HomeMy WebLinkAboutRes2017-055Sponsored by: Hunt
CITY OF SEWARD, ALASKA
RESOLUTION 2017-055
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
TWO-YEAR SPECIAL ELECTRIC RATE CONTRACT WITH THE
SEWARD ASSOCIATION FOR THE ADVANCEMENT OF MARINE
SCIENCE (SAAMS), ESTABLISHING A TRANSITION TO LARGE
GENERAL SERVICE RATE CLASS BY 2025
WHEREAS, SAAMS and the City are parties to the Agreement for Lease, Operation and
Maintenance of the Alaska SeaLife Center, with SAAMS operating the Alaska SeaLife Center and
providing fiill-time jobs in the community; and
WHEREAS, job creation, job retention, and promotion of marine research and economic
development are important to residents of Seward, and economic stability of the Alaska SeaLife
Center is important to the City, as owner of the facility; and
WHEREAS, the initial rate class of the Alaska SeaLife Center was the industrial rate class
which was eliminated in 2010, resulting in the creation of a Special Contract with SAAMS to
transition toward the Large General Service rate class due to the actual electrical demand being
higher 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 City Council has recommended a ten-year glide path to migrate SAAMS to
the Large General Service rate class, with the initial two years of that transition occurring in 2016
and 2017, and with the proposed Special Contract covering the period 2018 through 2019, leaving
six remaining years before reaching the ten-year transition to LGS rate.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City Manager is hereby 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
CITY OF SEWARD, ALASKA
RESOLUTION 2017-055
January 1, 2018.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 9°i day of
October 2017.
THE CITY OF SEWARD, ALASKA
can Bardarson, Mayor
AYES: Casagranda, Keil. Squires, McClure, Slater, Bardarson
NOES: None
ABSENT: Altermatt
ABSTAIN: None
ATTEST:
Brenda J. Ballou, MC
Acting City Clerk
(City Se4,- OF SEIV
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Council Agenda Statement
Meeting Date: October 9, 2017
To: City Council
Through: James Hunt, City Manage
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 Alaska SeaLife Center
BACKGROUND & JUSTIFICATION:
As of January 1, 2010, the City of Seward electrical tariff no longer had an `Industrial Rate.'
Council directed Industrial Rate users be transitioned into the `Large General' service 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. The
special contract applies only to the SeaLife Center site, and not to any other operations of SAAMS,
as the City is owner of the facility.
The proposed rates are based from the special contract which expires in December 2017. The
following suggested rates were calculated in 2015 and progressively move the SeaLife Center
towards the Large General service rate by charging an estimated Consumer Price Index (CPI) of
2.1 % plus 2% above the amount of the expected December 2017 rate for the third year (2018). 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.
INTENT:
To sign a special contract with SAAM S for a special electric rate for three years, establishing a glide
path toward full LGS rate by 2025.
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: Paye 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 requirement 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 2017 rates for
the SeaLife Center are an electric rate of $0. 02728 per kilowatt/hour and a demand rate of $21.27
per kilowatt. This compares to the current LGS rate for 2017 of $0.11454 for the first 200 kilowatt
hours/kilowatt and $0.06713 for additional kilowatt hours.
The suggested rate in energy and demand for SAAMS respectively is $0.03935/kWh and $21.91/kW
for 2018, $0.04816/kWh and $22.54/kW for 2019, $0.05905/kWh and $23.18/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 2025 under the proposed Special Contract and subsequent
contracts.
Signing SAAMS to a special contract will increase their electric bill in year 2018 by approximately
11.62% and an approximate dollar amount of $9,527 per month. 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 around 52.59% and an increase to annual revenue of approximately $306,547.11.
Approved by Finance Department: Alz�
ATTORNEY REVIEW: Yes No X
RECOMMENDATION:
The City Council pass resolution 2017- 055, authorizing the City Manager to enter into a special
contract with Seward Association for the Advancement of Marine Science for special electric rates
for the SeaLife Center facility, establishing a glide path toward the LGS rate class.
This Special Contract for Electric Rates ("Contract") is between the City of Seward
("C�ty")i whose address is P.O. Box 167, Seward, Alaska 99664 and the Seward
MTft&rT Ft I
1329, Seward, Alaska 99664.
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 stab,illity of operation of the Alaska SeaLife Center is
necessary to avoid requiring the City to assume operation of the facility; and
WHEREAS, after starting the industrial rate, the actual demand for electric power 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 has recommended that the City Council recognize
the unique power requirements of SAAMS for operating and maintainingi the Alaska
SeaLife Center for the City.
The parties hereby agree as follows:
Section 1. Effective Date and Term. This Contract shall become effective
January 1, 2018, upon approval by the City Council for the City and execution by each
party. This Contract shall remain in effect until December 31, 2020. Upon termination or'
expiration SAAMS shall resume a large general Class, of Service, as described in the City's
tariff, without further action by the parties.
Section 2. Rate Adjustment, Throughout the term of this Contract SAAMS shall
be entitled to electrical rates and charges as described below:
TariffRates stated in the City of Seward Electric
applicable w #; . Genlieral Service shall
appily except as fol'lows..
M the extent Chugachor any alternative wholesaleprovider,
rates increases energy aind demand rates they will' be directly and cumulatively added to the
Energy Chiarge:
From January 1, 26118 to December 31, 2618 the rate shall be $0.63338 per kilowatt hear
(kWh)
From January 1, 2919 to December 31, 2019 the rate shall be $0,04106 per kilowatt hour
(kWh)
From January 1111, 2620, to December 31, 26,26 the rate shall be $0,04927 per kilowatt hour
(kWh)
Demand Charge:
From January 1, 2618 to December 31, 2018 the rate shall be $21.09, per kilowatt (M)
From January 1, 2619 to December 31, 2019 the rate shall be $21.72 per kilowatt (M)
From January 1, 2626 to December 31, 2026 the rate shall be $22.36 per kilowatt (kW)
The miin,imum monthly Demand shall be 750 kW.
Rate changes established by Chugach Electric Association (CEA) or any fuiture wholesale
provider to the City of Seward through the Regulatory Commission of Alaska (RCA) shall
be passed directly through, to SAAMS without any markup from the City and shall increase
each of the rates listed) above.
Section 3. Requirements. SAAMS represents that it currently faces financial
difficulties and is looking for ways to reduce its costs while continiuing to operate and
maintain the Alaska SeaLife Center to a standard that is comparable to other well -operated
and well -maintained marine research facilities throughout the United States. It is expressly
agreed and understood that the rate adjustments described in Section 2 of this agreement
shall apply only to the Alaska SeaLife Center and shall not apply to any other properties or
operations of SAAM'S. Electric service is subject to interruption by the City when peak
demand is in excess of what the City can generate.
Section 4. Assignment. This Contract shall not be assigned.
Section 5. Amendments. Any amendments, including extension of term, rate
adjustments, or other provisions of this Contract, shall be agreed to in writing and signed
by both parties following approval by the Seward City Council'.
Executed this day of 2617.
James Hunt
City Manager
Johanna Kinney, CMC
City Clerk
John Foutz, Utiliity Manager