HomeMy WebLinkAbout09252018 City Council Work Session - Laydown - Prep Email for TranscoOcq 25
Brenda Ballou
From: John Foutz
Sent: Tuesday, September 2S, 2018 1:16 PM
To: Jessica Fogle; Brenda Ballou RE : V?.(n/1 S Co
Cc: Jeff Bridges; Brennan Hickok; GeNeil Flaherty
Subject: FW: Prep for next week.
Hi Jessica,
The email below can be included in the information to council. The questions below were from council with responses
from ATC.
Thank you,
John Foutz
Electric Utility Manager
From: Myers, Eric [maiIto: emyers@atcllc.com]
Sent: Tuesday, September 18, 2018 11:16 AM
To: John Foutz Ufoutz@cityofseward.net)
Subject: Prep for next week.
Good Afternoon, John!
Thank you again for the opportunity to meet with your Council on September 25. I'll be arriving in Alaska the morning of
September 24 and will be in Fairbanks Monday night for the GVEA Board Meeting. I'll plan on being in Seward some
time after noon on the 25`h and available for any pre -meetings you might recommend. I'm also willing to carpool with
you Tuesday if you're already in Anchorage as I'll plan to head back after the council meeting to be at the RCA
Wednesday Morning. Additionally, Dan Chay and David Thomas of the HEA Board said they plan to be in attendance in
case the Council had questions re: Transco formation impact on the interest of potential buyers.
I've taken a look at the questions you sent over last week and offered some suggested responses. Could we schedule
some time this week to go over these and make final plans?
Thanks,
-Eric
1. Would selling the transmission assets require a vote of the public?
A: Sale of the assets may be necessary to the extent there is existing municipal, tax-exempt debt on the transmission
assets and/or they are pledged as collateral for other tax-exempt municipal bonds. If the assets do need to be
transferred to the Transco to meet debt covenants, the process would be governed by the City of Seward's Code of
Ordinances, Chapter 7.05. However, the decision to sell or transfer in exchange for equity Seward's transmission assets
would only be necessary upon certification of the Alaska Railbelt Transco by the Regulatory Commission of Alaska. Once
the Transco is approved by the RCA, the City of Seward would have one of two options:
Participate as a Member of the Transco:
City of Seward Electric System has a representative on the Transco Board of Directors
o Subject to City approval, transmission assets are transferred into the Transco in exchange for cash
and/or equity in the Transco, if required by City debt/bond covenants. Asset Transfer may be delayed to
accommodate necessary City Council disposition procedures.
• Opportunity to Participate in Voluntary Capital Calls and earn an RCA -regulated return on any Transco
Equity Investments. Transco will be capitalized on a 60:40 Debt to Equity ratio, and equity capital will be
contributed by the participating Transco members on a voluntary basis. Non -participating members'
shares will be offset by additional capital calls to participating members.
o Interconnect to the Railbelt Transmission Network and its associated loads and generators at an
established network tariff rate, relative to Seward's percentage of total network load. The City of
Seward and/or is successor utility would have the opportunity to purchase power from and/or sell
power to loads interconnected to the network of Railbelt transmission assets without incremental
transmission cost.
• All transmission asset replacements and improvements, whether in the Seward area or elsewhere,
including compliance with mandatory reliability standards, etc. would be made by the Transco,
removing from Seward the obligation to maintain and capitalize transmission -voltage assets
o The City of Seward operations and maintenance personnel and/or contractors can elect to maintain the
transmission -voltage assets in the Seward service territory as contractors to the Transco.
Purchase Transmission Service as an Interconnected Load
No participation in Transco governance
c; Interconnect to the Railbelt Transmission Network and its associated loads and generators at an
established network tariff rate, relative to Seward's percentage of total network load. The City of
Seward and/or is successor utility would have the opportunity to purchase power from and/or sell
power to loads interconnected to the network of Railbelt transmission assets without incremental
transmission cost.
c City of Seward retains responsibility to maintain, replace and/or improve transmission voltage assets,
including compliance with mandatory reliability standards, asset replacement, etc.
2. How long of a process is this going to take?
The RCA must act upon a complete application for Certificate of Public Convenience and Necessity within 6 months of
receipt. Assuming an application was made by the end of 2018 and was deemed complete by the RCA, the CPCN could
be issued as early as July, 2019.
3. How does selling the utility affect this process?
This process can take place in parallel with the sale of Seward's utility assets. Substantial information about the Transco
implementation is in the public record, and additional information can be provided to potential purchasers as part of
due diligence.
Spam
Phish/Fraud
Not seam
Forget previous vote