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HomeMy WebLinkAbout02192020 PACAB Work Session PacketPORT &COMMERCE ADVISORY BOARD WORK SESSION PACKET Topic: Review the February 3, 2020 Council work session on electric rates and utilities. Wednesday, February 19, 2020 at 12:00 p.m. Council Chambers Port & Commerce Advisory Board February 19, 2020 TABLE OF CONTENTS Ordinance 2019-016, Amending City Code Section 14.15 — Electricity, Article 415 — Interconnection Requirements, Procedures, And Application Process For An Alternative Power Source Less Than 25KW. Enacted October 28, 2019 Port & Commerce Advisory Board Minutes May 15, 2019 PACAB recommends to council approving utility rebates for heat pump installs at 50150 or $1, 700. Rural Energy Savings Program Affordable loans to help consumers implement cost-effective, energy efficient measures. Port & Commerce Advisory Board 2020 Priorities Electric Department PowerPoint Presentation January 31, 2020 Letter from Citizen, Phil Kaluza CITY COUNCIL WORK SESSION PACKET Topic: Discuss Electric Department rates, classifications, utility infrastructure management, current contract regarding power factor adjustment penalty, current status/process of selling electric utility, update on current demand meter project, update on the air-to-air project, clarifying billing, and timeline or schedule for pole replacement. Monday, February 3, 2020 at 6:00 p.m. Council Chambers City Council Work Session February 3, 2020 TABLE OF CONTENTS Ordinance 2019-016, Amending City Code Section 14.15 — Electricity, Article 415 — Interconnection Requirements, Procedures, And Application Process For An Alternative Power Source Less Than 25KW. Enacted October 28, 2019 Port & Commerce Advisory Board Minutes May 15, 2019 PA CAB recommends to council approving utility rebates for heat pump installs at 50150 or $1, 700. Rural Energy Savings Program Affordable loans to help consumers implement cost-effective, energy efficient measures. Port & Commerce Advisory Board 2020 Priorities Sponsored by: PACAB Introduction Date: October 14, 2019 Public Hearing Date: October 28, 2019 Enactment Date: October 28, 2019 CITY OF SEWARD, ALASKA ORDINANCE 2019-016 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING CITY CODE SECTION 14.15 — ELECTRICITY, ARTICLE 415 — INTERCONNECTION REQUIREMENTS, PROCEDURES, AND APPLICATION PROCESS FOR AN ALTERNATIVE POWER SOURCE LESS THAN 25KW WHEREAS, PACAB's responsibilities include providing input tca the City Council o)n policy and procedural rnatters involving the establishment and continuance ofcoo nmercial activity', improving the qUality of late and protecting the pubhe's best interest and performing other duties as red. Uested by the ( I ity Council; and WHEREAS, in December, 2017, Council (firectcd 11ACAB to explore options f'or alternative energy in Seward, and WHEREAS, the rulesn fOr interconnection are (X re established by S" 14J5A L11111/11,11/1", Interconnection with ("ustomer-Owned Alternative P0WC1- SOU cc Generation Equipment, - and WHEREAS, PACAB believes that interconnection of customer -owned alternative power source generation equiptnent with the City's electrical distribution system is a key cornponeril of responsible energy policy; and WHEREAS, the ("'ode was last update(] in 2014 by Ordinance 2014-003 ain ordinance of the City (7ouncil of the City ofSeward, Alaska, amendingTitle 14 cat" the City's ('ode of Ordinances to provide for interconnection of small renewable energy sources to the City's, electrical distribution system; since this section of code was enacted in 2014, no homeowners in Seward have been able to SUceessfully connect to the C"ity's electrical distribution system; and WHEREAS, amending the code to remove certain hardware requirements WOUid lessen the financial and administrative burden of interc(,,)nnec6on while retaining compliance with all applicable codes and providing lor the safety of the ("ity's Flectric DeparttTlent cinployces and equipment-, and WI-IEREAS, these changes would bring Seward City Code in line with other local and national utility intercolincction policies. CITY OF SEWARD, ALASKA ORDINANCE 2019-016 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA HEREBY ORDAINS that: Section I. Seward City Code TITLE 14.15.415 — INTERCONNECTION REQUIREMENTS, PROCEDURES, AND APPLICATION PROCESS FOR AN ALTERNATIVE POWER SOURCE LESS THAT 25KW is hereby amended as follows: (Deletions are Bold Str4kethr-oughs; Additions are Underlined Bold Italics.) 