HomeMy WebLinkAboutRes2011-104 Sponsored by: Hunt
itrio CITY OF SEWARD, ALASKA
RESOLUTION 2011 -104
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
SPECIAL CONTRACT WITH ICICLE SEAFOODS, INC. FOR
DISCOUNTED ELECTRIC RATES FOR SEWARD FISHERIES
WHEREAS, Icicle Seafoods operates Seward Fisheries year -round and provides full -tine
employment in the City; and
WHEREAS, job creation, job retention, and promotion of fishing and fish processing are
important to residents and the City of Seward; and
WHEREAS, economic stability of operations of Seward Fisheries is necessary to the region
and residents of Seward; and
WHEREAS, except during a peak season in the summer, the actual demand for electric
power is lower than 750 kW; and
WHEREAS, the Utilities Manager is authorized to negotiate a special contract, subject to
.s approval by the City Council, for customers who have a demand in excess of 750kW or that have
unique power requirements that cannot be reasonably addressed by the Large General service tariff;
and
WHEREAS, the Utilities Manager recommended that the City Council approve the special
contract with Seward Fisheries based on current financial hardship resulting from growing
competition from offshore fish processor.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City Manager is authorized to enter into a Special Contract for Electric Rates
( "Contract ") in substantially the form presented at this meeting.
Section 2. The Recitals stated above are incorporated herein by reference as findings of the
City Council.
Section 3. This resolution shall be effective immediately. The contract shall be effective
January 1, 2012.
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CITY OF SEWARD, ALASKA
RESOLUTION 2011 -104
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 28 day of
November, 2011.
THE CITY OF SEWARD, ALASKA
1/
David Seaward, 3 , yor
AYES: Valdatta, Bardarson, Keil, Casagranda, Shafer, Terry, Seaward
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
„it /6-C- A...-/ciAllr
ohanna Kinney, CMC
City Clerk
(City Seal
4 0 01t eent
• 4 ei
•
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Council Agenda Statement
Meeting Date: November 28, 2011 a s alsa
To: City Council
Through: James Hunt, City Manager q t ,
From: John Foutz, Electric Utility Manager
Agenda Item: Special Contract with Icicle Seafoods, Inc. for Discounted Electrical Rates for
Seward Fisheries
BACKGROUND & JUSTIFICATION:
The electric tariff industrial rate, as of January 1, 2010, was abolished. The electric tariff allows,
"special contracts to be negotiated by the utilities manager with a customer that have demand in
excess of 750 kilowatts (kW) or that have unique power requirements that cannot be reasonably
addressed by the large general service tariff."
Seward Fisheries' unique requirements include; year round employment for Seward residents,
economic influx to the Seward area, seasonal demand in excess of 750 kW, and the importance of
retaining a business in the community. Seward Fisheries claims that if they pay the `large general
service' rate they will not be able to maintain their facility profitably and would be forced to close it.
If that were to happen the impact on Seward would be negative with the loss of jobs, tax revenue
and revenue to the city owned utilities as well as a potential loss of revenue to small local businesses.
INTENT:
To sign a special contract with Icicle Seafoods, Inc. for Seward Fisheries for a special electric rate
lasting two years.
CONSISTENCY CHECKLIST:
Where applicable, this agenda statement is consistent with the Seward City Code, Charter,
Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures or Other
Plans or Policies: Yes X (List Below) No
Electric Rates & Charges: Page 2 -2: 3. Special Contracts: Special contracts may be negotiated by
the Utilities Manager with customers that have a demand in excess of 750 kW or that have unique
power requirements that cannot be reasonably addressed by the large general service tariff. Special
contracts may include, but are not limited to, provisions for instantaneous demand charges, time of
service, interruptible power, minimum and maximum demand, adjustment of demand level,
ownership and payment of new distribution facilities, termination charges and power factor. Special
contracts must be approved by the City Council.
