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CITY OF SEWARD, ALASKA
RESOLUTION 2007-078
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
SETTLEMENT AGREEMENT WITH CEA IN THE MATTER OF THE
TARIFF REVISION DESIGNATED AS TA 279-8 FILED BY CHUGACH
ELECTRIC ASSOCIATION, INC. FOR A RATE INCREASE AND RATE
REDESIGN
WHEREAS, in September 2006, Chugach Electric filed for a rate increase of almost 24%
over 2005 rates; and
WHEREAS, the City filed a petition to intervene, as did Homer Electric and Matanuska,
Electric and a notice of election to participate as a party was filed from the Attorney General, in the
RCA tariff filing by Chugach Electric Association, Inc.; and
WHEREAS, on July 27,2007 Homer Electric and the Attorney General entered into a
settlement agreement with Chugach Electric; and
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WHEREAS, the settlement terms would result in a Pro Forma total revenue increase of
3.4%, based on 2005 revenues. The increase requested by Chugach Electric was a Pro Forma total
revenue increase of 8%; and
WHEREAS, it is in the City's best interest to agree to a settlement under these terms. A rate
increase that is less than 50% ofthe rate increase requested by Chugach Electric, and such that the
City will not have to spend additional attorney fees, at a cost that could exceed $30,000.00.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The City Manager is hereby authorized to join into a settlement agreement with
Chugach Electric Association, Inc., Homer Electric Association and the Alaska Attorney General's
office, in the form presented at this meeting.
Section 2. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 1st day
of August, 2007.
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CITY OF SEWARD, ALASKA
RESOLUTION 2007-078
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THE CITY OF SEWARD, ALASKA
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AYES: Dunham, Valdatta, Bardarson , Schafer, Thomas, Amberg, Shafer
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
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Council Agenda Statement
Meeting Date: August 1, 2007
Through: Phillip Oates, City Manager
From: Tim Barnum, Electric Utility Manager
Agenda Item: Authorizing the City Manager to enter
into a Settlement Agreement with Chugach Electric
Association, Inc. in TA 279-8, Tariff Revision for Rate
Increase and Rate Redesign
BACKGROUND & JUSTIFICATION:
In September 2006, Chugach Electric Association, Inc. (CEA) filed its general rate case
with the Regulatory Commission of Alaska (RCA) asking for a rate increase of almost
24% and a rate redesign.
In October 2006, the City filed a petition to intervene, along with the other wholesale
power customers. The Attorney General filed a notice of election to participate as a party
to address TA 279-8.
Our current power sales agreement allows for rate changes imposed by the RCA. The
City and other Utilities intervened in the request to the RCA in an attempt to limit the
increase being sought by CEA.
On July 27, 2007, Homer Electric and the Attorney General negotiated a settlement
agreement with CEA with regard to how much of an increase would be appropriate and
justifiable. This negotiated rate increase is less than 50% of the increase sought by CEA.
The impact to the City would be an increase of 3.4% (based on 2005 revenues). This
proposed settlement, if approved by the RCA, would mean an increase of $118,176.00
(based on 2005 revenues) verses a requested increase of $279,267.00. The City is
currently paying the same base rate that it paid in 1998 (the base rate does not include the
fuel adjustment factor), so it is likely the RCA would rule that there is justification for
some level of rate increase for Seward. In the event the City does not negotiate a
settlement prior to the case going before the RCA, the City will be required to accept the
ruling of the RCA, and any rate increase they may approve.
CONSISTENCY CHECKLIST:
Where applicable, this resolution is consistent with the Seward City Code, Charter,
Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of
Procedures.
FISCAL NOTE:
The City of Seward will receive a payment from the State of Alaska for energy relief, in
the amount of $198,000 which could be used by the City to offset some of the cost
increases to customers in the coming year.
Approved by Finance Department:
RECOMMENDATION:
City Council approve Resolution 2007- authorizing the City Manager to enter into a
settlement agreement with CEA under the same terms and conditions as negotiated and
agreed by Homer Electric and Attorney General.