14.15,415 - Interconnection requirements, procedures, and application process "ran alternative power source less than 5kw. (a)� Application. In order to proceed with interconnection of an alternative power source, the custorner must complete an application for a new/rework, of electrical service and ail interconnection application. The customer shall also provide equipment specifications, protection arrangements, and design drawings to the city for review. (b) Compliance with codes and standards, Interconnections shall not be fueled by nor connected to any non -qualified alternative energy sources. Interconnection customers, shall comply with all applicable local, state, and federal codes such as building codes, National Electric Code (NEC), and National Electrical Safely Code (NESC) for file installation of an interconnection. Once operating, the city reserves the right to require the custorner, at the customer's expense, to provide corrections, modifications, or additions to the interconnection as required or recornmended by government or industry regulations, and standards. "I'lle city will provide written documentation of the necessary clianges and a time frame to complete. If the customer fails to comply with the changes in the specified time fi-arne, the city will open and lock the interconnection. (e-y, .. ........... 14 --- maintain---the—exisfing•ei, ........ systea s--"wer .... q.ua1ft.y-.--a.nd --- retiability-,--only- one M.- e r- v .., ­.. �11� Wreoffneetion P distr-ibu4ion4fan*former-wfll4w-mAhorifed-. W (c) .PoWeEAa Ij t-Y all,d reliability. -The interconnection with the electric system shall not cause any reduction in the quality and reliability of service provided to other city customers. There shall be no generation of abnormal voltages or voltage fluctuations, and the harmonic content of the interconnection output must be below that level which would cause interference with other customer loads, other utilities, or city facilities and equipment. To minimize interference, the city requires the interconnection to meet the power quality standards presented in accordance with section 10, Recommended Practices for Individual Consumers of the latest Institute of Electrical and Electronics Engineers (IEEE) Standard 519, IEEE Recommended Practices and Requirements for I larmonic Control in Electrical Power Systems. In addition to rilecting all requirements identified in this document, the interconnection shall comply with all city ordinances and resolutions, and latest IEEE 1547, IEEE, Standard CITY OF SEWARD, ALASKA ORDINANCE 2019-016 Conformance Test Procedures for Equipment Interconnecting Distributed Resources with Electric Power Systems. fe)-(d) Testinp!,. Prior to initial energization of the interconnection, an inspection and tests will be performed by both the interconnecting customer and city personnel. "I'lle purpose of the inspection and testing will be to determine if the generator and related equipment of the interconnection meets the minimum requirements described by IEEE 1547, IEEE 519, and UL, 1741, Underwriter Laboratories Inc., Standard for Inverters, Converters, and Interconnection Systern Equipment for Use With Distributed Energy Resources. Based on the inspection, the city may elect to accept the installation and energize the interconnection. In the event that discrepancies are noted between the certified equipi-nent, and drawings previously provided to the city and the Customer's system inspected by the city, retesting may be required. Tile custorner shall be solely responsible for all costs associated with any retesting. to (e) City ins pcction and customer inaintenance records. The customer shall maintain the interconnection in good working order. The interconnection (i.e., generator and associated equipment) is subject to inspection and retesting by the city upon reasonable notice each year after the unit is placed in service. The customer will assume full responsibility for the routine rilainteriance of the interconnection and associated protective devices. The customer shall maintain accurate records of all maintenance activities performed. These records shall record the date and time, the person(s) who performed the activities, and a brief" description of the work. These records shall be made available to the city for inspection at all times upon