Loading...
HomeMy WebLinkAboutRES2025-111 Matanuska Electric Agreement1 Sponsored by: Sorensen CITY OF SEWARD, ALASKA RESOLUTION 2025-111 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO RENEW THE MANAGEMENT AGREEMENT WITH MATANUSKA ELECTRIC ASSOCIATION TO PROVIDE FOR THE ELECTRIC DEPARTMENT OPERATIONS IN AN AMOUNT NOT TO EXCEED $950,000 WHEREAS, the City of Seward owns and operates its own electric utility and recognizes the importance of maintaining a reliable, efficient, and forward -looking electric system for the benefit of Seward -area residents and businesses; and WHEREAS, in March 2024, the City of Seward entered into a management contract with Matanuska Electric Association (MEA) to oversee the City's Electric Department operations, including provision of a Utility Manager and Utility Operations Supervisor; and WHEREAS, this partnership has proven immensely successful, strengthening the City's operational capabilities, implementing cost -saving measures, and positioning Seward's locally owned utility to have a strong voice in statewide energy discussions; and WHEREAS, under MEA's management, the City has advanced major capital initiatives, including the Electric Infrastructure Project and the Clean Ports Shore Power Project, both of which are progressing smoothly and on schedule; and WHEREAS, the City and MEA continue to engage the public in shaping Seward's utility future through open meetings, focus groups, and other community engagement efforts; and WHEREAS, the contract renewal provides continued stability for the Electric Department while the City navigates multiple large projects and long-term planning for Seward's energy future; and WHEREAS, funding for this contract renewal is included in the FY2026 budget while the utility was still able to implement a winter rate decrease of two cents. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The City Council hereby authorizes the City Manager to enter into a management agreement with Matanuska Electric Association. Section 2. Funding in the amount of $950,000 is appropriated from the Electric Enterprise Fund Unassigned Account 15000-0000-3400 to Contracted Services Account 15000-3000-7009. Section 3. This resolution shall take effect immediately upon adoption. CITY OF SEWARD, ALASKA RESOLUTION 2025-111 Page 2 of 2 PASSED AND APPROVED by day of November 2025. AYES: NOES: ABSENT: ABSTAIN: ATTEST: the City Council of the City of Seward, Alaska this 17th THE CITY OF SEWARD, ALASKA Sue McClure, Mayor Barnwell, Crites, Osenga, Calhoon, Draper, McClure None Warner None Kris Peck City Clerk (City Seal) 7 1 City Council Agenda Statement Meeting Date: November 17, 2025 To: City Council Through: Kat Sorensen, City Manager Subject: Resolution 2025-111: Authorizing the City Manager to Renew the Management Agreement with Matanuska Electric Association to Provide for the Electric Department Operations in an Amount Not to Exceed $950,000 Background and justification: Since March 2024, the City of Seward has operated its Electric Department under a management contract with Matanuska Electric Association (MEA). This partnership has proven immensely successful, expanding the department's technical capacity, implementing cost -saving measures, and strengthening Seward's voice in statewide energy discussions as Alaska's Railbelt utilities and policymakers make key decisions about the state's energy future. Under this management contract, MEA provides a Utility Manager and Utility Operations Supervisor, as well as occasional ancillary support to meet operational needs. Together, these positions have allowed the City to enhance daily utility operations, improve customer service, and efficiently manage major capital projects, including the ongoing Electric Infrastructure Project and the Clean Ports Shore Power Project, both of which are progressing smoothly under MEA's leadership and collaboration with City staff. For fiscal comparison, the City of Ketchikan — also a municipally run electric utility — is currently hiring three Electric Division Management positions. These positions have a salary range of $13,800 to $19,400 a month, or up to $230,00 a year. A total cost for one position with benefits included would be upwards of $350,000. These three positions cover what is handled by the two positions being provided by MEA. This renewal continues that partnership for one year, with the option of two additional one-year extensions. The agreement maintains the same scope of services while increasing the annual not -to -exceed amount from $850,000 to $950,000. The increase reflects the transition of the Utility Manager position to full-time and provides flexibility for additional support as needed throughout the year. (The budget amount is a "not to exceed" and it doesn't mean that all of that money is spent. For example, the FY24 expenditure was $570,232 and the FY25 YTD expenditure is $622,949.) This expenditure was budgeted for in the FY25-26 Biannual City's budget, which also included a two -cent decrease in the utility's winter rates, effective October 2025. By continuing this successful management structure, the City can ensure stability in its electric utility operations while simultaneously advancing long-term planning for Seward's utility future through ongoing public engagement, focus groups, and community meetings. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: 3.7.1.3 Continue to improve the quality and efficiency of governmental services. 