HomeMy WebLinkAboutRes2021-064 Sponsored by: Bower
L Public Hearing: June 14, 2021
CITY OF SEWARD, ALASKA
RESOLUTION 2021-064
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING ELECTRIC RATES AND CHARGES AND
DEVELOPING A NEW INDUSTRIAL RATE BASED ON A "COST OF
SERVICE" ALLOCATION, AS RECOMMENDED IN THE RATE STUDY
CONDUCTED BY THE FINANCIAL ENGINEERING COMPANY
WHEREAS, the Seward Electric Department thoroughly assessed all customer rates
following an extensive rate study conducted by Mike Hubbard from the Financial Engineering
Company; and
WHEREAS, the study recommends a net zero rate impact to residential customers, based
on an approximate $2.00 increase in the residential customer base rate for average usage of 650
kwh/month and a $2.00 decrease in their Cost of Power Adjustment (COPA), based on the 2020
average; and
WHEREAS,the study recommends no change in base rates,but does recommend a slight
IL reduction in the COPA for small general service customers, large general service customers, and
the boat harbor; and
WHEREAS, the study recommends developing a new industrial rate for Seward's three
largest users of electricity: Alaska SeaLife Center(ASLC), JAG, and Icicle Seafoods (OBI); and
WHEREAS, the study recommends non-renewing the current Special Contract for the
ASLC that will expire on December 31, 2021 (per Resolution 2019-097), having the facility pay
the full COPA beginning January 1, 2022, and transitioning the facility to the full industrial base
rate over the next three years, beginning January 1, 2022; and
WHEREAS, the study recommends transitioning JAG and Icicle Seafoods (OBI) from
large general service to the new industrial rate beginning January 1, 2022; and
WHEREAS, these changes to the Electric Tariff ensure fair and equitable rates for all
customers while also ensuring the financial health of the utility.
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. Effective January 1, 2022, the Seward City Council hereby approves the
adjusted rates and tariff charges as attached hereto as "Electric Rates & Charges—2022".
Section 2. Effective January 1, 2022, the Seward City Council hereby approves the
CITY OF SEWARD, ALASKA
RESOLUTION 2021-064
development of a new industrial rate, as shown in the updated tariff, for Seward Electric's three
largest users of electricity: Alaska SeaLife Center(ASLC), JAG, and Icicle Seafoods (OBI).
Section 3. The Alaska SeaLife Center(ASLC)will pay the full Cost of Power Adjustment
(COPA) beginning January 1, 2022, and transition to the full industrial base rate over the next
three years,beginning January 1, 2022.
Section 4. JAG and Icicle Seafoods (OBI) will transition to the new industrial rate
beginning January 1, 2022.
Section 5. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska,this 14th
day of June,2021.
T. EC I S / •ii : . .
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AYES: Osenga, Seese, McClure, Casagranda, DeMoss, Baclaan, T-
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
Brenda J. Ballou, MMC
City Clerk
(City Seal)
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Agenda Statement
Meeting Date: June 14, 2021
To: City Council
Through: City Manager Janette Bower
From: Rob Montgomery, Electric Department Director
Agenda Item: Amending Electric Rates and Charges and developing a new Industrial rate
for Seward Electric's three largest users of electricity
BACKGROUND & JUSTIFICATION:
Following an in-depth assessment of rates for its various customer classes, Seward Electric has
determined several adjustments should be made as the utility continues to ensure fair and equitable
rates for all customers.
• ASLC should pay the full COPA charged to all other ratepayers. This will, in turn,reduce the costs
paid by the remaining customers.
• For Residential customers,the rate study recommends an increase of approximately$2.00 on base
rates—based on average monthly usage of 650 kwh. When combined with the adjustment in COPA
due to ASLC paying the full COPA,there will be no net increase to the Residential customers.
• For Small General Service, Large General Service and the Boat Harbor,the study recommends no
change in base rates,but a slight reduction in the COPA.
The study also recommends creating a new Industrial rate for Seward Electric's three largest users
of electricity—ASLC, JAG and Icicle Seafoods.
• For JAG and Icicle,the move from Large General Service to the new rate will result in an overall
reduction of 3 percent due to a lower energy rate,a slightly lower COPA,and a slightly higher
Demand Charge compared to Large General Service customers.
• The ASLC,because of its move from the Special Contract,will begin paying a full COPA in
January 2022 and will transition to the full Industrial base rate over three years beginning in
January 2022. To assist the ASLC with its transition,the Electric Department reduced its own
revenue margin by$75,000 for 2022, an amount that will be reduced by approximately$25,000
each year through 2025 as the ASLC makes the transition to the full Industrial rate.
When Seward Electric decided to assess its rates,the decision was driven primarily by three
factors:
1. To make sure the utility's rates are based upon"cost of service"and are fair and equitable
for all customers.
2. To ensure we have the revenue necessary to maintain the utility's financial health while
effectively running the business. This includes investing in the infrastructure and
maintenance necessary for ongoing safety and reliability.
3. A need for a new industrial rate for our three largest consumers of electricity (listed
above). Because their use is so much higher than other commercial customers,this new
industrial rate will more equitably account for their usage and help them better manage
their energy costs.
