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HomeMy WebLinkAbout08102026 City Council Laydown - Seward Electric Utility PDFSeward Electric Utility Paths Forward for the Utility and Its Ratepayers Presentation to Seward City Council August 10, 2026 Forecast period 2025–2084 Roadmap -Completed 2023 utility disposal votes 2-year moratorium on utility disposal –October, 2023 Guidance to explore utility alternatives –Spring 2025 First survey done September 11, 2025 Expiration of disposal moratorium –October, 2025 Three town hall meetings September 29, 2025December 10, 2025May 28, 2026 Financial deep-dives on August 10 –11, 2026 (in-progress) Alternative Analysis to Date - Three Paths Each path is modeled under four cases: Worst Case, Mid-Case, Base Case, Best Case Rate As Is Governance MUA or Coop The utility converts to a Municipal Agency (MUA) or a Cooperative and purchases wholesale power and passes through the fuel escalator. Ratebase as-is. Local Control Build Godwin 4th of July Creek Hydroelectric Project (G4J) The utility in any form builds the Godwin/4th of July hydroelectric project. Purchased power drops significantly in 2033. Excess generation is sold into the market to further reduce costs. Ratebase per 2026 draft rate study. Sale of the Utility Priced at the lowest-cost Railbelt utility, the MEA total bill of 24.56 c/kWh, escalated on fuel and load growth only. MEA current average rate. The four cases model changes in construction costs, available water for Hydro power, financing costs, load growth, fuel price escalation, and energy resale. Local Control & Build G4J Scenario — Major Assumptions Timeline 2026 Anticipate preliminary permit and license application development begins. Application for renewable energy fund grant. 2030 License is issued and bond advance note negotiated. 2031 Construction begins – estimated 2 – 3 years. 2033 G4J In service and producing power. Purchased power is significantly reduced. 2035 Investment Tax Credit applied and long-term financing acquired. 2061 Rates, energy sales and financing –Customer rates are set at the distribution system cost-of-service floor per 2026 draft rate study. –Power above local needs is sold into the energy market. Sales lower local rates, pay the G4J project debt and reserves, and fund a rate stabilization fund. –The Investment Tax Credit reduces project cost by 30% to 50%, depending on the case. –The remainder is financed by 25-year bonds from RUS, CFC, CoBank or municipal debt, refinanced once for a 50-year repayment period matching asset life. In the sale case the addition of G4J doesn’t change the cost of power in a larger utility – – The fuel portion of rates is based on current assumptions. Load growth is based on current trends. MEA’s average cost of power is used as the sale rate. – – – All amounts are in nominal dollars, except for power expense Scenario Analysis 1. Worst Case 1. Low load, high interest rates, high construction costs, low G4J energy production 2. Mid-Case 1. Below-average loads, moderately high interest rates, moderately higher construction costs, moderate G4J energy production 3. Base Case 1. Current loads, current interest rates, current construction estimates, base case G4J energy production 4. Best Case 1. High load, low interest rates, lower construction costs, high G4J energy production The Four Cases Summarized –Key Variables Best CaseBase CaseMid-CaseWorst Case Inputs: 150,000125,000100,00075,000G4J energy (MWh/yr) 70,000,00056,000,00049,000,00042,000,000Seward load (kWh/yr) $136.0M$181.0M$227.0M$273.0MConstruction + permitting $3,885$5,171$6,485$7,800Installed cost — construction ($/kW) 50%50%40%30%ITC direct pay (2035) 3.38%4.50%5.63%6.75%Long-term debt rate 1,286 GWh2,184 GWh1,831 GWh1,903 gWhSurplus energy for sale Rates in cents per kWh. The Four Cases Summarized –Key Variables Best CaseBase CaseMid-CaseWorst Case Outputs: 22.93 19.08 24.05 28.88 24.75 24.56 28.99 25.30 25.00 38.79 34.49 25.46 Rate 2030 —As-is Local Sale 22.37 9.68 23.30 28.31 14.75 24.34 28.48 21.50 25.20 38.22 34.13 26.09 Rate 2035 —As-is Local Sale 21.02 8.70 22.59 26.93 13.63 26.00 27.27 20.33 25.75 36.81 32.66 26.69 Rate 2045 —As-is Local Sale Rates in cents per kWh. Average electric rate under each path Roadmap –Next Steps Second survey –August 19, 2026 Fourth townhall and Council presentation –September 28, 2026 Survey resultsSummary financial analysisPresentation by national cooperative representatives Work session with Council –alternatives presentation –November 23, 2026