FY2018-31 & Amendment A&B; KEA – Interruptable Electric Service Sales AgreementAMENDMENT NUMBER TWO TO THE INTERRUPTIBLE
ELECTRIC SERVICE SALES AGREEMENT
(Borough contract 2018-31) 3
This Second Amendment to Contract No. FY2018-31 ("Amendment') is made and entered into
effective as of the jtby of &_41-r . 2020, by and between Kodiak Electric Association, Inc.
("KEA"), and the KODIAK ISLAND BOROUGH (the "Borough').
BACKGROUND
A. WHEREAS, KEA and the Borough entered into Contract No. FY2018-31 (the
"Agreement") in March 2018; and
B. WHEREAS, KEA and the Borough amended section 3(a) of the Agreement in
September 2020 to increase the maximum amount of expenditures subject to
reimbursement (the First Amendment); and
C. WHEREAS, KEA and the Borough now desire to make a second amendment to the
Agreement amending section 3(a) of the Agreement to set out a schedule for payment
of the remaining balance of the reimbursement amount over a period of 6 months
beginning in November 2020.
NOW, THEREFORE, in consideration of the premises and obligations as set forth in this
Amendment, the receipt and adequacy of which is hereby agreed to and acknowledged, KEA and the
Borough agree as follows:
I. Amendment to Section 3(a) of the Aereement. Pursuant to section 10(g) of the
Agreement, subsection 3(a) of the agreement is amended to read as follows:
a) KEA shall provide the Borough with a set of specifications to which the
Borough's interruptible Electric system must conform in order to ensure
technical compatibility with KEA's requirements for delivery of the
Interruptible Electric Service. The Borough shall be responsible for the design,
selection, purchase, and installation of Borough's Interruptible Electric System
at KFRC. KEA shall reimburse Borough for the expenses paid by Borough for
the design, selection, purchase and installation of the Borough's Interruptible
Electric System for the KFRC. The total amount of such expenditures subject
to reimbursement by KEA shall be $278,701.34 which shall be paid as follows:
Payments already made: $ 19,745.04
Payment on or before November 15, 2020 $ 50,000.00
Payment on or before December 15, 2020 $ 50,000.00
Payment on or before January 15, 2021 $ 50,000.00
Payment on or before February 15, 2021 $ 50,000.00
Payment on or before March 15, 2021 $ 50,000.00
Payment on or before April 15, 2021 $ 8,956.30
Total of all payments:
All other terms and conditions of the Agreement remain the same.
Kodd* clric Association, Inc.
Darron Scott, President/CEO
Date: Z a
$278,701.34
Fy,?ol6-3! A
AMENDMENT TO INTERRUPTIBLE ELECTRIC SERVICE SALES AGREEMENT
The undersigned parties to a Interruptible Electric Service Sales Agreement by and between
Kodiak Electric Association and Kodiak Island Borough hereby mutually agree to amend said
Agreement as follows:
Modify Section 3.a to read as follows:
a) KEA shall provide the Borough with a set of specifications to which the Borough's
Interruptible Electric System must conform in order to ensure technical
compatibility with KEA's requirements for delivery of the Interruptible Electric
Service. The Borough shall be responsible for the design, selection, purchase, and
installation of Borough's Interruptible Electric System at KFRC. Within one hundred
twenty days (120) days of the Operational Date for KFRC, KEA shall reimburse
Borough for the expenses paid by Borough for the design, selection, purchase and
installation of the Borough's Interruptible Electric System at that particular facility.
The total amount of such expenditures subject to reimbursement by KEA shall not
exceed Two Hundred Ninety Thousand Dollars ($290,000) and any expenses
incurred in excess of that amount shall be at Borough's expense.
All other terms and conditions of the Agreement to remain the same.
