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HomeMy WebLinkAboutRes2015-089 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2015-089 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING THE ELECTRIC RATES AND CHARGES, IMPLEMENTING SEASONAL RATES AND FREEZING SMALL GENERAL SERVICE RATES FOR 2016 AND 2017 WHEREAS, the Seward City Council conducted extensive public rate review work sessions for the purpose of addressing critical infrastructure and operational needs of the Electric Utility;and WHEREAS, the Council finds that it is in the financial interests of the Electric Utility to increase the electric tariff by the projected Consumer price index of 2.3%in 2016 and 2.4%in 2017 with the exception of Small General Service rate class; and WHEREAS, the Council finds that it is in the best interests of the residents and small business owners of the Seward Electric Utility to implement a seasonal rate; and WHEREAS, the Council seeks to incrementally increase rates to customers in order to address the growing infrastructure and operational needs of the electric utility,while avoiding single- year larger rate increases; and WHEREAS, to that end,Council approves changes to the Electric Tariff as attached hereto in"Electric Rates & Charges 2016", effective January 1, 2016; and WHEREAS, the Council further approves changes to the Electric Tariff as attached hereto in"Electric Rates & Charges 2017"to be effective January 1, 2017. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. Effective January 1,2016,the Seward City Council hereby approves the adjusted Electric Tariff rates and charges as substantially presented at this meeting as `Electric Rates & Charges—2016". Section 2. Effective January 1,2017,the Seward City Council hereby approves the adjusted Electric Tariff rates and charges as substantially presented at this meeting as "Electric Rates & Charges—2017". CITY OF SEWARD,ALASKA RESOLUTION 2015-089 Section 3. Effective January 1, 2016 the Seward City Council hereby approves the added language,in Yard Lights,under Monthly Operations&Infrastructure,which reads"LED equivalent _(1/2 of cost)." Section 4. Effective January 1, 2016 the Seward City Council hereby approves the added language which reads"* Summer is defined to mean the period from May 1 through October 31 with Winter defined as the remainder of the year" and the corresponding rates. Section 5. This resolution is effective immediately upon passage. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 26th day of October, 2015. THE CITY OF SEWARD,ALASKA ce.(),x) &LeieVV1, 14.J Jan Bardarson,Mayor AYES: Keil, Butts,Altermatt, McClure, Bardarson NOES: None ABSENT: Squires, Casagranda ABSTAIN: None Al EST: r- Jo hanna KZ!, CMC ityClerk (City Seal) of seve,„ ® ••' C, �e °v9• O .1 I SEAL °w 0 s • o g i a 1 ••• iii�°° Council Agenda Statement Of Meeting Date: October 26, 2015 v�,�� 16 From John Foutz,Manager Electric Utility q % Agenda Item: Amending Electric Rates and Charges, implementing seasonal rates and freezing Small General service rates for 2016 and 2017. BACKGROUND & JUSTIFICATION: At the recommendation of the contracted electric financial engineer, Mike Hubbard of Financial Engineering Company, it has been determined that electric rates will be increased effective January 1, 2016 by the projected Consumer Price Index (CPI) of 2.3 percent. In addition, rates will increase,by the projected CPI, an additional 2.4 percent effective January 1, 2017. This proposed tariff does not include a fee for the purpose of recovering costs associated with individuals who elect to turn off power seasonally. However, if the City Council desires to amend the tariff at this time to recover the lost revenue associated with the monthly infrastructure fee,we would propose the following amendment: Add a service as follows: "Reconnection to approved existing meter installation based on seasonal shut-off" (defined as shut-off for a period exceeding one month for seasonal purposes). Zone I= $127.33; Zone II=$159.16; Zone III= $191.00. The basis for this recommendation is to charge the customer the approximate monthly infrastructure fee multiplied by seven months. This methodology follows that used in the water tariff to address the adverse impact of seasonal turn-offs to that utility. During previous budget work sessions the Seward City Council chose to implement seasonal rates to the Residential and Small General Service rate classes. The Harbor Department, which is categorized as Small General but is another City department,will continue with an annual rate. This is meant to provide year-round residents and small business with some rate relief during the winter when economic activity is minimal. Also during the work sessions the Seward City Council chose to freeze the Small General Service Energy and Monthly Operations & Infrastructure Charges since, as a group, they are supporting more than their allocated cost of service. To offset this decrease in revenues to the electric department, the two special contract customers, whom are paying less than their allocated cost of service, will be gradually stepped into large general service rate class over five and ten years respectively. Finally, to promote the use of LED lighting, a cost line was added to the Yard Lights section under Monthly Operations &Infrastructure. Since LED lighting costs less to operate, if switched out,the savings will be passed along to the^"a*^finer. INTENT: The purpose of Resolution 2015-089 is to modify the Electric tariff to sufficiently recover projected expenses to the Electric Enterprise fund for fiscal years 2016 and 2017. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan( 1. 3, 3. 7. 3. 1, 3. 7. 3. 2): Continue to upgrade 1 and expand utilities to meet existing needs and encourage future X development. Expand customer base within the Seward Electric Utility area as a means to reduce energy costs and improve services. 2 Strategic Plan:The mission of the City of Seward government is to X provide quality leadership and economic wellbeing of its citizens 3. Other (list): X FISCAL NOTE: The 2.3%increase in 2016 is expected to generate approximately compensate for the slight dip in overall sales based on kWh. The 2.4%increase in 2017 is expected to compensate for a projected slight loss in overall sales. Those added revenues are crucial to the ability of the Electric Fund to cover the cost of some of its critical capital needs. Approved by Finance Department: ‘94 4/Latile. ATTORNEY REVIEW: Yes RECOMMENDATION: Seward City Council approve Resolution 2015-089, amending the Electrical Rates and Charges tariffs for 2016 and 2017.