If approved by Council, changes to the rates for the various customer groups, including the
development of a new Industrial rate for the largest users of electricity, would be implemented in
January 2022.
INTENT: To receive Council's approval on an updated "Electric Rates and Charges —
2022" tariff so that new electric rates for all customer groups and a new Industrial rate for large-
usage customers can be implemented in January 2022.
CONSISTENCY CHECKLIST: Yes No N/A
Comprehensive Plan Comprehensive Plan( 1. 3, 3. 7. 3. 1, 3. 7. 3. 2)
1. Continue to upgrade and expand utilities to meet existing needs and X
encourage future development.
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 changes to the rates as recommended will result in an estimated increase
in electric revenue in 2022 of $300,000. The 2022/2023 budget will factor in this increase in
revenue.
Approved by Finance Department: n&W1
ATTORNEY REVIEW: Yes X No
RECOMMENDATION:
Seward City Council approve Resolution 2021-064,amending the Electric Rates and Charges tariff
with implementation of the updated tariff beginning in January 2022.
Electric Rates & Charges
2022
As ofdanuary 1, 2022 via Res 2021-074 &Res 2021-073
ELECTRIC RATES & CHARGES
RATES FOR ELECTRICAL POWER BY CLASS OF SERVICE
Seward Utility Cost of Power
Class of Service Charge Demand Charge Customer Charge Adjustment
/kWh /kWh
(COPA)
Residential Base Rate
Monthly cost adjustment
passed directly to Seward
Summer* $0.1217 N/A by Chugach Electric
$22.10 Association(CEA),
Winter $0.0851 N/A based upon CEA's cost
of power
Small General Base Rate
Service
(less than 25 kW)
See explanation above
Summer* $0.1269 N/A $42 22
Winter $0.0927 N/A
Boat Harbor
(less than 25 kW) $0.1103 N/A $42.22 See explanation above
Large General $0.0761
Service (1"200 kWh/kW)
$26.93 $44.23 See explanation above
$0.0264
(Additional kWh)
Industrial***
$0.0437 $30.00 $100.00 See explanation above
Yard Lights $9.94(175 watts)
$14.75(250 watts)
N/A N/A $28.09(400 watts) N/A
$70.21 (1000 watts)
LED equivalent is
'/z of cost
Metered Street $0.1464 N/A $44.23 N/A
Lights
Cost of Power Adjustment(COPA)is based on the cost of energy and demand from Chugach Electric Association(CEA)
and will change when there is an adjustment to CEA rates charged to the City of Seward.
* Summer is defined to mean the period from April 15 through October 15,with Winter defined as the remainder of the
year.
**Demand Charges will be based on the maximum demand recorded over a 15-minute period.
*** ASLC Transition Industrial Rate - The Special Contract for utility service with the Alaska SeaLife Center(ASLC)
terminates on December 31, 2021. As of January 1, 2022, ASLC will be an Industrial customer. However, ASLC will
transition to the regular Industrial rate over a three-year period.The transitional Industrial rate applicable to ASLC for 2022,
2023,and 2024,are set forth below,with ASLC subject to regular Industrial rates as of 2025.
2022 2023 2024
Customer $100.00 $100.00 $100.00
Energy $0.0377 $0.0397 $0.0417
Demand $20.50 $23.67 $26.83
The Large General Service rate will be applicable to all services with a demand of 25 kilowatts or greater forthree or
more consecutive months during a year.
A Small General Service customer may elect to be billed under the Large General Service schedule. However, the
election to change the billing rate from one customer group to another may not be made more often than once every
12 months.
The Industrial rate will be applicable to all services with energy usage equal to or greater than 1 million kWh/year.
Definitions and Miscellaneous Charges
System Delivery Charge:A System Delivery Charge(SDC)of$28.75 will be applied to any service thatuses less than
150 k)Wmonth,whether or not electric service is used. This replaces the Seward Utility energy charge and the Cost
of Power Adjustment and is subject to proration. SDC under this schedule is an addition to the customer charge and is
based on a monthly usage of 150 kWh times the energy rate andthe COPA. Absent an active customer,the registered
property owner will be billed this monthly minimum charge.
Cost of Power Adjustment(COPA): The Cost of Power adjustment charge from the Power Provider is a direct pass-
through of the monthly total Power bill,including fuel costs,energy charges,customer charges, demand charges,and other
miscellaneous adjustments,prorated according to the number of kilowatt hours the Seward Electrical Utility customers
consumed during the billing period.The monthly rate for COPA may be modified as frequently as monthly,or through
the use of a balancing account intended to reduce rate fluctuations.
Seward Fuel Adjustment: The Seward Fuel Adjustment cost may be included in the COPA in the event The City
operates the standby generation plant,including fuel,labor,maintenance and repair when the cost exceeds the amount
budgeted.The cost will be prorated according to the number of kWh the customers consumed during the billing period.