reasonable notice to the customer. Failure to comply may result in the disconnection of the equipment or additional testing as Outlined in subsection (e) above. The customer is solely responsible ror all costs associated with any inspections, and testing required. (g) (f) Visible, lockable disconnect switch or electric break. An accessible, visible, lockable disconnect switch or electric break, whichever is applicable, is to be provided by the customer which is lockable in the open position only. This switch rnust be appropriately labeled, when locked in the open position for any of the following conditions, ri,iay be unlocked only by city Personnel. Tile city will lock the switch in the open position under the following circurristances: (1) it" it is necessary for the protection of line crew personnel when working oil de - energized circuits during a system emergency-, (2) If inspection of the interconnection reveals a hazardous condition or a lack of proper rnaintenance; (3) If the interconnection interferes with other customers, other utilities, or with the operation of the city's distribution systern; (4) If the city determines that the interconnection has generated power from a iloll- qualified altemative energy resource; or (5) For general rnaintenance ofthe city's distribution system. CITY OF SEWARD, ALASKA ORDINANCE 2019-016 The city will provide at least five days' notice, unless the circumstances warrant shorter notice, before locking the switch open for general maintenance as provided in condition (v) above. (h) (1!,) Metering/billing.—The customer shall install and maintain a kilowatt-hour rileter, or meters, at the interconnection, capable of registering the hi -directional flow of electricity at tile point of interconnection at a level of accuracy that meets all, applicable standards, regulations, statutes, and ordinances. The meter(s) may measure such parameters as time of delivery, power factor, voltage, and Such other parameters as the city shall specify. The customer shall provide space for metering equipment as specified by the city with the location of the meter(s) to be approved by the city. The customer is solely responsible fcrr all costs associated with the purchase, installation, and maintenance of all equipment required by the city in order to properly meter the interconnection, 0) (h) Nominal voltaXes_and , hasThe generator narneplate voltage must be the same as one of the nominal voltages supplied by the city. The nominal voltages are 120/240 V single- phase, 1,20/208 V three-phase, and 277/480 V three-phase, If the generator nameplate voltage is different from the city's nominal voltages, the customer must supply a dedicated generator transformer that will provide the required nominal voltage. The required transtim-ner connection, unless otherwise specified, is grounded wye-grounded wye. 0) (i) Fault current increase and upgrading equipment. In general, installation of a new generator will increase tile fault current level at the customer's electrical facility. 'rhis may require upgrading some of the customer's equipment, 'file customer will assume full responsibility of upgrading customer's own equipment. 00 0), 5�tLr In general, induction generators start as, motors; also, synchronous generators may be designed to start as motors. The customer -owned generator starting as a motor shall meet the motor starting requirements prescribed by the city. The city may require the customer to provide, at customer's own expense, special or additional starting equipment. (1) (k) Qjgq There are additional safety concerns that shall be addressed when considering circuit grounding of the interconnection interconnected to the city"s utility system. To ensure proper grounding of the generating facility, the customer shall follow all applicable national, state, and local codes regarding grounding for applicable generating installations, (m) (1) S rachrcrrmi aticrn, The interconnection must be synchronized with the city's utility system at all times and the customer shall be responsible for the cost and maintenance of` all synchronization equipment. (at) (n) Automatic disconnection, and Tillie- Dely yCd Automatic Reconnection. The interconnection shall be designed to automatically disconnect and lockout when the city"s service is interrupted for any reason. The-deviee­s�� CrrY OF SEWARD, ALASKA ORDINANCE 2019-016 have a manual res Automatic