Koc Association, Inc.
lec '
Signed e �-
Name/Title vg .. _C!2,r
Dated _ '91111 64 zo
Kodiak s nd Borough
Signed !TK
Name/Title M JC -RA EL �49L%l S/ fpk� l.�QNA�SC
DatedO3��
�S�,pfVD e0,`�
MN
G
\QS!(A "1
FY2018-31
INTERRUPTIBLE ELECTRIC SERVICE SALES AGREEMENT
BETWEEN
Kodiak Electric Association. Inc.,
and
Kodiak Island Borough
WHEREAS KEA, Kodiak Electric Association Inc. a non-profit electric cooperative
membership corporation whose address is 1614 Mill Bay Road, Kodiak, Alaska 99615,
owns, operates, and maintains an electric utility in Kodiak, Alaska; and
WHEREAS the Borough, Kodiak Island Borough, whose address is 710 Mill Bay Road
Kodiak, Alaska 99615, owns the Kodiak Fisheries Research Center(KFRC) in Kodiak,
Alaska; and
WHEREAS, at various times KEA will be capable of producing electric energy that
exceeds the system electrical demand, and the excess power could be used to reduce
the Borough's heating fuel consumption and boiler exhaust emissions at KFRC on an
Interruptible Basis; and
WHEREAS, KEA, and the Borough wish to enter into an agreement for the sale and
purchase of Interruptible Electric Service to generate Supplemental Heat for KFRC:
and
WHEREAS, the Borough understands and acknowledges that heat generated with
Interruptible Electric Service is Supplemental Heat which is intended solely to reduce
Borough's heating fuel consumption and it is the responsibility of the Borough to
operate and maintain a Primary Heat source at KFRC in a fully functioning manner at
all times;
Now, therefore, the parties agree as follows:
Section 1. Definitions
As used in this Agreement, the following terms shall have the following meanings:
a) "Agreement" shall mean this Interruptible Electric Service Sales
Agreement.
b) "BTU" shall mean British thermal unit, a standard unit for measurement of
thermal energy (heat).
c) "Effective Date" shall mean the date that this Agreement is executed by
both parties.
Interruptible Electric service Sales Agreement— Kodiak Island Borough
Page 1
d) "Interruptible Basis" shall mean electric energy that will be provided only
when available and may be increased, reduced or stopped at the option of
KEA with little or no notice.
e) "Interruptible Electric Service" shall mean electric energy provided to KFRC
on an Interruptible Basis through a separate electric meter and which
electric energy shall only be used to generate Supplemental Heat.
f) "KEA's Tariff shall mean KEA's current tariff, as it may be amended from
time to time by the KEA Board of Directors.
g) "Operational Date" shall mean with respect to KFRC, the date on which
Interruptible Electric Service is first delivered to that particular facility.
h) "Primary Heat System" shall mean the normal oil-buming heating system
(boiler, furnace, pumps, piping, appurtenances, etc.) and associated fuel
supply for KFRC that is capable of meeting the full heating demand of
KFRC.
i) "KEA" shall mean Kodiak Electric Association, Inc.
j) "Borough" shall mean the Kodiak Island Borough.
k) "KFRC" shall mean the Kodiak Fisheries Research Center at 301 Research
Court, Kodiak AK 99615, and the Borough facility that will receive
Interruptible Electric Service under this agreement.
1) "Borough's System" shall mean the equipment, piping, wiring, controls, and
other appurtenances put into place to receive Interruptible Electric Service
to generate Supplemental Heat at KFRC.
m) "Supplemental Heat" shall mean an interruptible heat source that may not
be capable of meeting the full heating demand of the facilities and is only
intended to reduce heating fuel consumption when available.
Section 2. Term.
This Agreement shall remain in effect for thirty (30) years from the Effective
Date. The Agreement shall be automatically renewed for additional five (5) year
terms if the Borough continues to accept Interruptible Electric Service after the
initial term. Subsequently, this Agreement will continue to be renewed for
additional five (5) year terms unless either party provides written notice at least
ninety (90) days prior to the expiration of the current term of its intention to end
the Agreement.
Interruptible Electric Service Sales Agreement — Kodiak Island borough
Page 2
Section 3. Construction of Borough's System.
a) KEA shall provide the Borough with a set of specifications to which the
Borough's Interruptible Electric System must conform in order to ensure
technical compatibility with KEA's requirements for delivery of the
Interruptible Electric Service. The Borough shall be responsible for the
design, selection, purchase, and installation of Borough's Interruptible
Electric System at KFRC. Within thirty (30) days of the Operational Date for
KFRC, KEA shall reimburse Borough for the expenses paid by Borough for
the design, selection, purchase and installation of the Borough's
Interruptible Electric System at that particular facility. The total amount of
such expenditures subject to reimbursement by KEA shall not exceed One
Hundred Sixty Seven Thousand Dollars ($167,000) and any expenses
incurred in excess of that amount shall be at Borough's expense.
b) The Borough's Interruptible Electric System may consist of boilers, piping,
pumps, valves, control panels, wiring and appurtenances necessary to
generate Supplemental Heat from Interruptible Electric Service to the
Borough's Heated Facilities.
c) The Borough's Interruptible Electric System to be installed at the KFRC is
anticipated to be ready to receive Interruptible Electric Service by 2019.