VAR Change(Power Factor Adjustment):All schedules requiring demand metering will be subject to the following power
factor adjustment provisions:
1. Demand-metered customer should attempt to maintain a unity power factor. If the power factor falls below
ninety percent lagging, the customer will take corrective steps to return the power factor to ninety percent or
higher. Also, the following charge for billed kilowatts will apply:
Monthly Billing Demand=Maximum Demand x 90%
Actual Power Factor
2. All power factor adjustment equipment installed by the customer must be approved by the city. Power factor can
be determined by permanently installed monitoring equipment or by periodic testing at reasonable intervals, at the
discretion of the City.
Standby Generation:The cost of operating the standby generation plant to meet a specific customer's need will be charged
directly to that customer. Such cost will be the total cost of operating the plant, including fuel, labor, overtime,
maintenance,repair and overhead,less the value of energy generated in excess of customer's need.
Other Miscellaneous Fees and Charges:Fees and charges for existing facilities can be found on the following pages,
as well as engineering service fees and charges for new facilities. Fees are listed according to service zones as follows:
ZONE 1 Inside City Limits(excluding the Boat Harbor)
ZONE H City limits to Mile 12 Seward Highway,and all roads connecting to the
highway within this area
ZONE III Mile 12 to Lawing
APUC Regulatory Cost Charge:A special surcharge of$0.000626/kWh imposed on electrical utilities by the Regulatory
Commission of Alaska (RCA) in response to the state's intent to assess user fees to support activities of the RCA and
departments.This charge was recommended by the RCA as a pass-through charge to retail utilities customers.
Alternative Power Rebate: Calculated by subtracting kWh generated by an alternative power source from the
kWh supplied to the customer from the City of Seward during the billing cycle. The difference is multiplied by
the City's utility/energy charge and the Cost of Power Adjustment(COPA), which are itemized and shown on
the bill.
Alternative Power Excess Credit. If a customer's alternative power source generates more kWh than supplied
from the City of Seward during the billing cycle,the difference is credited to the customer's account at the non-
firm avoided cost rate (dollars per kilowatt-hour) of the City's Electric Department. The non-firm avoided cost
rate for Seward is defined as those expenses equal to the variable cost per kilowatt-hour for purchased power
during the billing cycle—adjusted upward by X percent* to account for line losses. Credits are not provided for
capacity.
The variable cost of purchased power for Seward is equal to the sum of the base energy rate (BER) and the
purchased power&fuel (PP&F) cost as set by Seward's wholesale power supplier.
*The percentage used for line losses will be updated annually based on the previous year's line loss rate and
rounded to the nearest half percentage point.
EXISTING FACILITIES
SCHEDULE OF FEES AND CHARGES
Service Zone I Zone II Zone III
Meter testing $75.75 $106.06 $136.33
Per test,when results determined meter is accurate
Reconnection to approved existing meter installation $30.30 $37.88 $45.46
Reconnection to approved existing meter installation outside regular $212.11 $257.52 $302.98
business hours
New connection fee $221.14 $221.14 $221.14
Minimum deposit-Residential account $121.54 $121.54 $121.54
Minimum deposit-Commercial or Industrial account $243.09 $243.09 $243.09
The larger The larger The larger
of twice of twice of twice
Deposit-Interruptible,Off-peak account the the the
estimated estimated estimated
bill or bill or bill or
$243.09 $243.09 $243.09
Tampering with or unauthorized breaking of meter seal $737.06 $737.06 $737.06
Per annum interest on delinquent account 10.5% 10.5% 10.5%
Door hanger fee $35.10 $35.10 $35.10
Monthly late fee on delinquent account $6.33 $6.33 $6.33
Dishonored check fee $39.59 $39.59 $39.59
Seasonal turn-on or seasonal turn-off fee
2.17
(excludes brand new service;includes new account name or same $15 $15 $17
account name;waived if<2 months between turn-off and turn-on) each each each
Reconnection during regular business hours following disconnection of $57.32 $71.69 $86.03
delinquent account
Reconnection outside regular business hours following disconnection of $200.74 $243.72 $287.79
delinquent account
Transmission rate $7.84/kW $7.84/kW $7.84/kW
per month per month per month
Updated via Resolution 2021-064&Resolution 2021-073,Effective January 1, 2022.
NEW FACILITIES
ENGINEERING SERVICES
SCHEDULE OF FEES AND CHARGES
Service Zone I Zone II Zone III
Temporary secondary service $73.71 $88.46 $103.20
Primary overhead extensions—Residential $73.71 $88.46 $103.20
Primary underground extensions—Residential $73.71 $88.46 $103.20
Secondary service $73.71 $88.46 $103.20
Primary overhead extensions—Subdivision,Mobile Home Park,Multi- $147.41 $176.95 $206.40
Residence
Primary overhead extensions—Commercial,Industrial $294.83 $353.80 $383.28
Primary underground extensions—Commercial,Industrial $294.83 $353.80 $383.28
Modifications of existing facilities $147.41 $176.95 $206.40
Street lighting systems&Yard lights $73.71 $88.46 $103.20
NOTE:The Zone Fee or Charge is non-refundable until the service is connected.If the service is constructed and
connected,the charge will be adjusted to the actual cost of engineering services.
Updated via Resolution 2021-064&Resolution 2021-073,Effective January 1, 2022.