Rreconnection of the interconnection to the city's utility system shall be done only on hot-bus/hot-line/sync-check. Following verbal authorization by the eleetrie manager or the designeeF­An automatic reclose of the interconnection breaker (or interrupting device) is permitted once utility power has been restored a minintum qfflve minutes. (o) (n)Single phasim,),, protection. The customer is advised that a phase -unbalance disturbance on the city's utility system can result in overheating of" the interconnection. A tiegative-sequcnce- type relay (current or voltage) could be necessary to initiate tripping under phase -unbalance conditions and may also be used to block closing of the autornatic disconnecting, device if the city's utility systern is single -phased. (0 (o) Generating facility protection. The custorner is fully responsible for the protection of the generator and all of its associated equipment. Protection should be provided fior the custorner's own equipment failures, faults, and other disturbances on the city's utility system. (q) (p) Fault detection and automatic isolation. To prevent an interconnection frorn supplying current to a fault on the city's utility system, the interconnection shall be equipped to provide isolation ftorn the city's utility system for any fault occurring on the city"s utility system. Ilie automatic isolation shall be done prior to the city's breaker (or recloser reclosing, and within a reasonable period of time, typically less than two seconds (120 cycles). The customer is solely responsible for all costs associated with the purchase, installation, and maintenance of all equipment required by the city in order to properly isolate the interconnection from the city's utility system for any fault occurring on the city system. (*) (q) Under/over voltage relay, To prevent any hazardous operating conditions, the interconnection shall be isolated from the city's utility system liar any under -voltage (lower than 90 percent of nominal voltage) and over -voltage conditions (higher than 110 percent of nominal voltage) within two seconds (120 cycles). The customer is solely responsible for all costs associated with the purchase, installation, and maintenance of all equipment required by the city in order to properly isolate the interconnection from the city's utility system for any voltage level described above. (0 (r) Under/over frequency rday.To prevent any hazardous operating conditions, the interconnection shall be capable of disconnecting the customer's generation source from the city's utility system for any over- frequency and under-firequency conditions exceeding 60.5 Hz or below 59.5 Hz within 50 milliseconds (6 cycles). The customer is solely responsible for all costs associated with the purchase, installation, and maintenance of all equipment required by the city in order to properly isolate the interconnection from the city's utility system for any frequency deviation described above. (s) Dedicated (list ribution transformer. To ensure reliable service to other city custorners . .......... . ......... . ........ and to minimize all possible problems for other city customers, the electric department nu�v, when it deems it necessmy under the circumstances, require the interconnection shafl to be interconnected to the city utility systcrn through a dedicated -to singlc-customcr distribution CITY OF SEWARDI ALASKA ORDINANCE 2019-016 individual transforiner. Thi§r-----irefnent-4mW-bc-.-wai-ved--by.--the-ek-etr-k-dqw-4nwnt4kr"git written authorizati when ift .Wr-opf M, --A*mnder--- --eireunrAanees. Any cost associated to achieve dedicated -to -single -customer service shall be the customer's sole expense. (t) 5Ltqale- ,pha sei�qtLn facility on throe- hase distribution transformer. A custorner- � cLn— - _g-,, owned single-phase generating facility I OKW or greater shall not be allowed to be connected to a city three-phase distribution transforrTicr. This requirement may be wetived by the electric department through written authorization Pvhen it deems it ap1wopriate under the circumstances. J*) (u) Surge protection. The customer is responsible for the protection of customer's interconnection froin transient surges initiated by lighting, switching, or other systern disturbances. (w) (y) Future modification or expansion. Any future modification or expansion of the interconnection will require a separate review and approval by the city. (Y,) (w) Reservation of rights. The city reserves the right to require additional interconnection requirements for interconnection of alternative power source generating facilities, in order to preserve the safety and integrity of the city's utility systern. (y) (r) ��� f altcrriatie_pq�qj�gg gilergy cliveries.. ... . ... . .. . ........ . .. . ..require-powe-r-sour-ee-.,,I-o 1-e diseonnev, . fro the eity's elee,'Heal -1-stribution system whenever the city is generating its own power. The electric department shall have the right at any time, without liability to, the customer or any other person, to interrupt the alternative power source: (1) When reasonably necessary, in order for the electric department to construct, install, maintain, repair, replace, rernove, investigate, or inspect any equipment: or any part of the electrical distribution systern; or. (2) If" the electric department reasonably determines that interruption or reduction of deliveries or power is necessary because ofa systern emergency, a fiorced outage, force niaJeurc, or other operational considerations. (Ord. No. 2014-003, § 2, 6-9-2014) Section 2. ']"his ordinance shall take effect ten (10) days following its enactment. CITY OF SEWARD, ALASKA ORDINANCE 2019-016 ENACTED BY THE CITY COUNCIL, OF "I'HE CITY OF SEWARD, ALASKA this 28' day of October, 2019. THE CITY OF SEWARD', ALASKA ... ... . ... CZ , Mayor AYES: Baclaan, Osenga, Lane, McClurc, Seesc, Terry NOES: None ABSENT: Butts ABSTAIN: None ATTEST: Lim Brenda J. Ballou, N4MC" City Clerk I I 0�1� qf'Senvard, Alaska Pon and Commerce Ade 4soty Boor. d Minutes May 15, 2019 Volume 3, 3 74 CALL TO ORDER The May 15, 2019, regular meeting of the Port and Commerce Advisory Board was called to order at 12:01 p.m. by Chair Christy Terry, OPENING CEREMONY Harbormaster Regis led the pledge of allegiance to the flag. ROLL CALL There were present: Christy Terry presiding, and Bruce Jaffa Laura Schneider t,yndallacluette Erin Lemas Comprising a quorum of the board; and Absent — Carl Hughes excused Also, Present: Scott Meszaros, City Manager Norm Regis, Harbor Master GeNcil Flaherty, Executive Liaison Suzi Towsley, Council 1,iaison Colby Lawrence excused CITIZENS' COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING Ester Porter with the Coast Guard, Marine Industry Training for Port Security and Sal"'ety. She stated that she is out of the Anchorage Sector and she is here working with the railroad and the cruise ship terminal but she is available to, the city regarding safety and security. Her job is to see how Seward is doing and what if anything needs to be done to improve the port's safety and security. APPROVAL OF AGENDA AND CONSENT AGENDA Motion (Paquette/Schneider) Motion Passed Approval of Agenda and Consent Agenda Lo TIM "7= SPECIA1, ORDERS, PRESENTATIONS AND REPORTS Alaska Railroad Report - Christy Terry submitted electronically, no additional information, Chamber of Commerce Report — Cindy Clock submitted electronically I-larbormaster Report — Norm Regis submitted electronically but added that he asked the fire chief to come in case there were any building code questions based on our agenda. He answered questions regarding the launch ramp progress and about the upcoming Seward Mermaid Festival. Cio� of'Sevvard, A laska Port andConnnerce Advisory Board Mintifes Mail 15, 2019 Volume 3, 375 Administration Report — Scott Meszaros stated he was available to meet with anyone who, is interested, please schedule an appointment. UNFINISHED BUSINESS 7A -Approve December 19, 2018, January 2, 2019, , February 6, 2019, March 6, 2019 and April 3, 2019 minutes. Terry suggested that the approval of the Minutes to be at a meeting in July. NEW BUSINESS 8A - Proclamation in support of Spring Creek Correctional Center Maximum Security Prison. Motion (Jaffa/Paquette) Motion Passed Unanimous Consent 8B - Review and discuss progress toward Alternative Power Source Interconnect Code Revision Information - A Resolution of the Port And Commerce Advisory Board of the City Of Seward, Alaska, Providing A Recommendation To Council To Update Portions Of SCC 14.15.4 Interconnection With Customer -Owned Alternative Power Source Generation Equipment Motion (Terry/Paquette) Motion To Amend (Terry/Jaffa) Main Motion Passed Approve Resolution 2019-003 Amend Resolution 2019-0I03 by striking "at the next possible Council Meeting" to "before the end of October 2019." Yes: Jaffa, Lemas, Terry No: Paquette, Schneider Unanimous Consent 8C - Discuss and make recommendation to Council re: possible rebate credit for Air to Air Heat Pump install Motion (Terry/Lemmas) The Port And Commerce Advisory Board recommends, to council approving utility rebates for heat pump installs at 50150 or $1,700.00. Motion passed Unanimous Consent Ru'ra�l Enerig�y Saivings Pro�gralmi (R,EiSP)i a-UUM "I M The Rural Energy Savings Program (RESP) provides loans to entities that agree to make affordable loans to help, consumers implement cost-effective, energy efficiency measures. This program, authorized by Congress in the 2014 Farm Bill, helps to build a cleaner and more sustainable domestic energy sector for future generations. RESP will help lower energy bills for rural families and businesses and will reduce barriers to investment in energy efficiency projects or activities. 7 Who is an eligible borrower under this program. Eligible applicants include current and former Rural Utilities Service (RUS) borrowers, subsidiaries of current or former RUS borrowers, and entities that provide retail electric service in rural areas. How is RESP, different from the Energy Efficiency a�nd Conservation Loan Program (EECLP)? RESiP offers a lower -cost financing option —a zero percent interest rate; nonprofit organizations, municipalitles and states)i, while EECLP program borrowers are limilted to utillities that serve rural areas; RE�SP offers longier loan terms- 20 years veirsuis 15 years for EECILP loans. How may funds bei used? M 0 4, roMMUMOTIMUMUM, INOMMURWii .................. . . . . . . . . . . . . . . in the annual funding announcement published in the Federal Register. The RUS borrower is eligible to apply for a loan of up to 20 years at a: 01 percent interest rate. (Up to 4 percent of the loan total may be used for startup costs.) The RUS borrower q�ualified coinsumersi. What goverins this program? These loans are made available under the authority of Act of 2002 Q U. S.C� 8107a)i (Section 640:7). How do I learn moire7 WON 111111604 Sponsored pima: PACAB CITY OF SEWARD, ALASKA PORT AND COMMERCE ADVISORY BOARD RESOLUTION 2020-001 A RE'SOLUTION OF THE SEWARD PORTAND COMMERCE ADVISORY BOARD, RECOMMENDINC COUNCIL APPROVAL, OFTHI�11 PORT All COMMERCE ADVISORY BOARD 111111011UTIES FROM FEBRUARY 2020TO FEBRUARY 2021 WHEREAS,PACAB's resp�o�iisib�ilities,�treliste(.I inSC(I" 2,30,325 Powersand Dutiesand WHEREAS, at its December 18, 2019 work session, PACAB rev ievved and refirlCd their [Iriorifies and Goals, list f6r 2020 NOW, THEREFORE, BE IT RESOLVED BY THE PORT AND COMMERCE ADVISORY BOARD OF THE CITY OF SEWARD, ALASKA that: Section I.The following list ol'Priorificsand Crioals frorn February 20�20 through 1`ebruary 2021 is hereby approved by, the Board an(] recornmended C(,,$ Council for their approva.1- PRIORIT'IES • Support harbor operations and harbor users • Llelp lead Seward Marine Industrial Center (SMIC) developnient • Advise and support the Seward Chamber of (','omnierce in their marketing role t*or the city • Explore and promote energy alternatives and community sustainability practices Support actions and legislation that promote the viability ofall businesses Promote quality of fife for Seward residents SHORT TERM GOALS • Review the vessel property tax and provide reconimendationto Council • Sponsor an f"nergy workshop for the community • l.,,valuate options for as heat PLInip rebate prograrn and present a proposal to Council • flold another joint work session with the Planning & Zoning Commission about a SMIC overlay • Work towards developing a Climate Action Phan • Discuss and review the January 2020 City Council work session with the electric department PORT AND COMMERCE ADVISORY BOARD RESOLUTION 2020-001 • Determine action needed to address halibut by -catch and provide recommendation to Counci I • Support the work of the Airport Connnittee • Create an ad hoc committee for SMIC Development and an ad hoo: committee liar Energy • Send a board member to the Alaska Municipal I,eague Conterence • Priorifize City, State, and Federal Priorities for port and con-unerce initiatives • Evaluate city utility infrastructure Bear future growth • Participate in Joint Work Session with 1-fistoric Preservation cornaiiacc on Downtown Historic 0verlay District • Reviewthe SMIC Development Plan • l'I'valuate the Blue Pipeline Initiative anal give recommendation to Council on the city's continued investment o Provide input on the Capital Improvement Plan LONGTERM GOALS • Revi ew the f I arbor Tari IT (Target Com pletion 202 1') • Submit a Giniate Action Plan to Council for adoption (Farget Completion 2021) • U pdate f e ward Boat Harbor Vila n (Target Comp let io n 202 1 ) • Update SMIC Development Plan (Target Completion 2022) Section 2. This resolution shall take effect irnmedfately upon its, adoption. PASSED AND APPROVED by the Port and (-ommercc Advisory Board of t1le ('.'ity of Seward, Alaska, this 'a, clay of January, 2020. 