Interruptible Electric Service is anticipated to be available in 2019 or 2020,
after completion of KEA's Upper Hidden Basin Diversion project.
d) The Borough's System shall be designed to allow the coordinated operation
of the Primary Heat and the Borough's System such that the Primary Heat
will operate as needed based on the amount of Supplemental Heat being
generated by Borough's Interruptible Electric System and the Borough's
desired temperature in its Heated Facilities.
e) Should this Agreement be terminated or the Borough otherwise be unable
or unwilling to accept Interruptible Electric Service at any time prior to
January 1, 2035, because of Borough default, Borough shall repay to KEA
a percentage of the KEA reimbursement for expenses under this Section 3.
The payback to KEA shall be equal to the original amount reimbursed by
KEA to Borough under this Section multiplied by the proportional shortfall
in the number of months between the first Operational Date and the
termination date, and between the first Operational Date and January 1,
2035, when Borough should have been purchasing Interruptible Electric
Service from KEA. Such amount shall be due and payable within ninety (90)
days of termination or cessation under this Agreement.
i) For example, if the Agreement is terminated for Borough's default
on January 1, 2030, and the first Operational Date is January 1,
2020, the payback amount would be:
Amount KEA Reimbursed to Borough x (1 — (120 / 180))
Interruptible Electric Service Sales Agreement— Kodiak Island Borough
Page
Section 4. Operations.
a) Supply of Interruptible Electric Service. Beginning on the Operational Date,
KEA will supply Interruptible Electric Service to Borough under the terms
and conditions of this Agreement. It is agreed to and understood by both
parties that Interruptible Electric Service will be supplied to KFRC on an
Interruptible Basis and that all heat generated by the Borough's System is
Supplemental Heat. KEA may increase, interrupt, curtail, or limit the
delivery of Interruptible Electric Service at any time and for any reason,
including but not limited to: inadequate actual or projected hydroelectric or
wind energy, grid frequency response, to best match various other
interruptible customer loads to available surplus hydroelectric or wind
energy, and to optimize the reliability and efficiency of service to KEA's firm
customers.
b) Borough Primary Heat System. Borough shall be solely responsible at all
times to operate and maintain in a fully functioning mannerKFRC's Primary
Heat System. Borough shall be solely responsible at all times to maintain
an adequate fuel supply to meet the full heating demand of KFRC.
c) Operation. KEA shall be solely responsible for determining the amount of
Interruptible Electric Service to provide to the Borough's System. KEA, and
Borough agree to the integration of an electric boiler with the Primary Heat
System. Borough shall ensure that KEA has access to data regarding the
heat output of Borough's System, the heat output of Borough's Primary
Heat System and the actual and desired temperatures for KFRC. Borough
shall be solely responsible for determining the temperature at which to
operate KFRC. The Borough's System shall be designed by Borough to
limit receipt of Interruptible Electric Service when not needed to meet the
Borough's desired temperature at KFRC.
d) Borough Option to Operate Electric Heat System.. Upon reasonable written
notice to KEA and subject to KEA's available capacity, Borough may
request that KEA supply electricity to Borough's System at a time KEA is
not already providing Interruptible Electric Service, or is not providing
sufficient Interruptible Electric Service to meet Borough's needs. Electric
service provided at Borough's request under this Subsection shall be
charged at the applicable KEA Tariff commercial rate, including the Cost of
Power Adjustment, even though it is being used to generate Supplemental
Heat.
e) Priority Interruptible Electric Service provided under this Agreement will
have no priority over KEA's provision of service to any other firm or
interruptible customer.
f) Delivery Point. The KEA electric meter(s) at KFRC shall be the point of
delivery for Interruptible Electric Service. No load other than Borough's
System shall be connected to the meter at the Delivery Point.
Interruptible Electric Service Sales Agreement — Kodiak Island Borough
Page 4
g) Resale. Resale of any electric service provided under this Agreement is
prohibited.
