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Home My WebLink AboutRes2015-110 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2015-110 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RESCINDING RESOLUTION 2015-087 AND 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-time 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 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,Icicle Seafoods prefers a two-year contract with an automatic renewal for an additional two-years and adjusting to large general service on the fifth year. WHEREAS, the administration recommends that the City Council approve the special contract with Seward Fisheries based on current multi-million dollar plant expansion,which would make it difficult to move to large general service rate class in the short term. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. Rescind resolution 2015-087 for special contract for electric rates with Icicle Seafoods. Section 2. The City Manager is authorized to enter into a Special Contract for Electric Rates ("Contract") in substantially the form presented at this meeting. Section 3. The recitals stated above are incorporated herein by reference as findings of the City Council. Section 4. This resolution shall be effective immediately. The contract shall be effective January 1, 2016. CITY OF SEWARD,ALASKA RESOLUTION 2015-110 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of December, 2015. THE CITY OF SEWARD,ALASKA can Bardarson, Mayor AYES: Casagranda, Keil, Squires, Butts, McClure, Altermatt, Bardarson NOES: None ABSENT: None ABSTAIN: None ATTEST: Jo anna Ki Mr MC .• Clerk (City Seal) 1�.®•�`®..eea®@ e7 q ter. OF _'V.,r_ es> trOS � as Council Agenda Statement Meeting Date: December 14, 2015 4 o sE� To: City Council 4‘. Through: James Hunt, City Manager 1 s+kk 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 strong and vibrant seafood industry in the community. Seward Fisheries is undertaking a multi-million dollar expansion project,making it difficult in the short-term,to maintain profitability if required to pay the large general service rate in the immediate term The proposed rates are based from the special contract which expires in December 2015. The following suggested rates are calculated to bring Icicle Seafoods into the large general rate class within five years.The electric and demand rates are calculated to be approximately equally,based on monthly dollar average,applied over the years 2016 to 2020 to match a projected Large General rate. Percentage spikes were levelized slightly. After further discussions with Icicle Seafoods management,administration is submitting a two-year contract with an automatic two-year renewal. The rates remain unchanged and Icicle would still be stepping into a large general service rate at year five. INTENT: To develop an escalating rate structure for Icicle Seafoods, Inc. which will bring them up to the Large General Service rate class within the next five years. 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 customers that have a demand in excess of 750 kW or that have unique lob 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. In January 2012 Seward Fisheries started with an electric rate of$0.00891 and a demand rate of$12.86. The end-of-year 2015 rates for Icicle Seafoods 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 Seward Fisheries respectively,incorporate estimated CPI increases intended to bring them to LGS rate class within five years, and are as follows: $0.02812/kWh(1st 200 kWh/kW), $0.03729 (Additional kWh) and$19.83/kW for 2016 and $0.03877/kWh (1St 200 kWh/kW), $0.05707 (Additional kWh) and $20.49/kW for 2017 and $0.04943/kWh (1st 200 kWh/kW), $0.07684 (Additional kWh) and $21.14/kW for 2018 and $0.06008/kWh (1st 200 kWh/kW), $0.09662 (Additional kWh) and $21.80/kW for 2019. The minimum monthly billing demand shall be 750 kW. Any other charges or rates that may be applicable will follow the Large General Service rate class. The attached table shows the current 2015 rates as a basis per month, followed by the approximate amounts Seward Fisheries will pay in 2016 through 2019 by the recommended Special Contract. Also included is the estimated percentage and dollar increase per month. The proposed special contract with Icicle Seafoods will increase their electric bill by approximately 10.13%and an approximate dollar amount of$4,958.92 per month and$59,506.99 per year.If Icicle Seafoods were to instead pay the Large General Service rate in one year the percentage increase would be 56.44%and an increase to annual revenue of$274,651.43. Approved by Finance Department: s Liteh ATTORNEY REVIEW: Yes No RECOMMENDATION: The City Council rescind resolution 2015-087 and pass resolution 2015- 1 (0 authorizing the City Manager to enter into a special contract with Icicle Seafoods for special electric rates for the Seward Fisheries location. Current Special 2016 Special 2017 2015 Monthly Bill Electric Operations&Infrastructure Fee $40.22 $41 15 $42.13 Energy charge(rate) $0.01746 $0.02812 $0.03877 Avg.cust kWh 304,200 182,520 182,520 $5,311.33 $5,131.73 $7,076.67 $0.03729 $0.05707 121,680 121,680 $4,537.87 $6,944.03 Energy charge $5,311.33 $9,669.61 $14,020.70 Fuel Charge(rate=2014 average) $0.060663 $18,453.68 $18,453.68 $18,453.68 Demand Charge(per kW) $19.18 $19.83 $20.49 Avg.Cust kW 873 873 873 $16,744.14 $17,315.08 $17,886.02 Total Electric per month $40,549.38 $45,479.52 $50,402.54 Increase per month: $4,930.14 $4,923.02 Percentage overall increase: 12.16% 10.82% *based on average split;actual may vary Special 2018 Special 2019 Special 2020 $43.23 $44.35 $45.51 $0.04943 $0.06008 $0.07074 182,520 182,520 182,520 $9,021.60 $10,966.53 $12,911.46 $0.07684 $0.09662 $0.11780 0.1178 I 121,680 121,680 121,680 $9,350.20 $11,756.36 $14,334.45 $18,371.79 $22,722.89 $27,245.92 $18,453.68 $18,453.68 $18,453.68 $21.14 $21.80 $22.45 873 873 873 $18,456.97 $19,027.91 $19,598.85 • $55,325.67 $60,248.83 $65,343.96 $4,923.13 $4,923.16 $5,095.12 10.71% 9.77% 9.21% 1 c .