Loading...
HomeMy WebLinkAboutRes2015-088 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2015-088 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 electricpower 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, 2016. CITY OF SEWARD,ALASKA RESOLUTION 2015-088 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 26th day of October 2015.. THE CITY OF SEWARD,ALASKA J• ,n Bardarson, Mayor AYES: Keil,Butts,Altermatt, McClure,Bardarson NOES: None ABSENT: Squires, Casagranda ABSTAIN: None ATTEST: 0 - J o hanna Ki gir CMC ity Clerk (City Seal) 0pp860@H.3Csa.' .••°�OFD ^ ®° s, ke aT *** • SE i, Council Agenda Statement e of .... ................................ Meeting Date: October 26,2015 u To: City Council �... 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 no longer had 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. The proposed rates are based from the special contract which expires in December 2015. The following suggested rates are calculated by charging an estimated Consumer Price Index (CPI) of 2.3% plus 2% above the amount of the expected December 2015 for the first year (2016). The suggested rate for the following years is calculated to bring SAAMS to approximately the same rates as large general service in electric and demand by the year 2025. The electric and demand rates are calculated to be approximately equally applied over the years 2017 to 2025 to match a projected Large General rate. Percentage spikes were levelized slightly. A five year contract is more appropriate than a ten year contact since future rates are assumed and will have to be adjusted. 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. The projected additional monthly revenue to the electric department is shown on the attached table. 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. The end-of-year 2015 rates for the Sealife Center are an electric rate of$0. 017460 per kilowatt/hour and a demand rate of$19.18 per kilowatt. The suggested rate in energy and demand for SAAMS respectively is$0.01821/kWh and$19.82/kW for 2016, $0.02568/kWh and $20.45/kW for 2017, $0.03338/kWh and $21.09/kW for 2018, $0.04106/kWh and $21.72/kW for 2019, $0.04927/kWh and $22.36/kW for 2020. Any other charges or rates that may be applicable will follow the Large General Service rate class. The following table shows the 2015 rate as a basis per month, followed by the approximate amounts SAAMS will pay in 2016 through 2020 under the proposed by Special Contract. Signing SAAMS to a special contract will increase their electric bill in the first year by approximately 1.70% and an approximate dollar amount of$802.47 per month and$9,629.67 per year. For each additional year the increase will average 6.71%with a high of$5,683.68 and a low of $3,715.25 per month. If the Sealife Center increases their rate to the Large General Service rate in one year the percentage increase would be 66.39%and an increase to annual revenue of$384,716.79. Approved by Finance Department: ATTORNEY REVIEW: Yes _ No RECOMMENDATION:, The City Council pass Resolution 2015-088,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.