Section 5. System Maintenance.
a) Maintenance Responsibility. Borough shall be responsible for maintaining
the Borough's System. KEA shall be responsible for maintaining KEA's
electric distribution system up to the Delivery Point(s).
b) Failure to Maintain. If Borough fails to properly maintain Borough's System
in a fully functioning and environmentally safe manner, KEA shall have the
right to suspend service until Borough remedies the problem. If the failure
continues for more than one hundred and twenty (120) days, KEA may treat
the failure as a Default by Borough.
Section 6. Payment Obligations.
a) Commencement. Borough's payment obligation described in this section
to KEA shall start on the Operational Date and remain in effect through the
term of this Agreement.
b) Billing. At KEA's option, billing may be accomplished by separate invoice
or by including a line item on Borough's existing electric service bill.
Payment terms and conditions shall be in accordance with KEA's Tariff.
c) Fixed Charge. For each meter installed to provide Interruptible Electric
Service, Borough shall pay Seven and 50/100 Dollars ($7.50) as a monthly
charge to cover the average cost of meter reading and billing.
d) Variable Charge. In addition to the Fixed Charge, Borough shall pay a
monthly variable energy charge based on electricity consumed ("Variable
Charge"). The Variable Charge is designed to charge Ninety Percent (90%)
of Borough's estimated avoided fuel cost from utilizing Interruptible Electric
Service to generate heat. An electric meter ("meter") shall be installed at
KFRC and will measure and record in kWh the Interruptible Electric Service
provided to Borough. The meter shall be read on a monthly basis and the
amount owed for the monthly energy charge for Interruptible Electric
Service shall be determined from the following formula:
Monthly Variable Charge = 90% x Equivalent Fuel Savings (Gal) x Fuel
Price
Where:
Equivalent Fuel Savings = Electric Energy x 0.0318
ii) Electric Energy = amount of Interruptible Electric Service
measured in units of kWh as recorded by the meter(s) for the
billing period.
Interruptible Electnc Service Sales Agreement — Kodiak Island Borough
Page 5
iii) .0318 is the calculation of estimated heating value of a kWh
of electricity where:
3,414 BTU is equal to one (1) kWh;
134,000 BTU is the energy content of one gallon of #1
diesel;
80% is the assumed net oil fired boiler efficiency; and
3,414 BTU/kWh10.80 (134,000 BTU/Gal) = 0.0318
Gal/kWh
iv) "Fuel Price" is the average price paid by Borough for heating
fuel delivered to KFRC. The Fuel Price will be revised each
month. Borough shall provide a monthly report to KEA stating
the delivered fuel price paid by Borough for fuel delivered to
KFRC. Such report shall include copies of fuel invoices and
shall be received by KEA no later than the 10th day of each
month. KEA will calculate the Variable Charge for the prior
month and invoice Borough no later than the 151h day of the
month. The invoice shall be based on the previous month's
meter reading and purchased fuel cost.
e) Sample Variable Amount Calculation.
If the Borough's Fuel Price for May 2021 is $3.00 per gallon
and Borough receives 100,000 kWh of Interruptible Electric
Service during that month, the Variable Amount due on the
June 2021 invoice would be:
90% x (100,000 kwh x.0318) x $3.00 = $8,586
Section 8. Insurance and Indemnification.
a) Indemnification. Each party shall indemnify, defend, and hold the other
party harmless from any liability, action, claim, suit, loss, property damage,
or personal injury of any kind resulting from or arising out of any act of
commission or omission by the party, its agents, employees, or customers,
or arising from or connected with the exercise of the rights and privileges
granted by this Agreement, except as provided in subsection c below.
b) Insurance. Each party shall be responsible for obtaining its own insurance
for its facilities and indemnity obligations.
c) No Liability for Certain Damages. Notwithstanding any other provision in
this Agreement: (i) KEA will not be liable for any damage or loss to persons
or property arising out of the operation of the Borough's System unless the
damage or loss was caused by KEA's sole and exclusive negligence; and
(ii) KEA will not be liable for any damage or loss caused by failure to provide
Interruptible Electric Service to Borough.
Interruptible Electric Service Sales Agreement —Kodiak Island Borough
Page 6
Section 9. Default and Termination.
