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Home My WebLink AboutRes2013-105 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2013-105 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A SPECIAL CONTRACT WITH THE SEWARD ASSOCIATION FOR THE ADVANCEMENT OF MARINE SCIENCE (SAAMS) FOR ADJUSTED ELECTRIC RATES WHEREAS, SAAMS and the City are parties to the Amended and Restated Agreement for Lease Of Tract 2A, Waterfront Tracts And Adjacent Tidelands, And The Lease, Operation And Maintenance Of The Alaska SeaLife Center; and WHEREAS, SAAMS operates the Alaska SeaLife Center year-round and provides full-time employment in the City; and WHEREAS,job creation,job retention, and promotion of marine research and economic development are important to residents of Seward; and WHEREAS, economic stability of operation of the Alaska SeaLife Center is necessary to avoid requiring the City to assume operation of the facility; and WHEREAS, after starting on the industrial rate, SAAMS actual demand for electric power for the Alaska SeaLife Center site is not lower than 750 kW; and WHEREAS, the Utilities Manager is authorized to negotiate a special contract, subject to 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 recommends that the City Council approve the special contract with SAAMS based on current financial hardships. 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, 2014. CITY OF SEWARD, ALASKA RESOLUTION 2013-105 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 9th day of December, 2013. THE CITY OF SEWARD, ALASKA J•an Bardarson, Mayor AYES: Keil, Shafer, Casagranda, Terry, Squires, Bardarson NOES: None ABSENT: Butts ABSTAIN: None ATTEST: 1 2 / I Jo canna Kin Or MC C ty Clerk (City Seal) , � �� • •�ck�•`,. •• .N w. i SEAL . •• O • • r. v 47°Z. ti . P,� ,•�Iy/Y4�i OF 1P •i'` Council Agenda Statement e of sell" 4 � Meeting Date: December 9, 2013 % � . 1 To: City Council q�is+�P Through: James Hunt, City Manager From: John Foutz, Electric Utility Manager Agenda Item: Special Contract with Seward Association for the Advancement of Marine Science for Discounted Electrical Rates for the SeaLife Center BACKGROUND & JUSTIFICATION: As of January 1, 2010, the City of Seward electrical tariff will no longer have an `Industrial Rate.' For SAAMS changing to the higher`Large General Service' rate in a one year time period would be financially damaging. 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" In the case of Seward Association of the Advancement of Marine Science (SAAMS) these unique power requirements include a monthly demand in excess of 750 kW, full-time employment for Seward residents, economic stability for Seward, and the promotion of essential marine research. SAAMS financial stability relies on an electric rate which is comparably less than the larger General Service rate. SAAMS claims that if they pay the higher rate they could not maintain the SeaLife Center profitably, and may be forced to close. If the facility closes the impact would be great and would include higher unemployment rates,loss of revenues to the Seward area,less attraction to the area by visitors and the City of Seward would be forced to take over the facility. The special contract applies only to the SeaLife Center site, and not to any other operations of SAAMS. INTENT: To sign a special contract with SAAMS for a special electric rate for two years,giving them time to become more financially stable. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan (1.3, 3.7.3.1, 3.7.3.2): X 2. Strategic Plan (document source here): X 3. Other (list): X Electric Rates&Charges: Page 2-2:3.Special Contracts: Special contracts may be negotiated by the Utilities Manager with customer that have a demand in excess of 750 kW or that have a 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 April 2009 SAAMS started being charged a rate of$0.00574 per Kilowatt-hour for an energy charge and $10.25 per Kilowatt for a demand charge. In January 2012 the Sealife Center started with an electric rate of$0.00891 and a demand rate of$12.86. The proposed rates are based on the special contract which expires in December 2013. The following suggested rates are calculated by charging an estimated Consumer Price Index (CPI) of 2.6% above the amount for December 2013 and an additional estimated CPI of 2.6% above the December 2014 amount. The suggested rate in energy and demand for SAAMS is $0.011594/kWh and $16.79/kW respectively for 2014 and$0.011895/kWh and$17.22/kW for 2015. Any other charges or rates that may be applicable will follow the Large General Service rate class. The following table shows the 2013 rate as a basis per month, followed by the approximate amounts SAAMS will pay in 2014 under the Large General Service or by Special Contract. Also included is the percentage over the 2013 rate. Signing SAAMS to a special contract will increase their electric bill by approximately 0.92%and an approximate dollar amount of$447.36 per month and$5,368.32 per year. If the Sealife Center pays the Large General Service rate the percentage increase would be 68.07% and an increase to annual revenue of$397,339.08. SEALIFE CENTER Current Large General S 2014 Special Contract 2014 Oct-I3 Estimated Monthly Bill Electric Operations&Infrastructure Fee $38.21 $39.20 $39.20 Energy charge(rate) $0.01 130 $0.09836 $0.011594 Avg cust kWh 433,440 260,064 * 433,440 $4,897.87 $25,580.58 $5,025.22 $0.05906 173,376 * $10,238.99 Energy charge $4,897.87 $35,819.57 $5,025.22 Fuel Charge(rate=$0.072536 @ 10/13) $0.072536 $31,440.00 $31,440.00 $31,440.00 Demand Charge(per kW) $16.36 $19,28 $16.79 Avg Cust kW 750 750 750 $12,270.00 $14,458.91 $12,589.02 Total Electric per month $48,646.09 $81,757.68 $49,093.44 Increase per month: $33,111.59 $447.36 Percentage overall increase: 68.07% 0.92% *based on average split:actual may vary -,-4041111 Approved by Finance Department: \ ) 40. ATTORNEY REVIEW: Yes No X RECOMMENDATION: (c. p�) The City Council pass resolution 2013- , giving the City Manager authorization to enter into a special contract with Seward Association for the Advancement of Marine Science for special electric rates for the SeaLife Center facility.