FISCAL NOTE:
In 2009 Seward Fisheries was charged a rate of $0.00574 per Kilowatt-hour for an energy charge and
$10.25 per Kilowatt for a demand charge. The proposed rates are based on the previous special
contract which expires in December 2011. The following suggested rates are calculated by charging
10% above the amount for 2011 and an additional 5% above the 2012 amount. The city council
added a ten percent increase effective January 1, 2012 to all rates and a five percent increase
effective January 1, 2013 to all rates.
The suggested rate in energy and demand for Seward Fisheries is $0.00891 /kWh and $12.86/kW
respectively for 2012 and $0.00936 /kWh and $13.50/kW for 2013. Any other charges or rates that
may be applicable will follow the Large General Service rate class. The following table shows the
2011 rate as a basis per month, followed by the approximate amounts Seward Fisheries will pay in
2012 under the Large General Service or by Special Contract. Also included is the percentage over
the 2011 rate.
Signing Icicle Seafoods to a special contract will increase their electric bill by approximately 4.05%
and an approximate dollar amount of $2,319.47 per month and $27,833.64 per year. If Icicle
Seafoods pays the Large General Service rate the percentage increase would be 72.33% and an
increase to annual revenue of $497,075.28.
ICICLE
SEAFOODS
Note: July was the highest month
Large
General Special
and the lowest month (207 kW and Current Service 2012 Contract 2012
82,800 kWh) was January for
usage Jul -11 Estimated
Monthly
Bill
Electric
Operations & Infrastructure Fee $31.50 $36.39 $36.39
Energy charge (rate) $0.00810 $0.08987 $0.00891
Avg. cult kWh 517,500 310,500 * 517,500
$4,191.75 $27,904.64 $4,610.93
$0.05368
207,000 *
$11,111.76
Energy charge $4,191.75 $39,016.40 $4,610.93
Fuel Charge (rate = $0.065908 @
7/11) $0.065908 $34,107.39 $34,107.39 $34,107.39
Demand Charge (per kW) $11.69 $15.76 $12.86
Avg. Cust kW 1620 1620 1620
$18,937.80 $25,531.20 $20,833.20
Total Electric per month $57,268.44 $98,691.38 $59,587.91
Increase per month: $41,422.94 $2,319.47
Percentage overall increase: 72.33% _ 4.05%
* based on average split; actual may vary
Approved by Finance Department: ,
ATTORNEY REVIEW: Yes X No
RECOMMENDATION:
The City Council pass resolution 2011 - �� , giving the City Manager authorization to enter into a
special contract with Icicle Seafoods for special electric rates for the Seward Fisheries location.
ICICLE SEAFOODS
Note: July was the highest month
and the lowest month (207 kW and Current Large General Service 2012
82,800 kWh) was January for usage Jul -I 1 Estimated
Monthly Bill
Electric
Operations & Infrastructure Fee $31.50 $36.39
Energy charge (rate) $0.00810 $0.08987
Avg. cult kWh 517,500 310,500 *
$4,191.75 $27,904.64
$0.05368
207,000 *
$11,111.76
Energy charge $4,191.75 $39,016.40
Fuel Charge (rate = $0.065908 @ 7/11) $0.065908 # # # # # # ## $34,107.39
Demand Charge (per kW) $11.69 $15.76
Avg. Cust kW 1620 1620
# # # # # # ## $25,531.20
Total Electric per month # # # # # # ## $98,691.38
( Increase per month: # # # # # # # ##
Percentage overall increase: 72.33%
* based on average split; actual may vary
`1
Special Contract 2012 Large General Service 2012 Large General Service 2012
Lowest Possible Highest Possible
$36.39 $36.39 $36.39
$0.00891 $0.08987 $0.08987
517,500 0 * 517,500 *
$4,610.93 $0.00 $46,507.73
$0.05368 $0.05368
517,500 * 0 *
$27,779.40 $0.00
$4,610.93 $27,779.40 $46,507.73
$34,107.39 $34,107.39 $34,107.39
$12.86 $15.76 $15.76
1620 1620 1620
$20,833.20 $25,531.20 $25,531.20
$59,587.91 $87,454.38 $106,182.71
$2,319.47 $30,185.94 $48,914.27
4.05% 52.71% 85.41%