In the event that either Party defaults in the performance of any of its
obligations hereunder ("Default"), and said Default is not rectified within ten
(10) days of written notice of said Default, the other Party may, at its option,
terminate this Agreement upon written notice to the defaulting Party, which
termination shall not excuse either party from its obligations to make payment
of any amounts due hereunder. Provided, however, that if such matter cannot,
with due diligence and good faith, be cured within such ten (10) day period
(unless such default is incapable of being cured due to the nature thereof), the
defaulting Party shall not be in Default if said Party shall commence the cure
within such ten (10) day period and thereafter diligently and in good faith
pursues the cure thereof. In the case of a Default that is not cured after notice
as provided for in this section, the Party not in Default shall be entitled to all
expenses and fees, including reasonable attorney's fees, suffered or incurred
by that Party in endeavoring to enforce this Agreement or any provision hereof.
Section 10. Miscellaneous.
a) Resolution of Disputes. The parties agree to arbitrate all disputes arising
out of or relating to this Agreement. If the parties cannot agree on an
arbitrator, the Presiding Judge of the Third Judicial District, State of Alaska,
shall appoint an arbitrator. Venue for the arbitration will be in Kodiak,
Alaska. The parties expressly waive any claim to sovereign immunity and
agree that the decision of the arbitrator shall be binding on them and non -
appealable.
b) Waiver. The failure of either party to enforce or insist upon compliance with
any terms or conditions in this Agreement shall not constitute a general
waiver or relinquishment of any such terms or conditions, but the same shall
be and remain at all times in full force and effect.
c) Scope. The terms and conditions of this Agreement apply only to the
purchase of Interruptible Electric Service at KFRC. All other purchases of
electric service shall be in accordance with KEA's Tariff, or if applicable,
under a separate special contract.
d) Tariff. Except for those aspects of service expressly provided for in the
Agreement, the provision of service under the Agreement is subject to the
provisions of KEA's Tariff.
e) Construction of Agreement. This Agreement is executed by the parties with
the understanding that it embodies the entire agreement between the
parties pertaining to the subject matter of this Agreement and that there are
no representations, warranties or other commitments which are not
embodied in this Agreement. The parties have both had access to legal
counsel and thoroughly reviewed and negotiated this Agreement, and as a
result it should not be interpreted in favor of either party.
Interruptible Electric Service Sales Agreement — Kodiak Island Borough
Page 7
f) Headings and Titles. The titles of the Sections and other parts of this
Agreement have been inserted only as aids to convenient reference. No
inferences shall be drawn from such titles when construing or interpreting
this Agreement.
g) Amendments. Any amendments to this Agreement must be in writing and
executed by both parties.
h) Waiver. The failure of a party hereunder to assert a right or enforce an
obligation of the other party shall not be deemed a waiver of such right or
obligation. All rights and remedies are cumulative and election of one right
or remedy shall not exclude another. No waiver by KEA or Borough of any
default of the other under this Agreement shall operate as a waiver of any
further default whether of like or different character.
i) Capital Credits. No capital credits shall accrue for Interruptible Electric
Service.
j) Notices. Notices may be sent to the parties as follows:
To KEA:
Darron Scott, President/CEO
Kodiak Electric Association, Inc.
1614 Mill Bay Road / P.O. Box 787
Kodiak, AK 99615
Phone: (907) 486-7700
To Borough:
Office of the Borough Manager
Kodiak Island Borough
710 Mill Bay Road
Kodiak, AK 99615
Phone: (907) 486-9310
Interruptible Electric Service Sales Agreement — Kodiak Island Borough
Page
IN WITNESS WHEREOF, the parties have caused this document to be executed on
the dates indicated below.
REF ..'
1� -CAR y '
PUGyre .
OF_P�Pgy
STATE OF ALASKA
Kodi lec c Association, Inc.
Signed /.
Name/Title Marron Scott, PresidenbCEO
Dated 3( r // k
THIRD JUDICIAL DISTRICT
)ss
)
The foregoing Interruptible Electric Service Sales Agreement was acknowledged
before e this Val,dayof(�� • 20 6, by
Notary Public in and for the State of Alaska
My commission expires: o1W
txOTAI?i' Signed
,•
pt18t1�+ e
Name/Title
Dated
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
Ko k Isla orough
3 �l
The foregoing Interruptible Electric Service Sales Agreement was acknowledged
before me this VSs day of Yylwcl , 20 It , by
Notary Public in and for the State of Alaska
My commission expires: jLj
Interruptible Electnc Service Sales Agreement — Kodiak Island Borough
Page 9