'THE CITV OF SEWARD, ALASKA Ul uu chneider, Chair A Y E' S.- Smith, [lughes, Lawrence, Schneider NOf,"S: None Al: SFNT: laffia, l...,ernas, Paquette ABSTAIN: None PORT AND COMMERCE ADVISORV BOARD RESOLUTION 2020-001 .Jessica Stallard Deputy City Clerk (City Seal) ssq's I, V, % # 0 4 � , 4, , % 01: C -it % .0 0 E I o W Q 00 M 00 M O 11 00 M M LO �O 00 L 00 00 r- O cM cM O O M M LO �O cM O M -0 LO 0- 11 r- N CV 0- cM O CV r— N 00 �O M M 1 LO LO O O 11 11 CV CV �O -0 M M -0 �O 00 O O 00 O �O 11 N N 00 M 00 0- I� M M 1 O r- cM �O N 00 O LO CV -0 CV LO 0- O CV 00 M M O r- CV M M O r- -0 N 00 0- -0 O M M LO LO LO LO CV 11 LO LO -0 -0 -0 -0 0- 0- M M O O O O O O O O N N 00 0- O 00 CV M -0 LO 00 00 M CV CV O 0- 0- 00 00 M M r- r- 11 11 O O O O 0 0 0 0 . : M 4 : . ■ 10 k . 00 ., . .�. N H u LU N ON Ceo Qa C:) CN V c� IN cl v IA JAN 3 1 202,0 0FRCE --CITY CLERK TOSeward City Council & PACAB members Date: Jan. 30th, 2020 SUBJECT: Discussion on electric utility matters l would like to preface my comments, with a little of my background. During my seventeen, years in Nome, I served six years as an elected Nome Joint Utility Board member, and another six years on the Nome City Council which, like Seward, the council ultimately oversees the utility. Twas a different time and a different place than Seward is today, but many of the issues remain the same. In preparing for the utility discussion f requested information on some of the financial and operational characteristics of our electric utility, The City Clerk's Office was helpful in directing me to the 2017 financial statement as the more recent statement is not yet available. l did receive some info from the electric utility on proposed projects for the coming year as well as historical kWh purchasing and sales. Current status of our infrastructure: From the 2017 financials one metric of evaluating our grid is to look at the value of the utility assets and the ratio of the net value (less depreciation) divided by the total value. $25,602,559 / $67,510,847 = 33%®. It is my understanding the industry standard is a 50% ratio (little higher including inflation). An example: Chugach Electric's ratio is 57%. This indicates we are not keeping up with investments, to our system. Fortunately our debt is low and we have cash assets that will help mitigate the need for needed investments. This is overly simplifying our current status, but is a useful data point. Another valuable metric is line -loss. The difference between kWh purchased from Chugach and the kWh sold. These losses occur from transformers, loading on distribution lines, splices and connections, etc... Differences between rural and urban distribution networks vary but from my research a 5-6% line loss is considered typical. From the data obtained in my request for information I calculated a five year average of a 10% line -loss for our system. This equates to an average loss of approximately 6 million kWh purchased from Chugach lost along the way to our end users. At $ . 1 0/kWh this equates to an annual loss of $600,0100, This higher line loss also indicates the need JAN 3 1 2020 for upgrading the aging distribution system and as a reasonable cost sJ K Much like insulating your home to lower your heating bill. A well maintained grid could reduce that loss by 50% or a savings of $300,000 a year. Poor power factors also contribute to higher line losses. As a side note: I would like to see the utility work with those problem facilities to improve their systems prior to purchasing new meters and changing rates. (More carrot - less stick approach). On the environmental side, Iby cutting our line -losses in half we could reduce the carbon emissions by 3 million lbs per year. Another win -win. 2. Electric Rates: Beyond ensuring adequate revenue is generated to maintain an efficient and reliable system, who pays for what is a very political and societal decision. As a strong advocate for heat pumps replacing oil as both an economic and environmental benefit, I do like the summer / winter rates. Other rate structures can offer similar or additional incentives for encouraging heat pumps and should be explored. With, any rate structure there is always, going to be winners and losers. Period, It is an issue with no perfect right answer today, much less tomorrow. Rates are only part of the equation. Ultimately for the consumer it's the bill each month that matters most. Encouraging wise use and reduced waste is paramount to a sustainable future. 