3.7.1.4 Continue to upgrade and expand utilities to meet existing needs and encourage future development Strategic Plan: Other: Total amount of funds listed in this legislation: $ 950,000 This legislation (✓): Creates revenue in the amount of: Creates expenditure in amount of: Creates a savings in the amount of: Has no fiscal impact Funds are (✓): Budgeted Line item(s): 15000-3000-7009 $ 950,000 Not budgeted Not applicable Fund Balance Information Affected Fund (✓): General Boat Harbor Motor Pool SMIC Parking Other Electric Water Fund Balance/Net position — unrestricted/unassigned $ Yes Wastewater Healthcare Note: amounts are unaudited Finance Director Signature: Attorney Review Attorney Signature: Not applicable Comments: 94e4"° Administration Recommendation Adopt Resolution Other: xM EA MATANUSKA ELECTRIC ASSOCIATION CONFIDENTIAL Management Services Agreement between MATANUSKA ELECTRIC ASSOCIATION, INC. and CITY OF SEWARD THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is entered into by and between City of Seward ("COS"), a city located in the Kenai Peninsula Borough with main offices in the City Hall Building at 410 Adam Street, Seward, Alaska, and Matanuska Electric Association, Inc. ("MEA"), an Alaska electric cooperative association with headquarters at 163 East Industrial Way, Palmer, Alaska "the Parties". WHEREAS: COS is engaged in the business of production, transmission, and distribution of electricity in Alaska; COS desires to obtain the services of MEA to assist it in the oversight of COS' utility operations; MEA is able to provide services to COS for such purpose; and, COS and MEA have met, discussed, and agreed on the broad details of the mechanisms by which a management agreement will be executed. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, the Parties hereto agree that MEA will provide management services for the benefit of Seward as follows: PURPOSE: This Agreement constitutes the Management Services Agreement between COS and MEA whereby MEA will provide management to oversee electric utility operations for COS. SCOPE OF SERVICES: MEA will provide management to oversee electric utility operations at COS as needed to allow the essential functions of the electric utility to be carried out. These services will be for the management of the COS utility operations, line, and engineering staff for continuing operational requirements and work associated with the capital program underway. MEA may provide additional resources if available, as requested by COS by mutual consent of both Parties. COS will contract directly for any additional contract services necessary for prudent utility operations. MEA management may oversee applicable contracts for COS. MEA, if approved by the COS, may represent the interests of COS on boards, committees, or in activities where MEA and COS are both voting members. MEA will not represent the COS in these areas where a conflict of interest has been identified, unless by mutual consent of both Parties. The MEA employees are fully seconded to the COS and will act at the direction of COS officials. MEA will not represent the COS in the areas of labor contract disputes or labor negotiations. Any employee hiring or disciplinary matters outside of the resources MEA supplies will be the responsibility of the City of Seward. MANAGEMENT OVERSIGHT: a) Though MEA will supply employees (MEA staff) to carry out the Purpose of the Agreement, it is understood that changes in employment of MEA personnel may affect the performance of MEA under this Agreement. MATANUSKA ELECTRIC ASSOCIATION, INC. • P.O. Box 2929 • Palmer, Alaska 99645 • t 907.745.3231 • f 907.761.9368 • www.mea.coop Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward November 17, 2025 Page 2 b) MEA will dedicate one employee to perform the functions of the Utility Manager and will dedicate one employee to perform the functions of the Operations Supervisor. The Operations Supervisor will report to the Utility Manager. The Utility Manager will provide COS with recommendations and assistance in areas such as planning, power supply, or finance. All decisions with respect to the future status or financial obligations related to the provision of electrical service by COS will be made by COS, not MEA personnel. All administrative support for the Utility Manager and Operations will be provided by COS, unless otherwise agreed by both Parties. c) The Operations Supervisor will be based in Seward. The Utility Manager will not be based in Seward but will travel to Seward as necessary to fulfill their duties, including meeting with COS management or the Seward City Council. d) COS management will keep MEA informed of performance issues and will provide performance feedback to MEA on at least an annual basis. MEA retains full discretion regarding compensation, benefits and other standard employment provisions. COS will be responsible for reimbursing the full costs of compensation adjustments in accordance with the provisions of the COST section of this agreement. e) MEA may provide other employees as necessary to support specific activities of COS electric utility operations as requested by COS and agreed upon by both Parties. Other resources may travel to Seward or work remotely from the MEA service territory depending on circumstances and agreed to by both Parties. All costs associated with additional MEA resources will be allocated to COS as defined in the COST section of this