document that was a copy of Hubbard's slideshow. Having 2 different documents
has caused a lot of confusion. Casagranda thanked Wells for coming to the meeting so
that we are able to ask questions and eliminate some of the miscommunication that has
been happing since the committee's inception.
Some questions were asked about the rate study and the numbers they were using.
We didn't arrive at clear answers.
The public can request the rate study draft (135 pages long) from the city
clerk.
B. Dunham said he's been working on a different committee that thinks the electric utility is
a viable company with the ability to turn a large profit. Casagranda summarized what
Dunham was saying as we've created jobs, added money to the MRRF and repairs and
created a viable budget, therefore there's no reason to sell.
It was pointed out that in March of 2024, Homer Electric will need to renegotiate their gas
contract with Hillcorp, which will likely raise rates for everyone.
Chugach has more options for gas than Homer.
Dunham said he's met with the head of cybersecurity at Chugach who said Seward wouldn't
have much problems with the new requirements. There would be oversight needed for
substations bigger than 69kv and large power plants, but the Chugach cybersecurity head said
that there will be help from FEMA and others to have oversight of cyber security_ Seward should
have no need for a full time cyber security position.
C. Kaluza moved, Testarmata 2nd to bring creation of a board of directors for the utility to the
floor.
McKracken asked if residents with meters or members with meters could vote to determine the
board.
Kaluza mentioned that Nome's board of directors had to be a resident of the city.
Shaffermeyer said that Seward used to have an electrical utility board and we could look back to
see how it was created. Similar to the hospital board. Reminded audience that the ultimate
decision makers would be council and the board would need to work with this in mind.
Dunham mentioned that when there was a board, there were less people/meters outside of city
limits, so it may have been just residents who were able to be on the board. Now that 48% of
the meters are outside of city limits, it may be necessary to give those people a voice.
it was suggested that city recommend to council to question the city lawyer if all board members
would need to be city residents? Or would there be a way to provide a non-voting seat or two
from outside city limits?
Dunham said he supports a board even if it was all from within city limits. There's so much on
council's plate that it would be helpful to have any group focus on the details so they wouldn't
have to. He also suggested no term limits for members to keep people on the board that really
wanted to participate and keep the history going. Suggested we add this to our council
recommendations.
D. Dunham moved to approve minutes from the Sept 5th meeting. Kaluza seconded. No
objections
E. Kaluza moved to approve minutes from the Sept 11 th meeting. McKracken seconded. No
objections
F. McKracken moved to begin discussion on council's letter and Thayer's letter. Kaluza
seconded. Testarmata made some edits and the committee approved Casagranda to send the
letter to Thayer via the clerk.
Committee made a few edits to council's clarifying letter and approved Casagranda to send the
letter to council via the clerk, it was also agreed that Casagranda will read the letter aloud in
public comments at the next council meeting and bring a laydown.
i�. McKraken moved to bring public information of the committees work to the floor.
Dunham asked if we were able to send the info to the public or if we were only allowed to send it
to council?
Casagranda requested a 5 min recess and an extension for more time. Dunham moved and
Hatfield 2nd.
Meeting called back to order at 7:47pm.
Suggested that an extended letter based on the draft be sent to council and administration and
a condensed version be drafted for the Seward Journal which could include a link to find all the
Ad Hoc Committee's documents.
Motion to extend by Testarmata and second by Hatfield
Casagranda asked Testarmata and Hatfield to work on editing the letter to council so that it
could be sent to them. All our documentation could be included as a laydown so that when it's
published online, there would be one link to access all documents.
Mike Paschall of the Seward Journal said that anything for the Journal would need to be sent by
Tuesday to publish on Wed.
Committee decided to ask city manager for a special meeting to be arranged for Monday, Sept
25th before the council meeting in order to share our findings and have an open discussion. If
that was granted, we could discuss with them how they would like us to proceed with sharing
our work with the public.
H. Kaiuza moved to bring the topic of dissolving ourselves to the floor. Dunham seconded.
McKracken stated that we had completed the tasks that council had asked of us, even though it
was in a restrictive fashion and didn't see any further need for the committee to meet. If it's
voted to keep the utility, council can ask us back for advice.
Casagranda stated that she wanted to keep it and let the council decide when our job was done.
Dunham said he'd like to operate as a private citizen so that he wasn't so bound by the open
meetings act.
Kaluza said that it makes a stronger point if the council dissolved the committee instead of
having us resign.
McKracken moved to dissolve the committee after the council meeting on September 25th.
Dunham seconded. Vote failed 4-2
Yes - McKracken, Dunham
No - Casagranda, Kaluza, Testarmata, Hatfield
No citizen comments
Meeting adjourned at 8:44pm