3. Selling the utility: As Seward ponders selling their utility assets, other small communities in the country are looking at purchasing their private utility to better serve their citizens. I believe we as a community can continue to support our own electric utility. We may need more technical advise on rates and engineering services for opti:mium upgrades but II think the pros of owning far outweigh selling. Though our electric sales have been stagnant as demand side efficiencies take their toll (LED lighting, efficient appliances, etc) I believe our near future looks much brighter. 11 assume one likely purchaser is, Chugach Electric, though they may be acquisitioned out from the purchase of ML&P to offer us a fair price. As a regulated utility it is unlikely they could support things like our summer/winter rates or subsidies to the Sealife Center or other infrastructure we find essential. Or, would be willing to participate in incentive and finance programs encouraging heat pumps that would only affect a tiny sliver of their total customer load. Changes to their tariffs would require substantial work to receive approval from the Regulatory Commission of Alaska, Supporting our back-up generation capability would likely fall solely onto the City without the utility revenues to support it. Homer Electric would be a possibility but their rates are higher than our current rates. Thus our rates would likely go up. Again, as part of a regulated utility we would have little opportunity to establish unique rates to support things like heat pumps. A Private for profit utility could buy our utility. Rates are likely to go up even more as they will need to make a profit for investors, pay federal taxes, and acquire funding at higher interest rates than a municipalutility, Personally, I believe in our locally owned utility. I would suggest an advisory, board, similar to the PACAB. Primary role to oversee the, management and make recommendations to the City Council on utility manager hire, major expenditures, rate changes, etc., The Nome Joint Utility Board structure has worked well for Nome for over 50 years. Not sure Seward would need to go as far as an "elected" board, but worth considering given the electric utility is a multi -million dollar enterprise for the city. 1: believe with the market transformation away from oil for both economic and: environmental reasons directs us towards heat pumps and electric vehicles and will provide a huge increase in annual sales. Recall for every gallon of heating oil we displace with heat pumps, the utility sells 11-12 kWh, Multiply that by the total gallons of heating oil potentially displaced in Seward and the gallons of gas to be displaced by electric vehicles. With investment and leadership the future for our electric utility looks bright. All those new kWh sales will help support maintaining our competitive rates and provide the community the opportunity to invest in even more sustainable opportunities including renewable energy. Given the majority of customers with Chugach and Homer Electric are natural gas customers, the value of heat pumps are not a practical alternative, thus their interest would be minimal. And, as part of a larger utility all those future revenue benefits will' be diluted as they will be shared with a much larger pool of ratepayers and all decision making is forfeited. The future is clear for Seward to transform from an oil heating and gasoline powered cars to an electric based system in, the coming years. The technology is already in place. How quickly we transform will depend in part on available financing and incentive opportunities. I believe those opportunities can be best implemented and new revenues generated by keeping our electric utility, NINE= ,.JAN 3 1 2020