document. TERM: This Agreement is effective upon the date approved by the Parties. Because of the anticipated nature and duration of the proposed Scope of Services, the Agreement is expected to terminate no later than January 31, 2027, with two, one-year extensions upon mutual agreement by both Parties. COS or MEA may terminate this Agreement without cause and for any reason at any time. The terminating party will provide four weeks written notice unless termination is for cause. BENEFIT: This Agreement is for the benefit of COS. COST a) MEA will invoice COS monthly for MEA's actual costs in connection with the terms of the Management Services Agreement and include an additional 3% to cover incidental support costs. Total annual costs shall not exceed $950,000 prorated to represent the actual period of this Agreement during any single year. Changes to the not -to -exceed amount may be negotiated each year the contract is extended depending on anticipated annual costs of the contract. b) All costs for the services provided by MEA, including but not limited to labor, benefits, housing, transportation, and insurance, which may include professional liability insurance, shall be considered part of the actual costs and the responsibility of COS. The costs of services provided by MEA will not include any other contract services necessary for COS operations. COS will contract directly for any additional contract services. A non -exhaustive list of examples includes legal, regulatory, studies, engineering, construction, and other operational support and planning related services. GENERAL PROVISIONS: a) COS Management The City Manager for COS will provide feedback to the work and progress of MEA management's performance. MEA shall provide the direct oversight of COS electric utility employees as noted Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward November 17, 2025 Page 3 under Scope. COS retains the employer -employee relationship with COS electric utility employees. b) Reporting MEA shall provide services to the COS consistent with the Scope of Services, as may be revised and updated. No less than monthly, MEA staff will report on all work within the Scope of Services to the City Manager for COS. In addition, MEA staff may provide updates, reports, and analyses requested to the COS at regularly scheduled City Council meetings. c) COS Interests Under the Scope of Services, MEA staff shall represent the needs of COS' electric utility. Where areas of conflict between the interests of MEA and COS are identified by MEA, MEA staff will clearly identify such conflict and recuse themselves from representing COS if necessary and as agreed to by both Parties. MEA staff shall communicate with the City Manager items where MEA determines there is a conflict of interest. d) Future Interests Nothing in this Agreement shall be construed to restrict or prevent MEA from responding to any Requests for Proposals (RFPs), Invitations to Bid, or other solicitations from the city of Seward for which MEA determines it is qualified and able to respond nor entering into negotiations or partnerships with the City of Seward on items of mutual interest. e) Hold Harmless The COS shall defend, indemnify, and hold harmless MEA against any and all loss, liability, damages or expenses arising from any claim by any person with respect to, or in any way related to, the performance of services contemplated by this Agreement resulting from any act or omission, other than for claims which shall be proven (as determined by a final, non - appealable determination of a court of competent jurisdiction) to be the direct result of gross negligence, bad faith, or willful misconduct by MEA. COS shall list MEA as an additional insured on its casualty insurance policies, to include general and excess liability insurance policies, and automobile liability insurance if MEA employees will be utilizing COS vehicles. MEA shall defend, indemnify, and hold harmless COS against any and all loss, liability, damages or expenses arising from any claim by any person with respect to, or in any way related to, the release, unauthorized use or disclosure of COS' confidential information by MEA or one of its employees, agents, or representatives. All confidential information shall be marked by the provider of the information as such. MISCELLANEOUS: a) Assignment This Agreement may not be assigned by either Party without the prior written consent of the other Party. b) Governing Law This Agreement shall be interpreted and construed under the laws of the State of Alaska. c) Amendment Any modification, amendment, or change in this Agreement shall be approved and authorized in writing by the Parties. d) Non -Competition During the term of this Agreement and during any extension thereof, unless authorized by COS, MEA shall not enter into or participate in any business competitive to the business carried on by COS. Management Services Agreement between Matanuska Electric Association, Inc. and City of Seward November 17, 2025 Page 4 e) Information During the term of this Agreement, MEA will not use for its own advantage or disclose to any unauthorized confidential information relating to the business operations or properties of COS or its utility operations. IN WITNESS THEREOF, the Parties below have executed this Agreement. CITY OF SEWARD By: Date: Kat Sorensen City Manager MATANUSKA ELECTRIC ASSOCIATION, INC. By: Date: Anthony M. Izzo Chief Executive Officer