FY2018-25 & 25 A&B, Service sales agreement between KEA, KIBSD, and KIB for electric boilers.AMENDMENT NUMBER TWO TO THE INTERRUPTIBLE
ELECTRIC SERVICE SALES AGREEMENT
(Borough contract 2018-25)
This Second Amendment to Contract No. FY2018-25 ("Amendment") is made and entered
into effective as of the W7 -day of (k, w, 2020, by and between Kodiak Electric Association,
Inc. ("KEA"), and the KODIAK ISLAND BOROUGH (the `Borough") and the Kodiak Island
Borough School District (the "District"), collectively referred to as the "Parties".
A. WHEREAS, the Parties entered into Contract No. FY2018-25 (the "Agreement")
in February 2018; and
B. WHEREAS, the Parties amended section 3(a) of the Agreement in September 2020
to increase the maximum amount of expenditures subject to reimbursement
(Amendment number one); and
C. WHEREAS, the Parties 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 7 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, the Parties
agree as follows:
1. Amendment to Section 3(a) of the Agreement. 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 District with a set of specifications to which the
District'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 District's Interruptible
Electric System at Each of the District's Heated Facilities. KEA shall
reimburse Borough for the expenses paid by Borough for the design,
selection, purchase and installation of the District's Interruptible Electric
System for the District's Heated Facilities. The total amount of such
expenditures subject to reimbursement by KEA shall be $732,897.84
which shall be paid as follows:
Payments already made: $295,102.95
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
Payment on or before February 15, 2021
Payment on or before March 15, 2021
Payment on or before April 15, 2021
Payment on or before May 15, 2021
Total of all payments:
All other terms and conditions of the Agreement remain the same.
Kopalc-El tric Association, Inc.
Dacron Scott, Preside
nt/CEO
Date:
Islan Borough S ofDi}stri�ct
Lany Le ' , Superintendent
Date: /0� 1 CD
$ 50,000.00
$ 50,000.00
$ 50,000.00
$ 91,043.70
$ 96,751.19
$732,897.84
Kodi *d�
Michael Po ers Boorough Man—ager
Date:
If:;
FY. -)01S d �r
AMENDMENT TO INTERRUPTIBLE ELECTRIC SERVICE SALES AGREEMENT
The undersigned parties to a Interruptible Electric Service Sales Agreement by and between
Kodiak Electric Association, Inc., Kodiak island Borough, and Kodiak Island Borough School
District hereby mutually agree to amend said Agreement as follows:
Modify Section 3.a to read as follows:
a) KEA shall provide District's with a set of specifications to which the District'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 District's Interruptible Electric System at each of District's
Heated Facilities. Within one hundred twenty days (120) days of the
Operational Date for each of District's Heated Facilities, KEA shall reimburse
Borough for the expenses paid by Borough for the design, selection, purchase
and installation of the District's Interruptible Electric System at that particular
facility. The total amount of such expenditures subject to reimbursement by
KEA shall not exceed Seven Hundred Sixty Thousand Dollars ($760,000) and
any expenses incurred in excess of that amount shall be at District's expense.
All other terms and conditions of the Agreement to remain the same.
Ko di is Association, Inc.
Signed
Name/Title
Dated 9�Zorr�
Kodiak IISN d Borough
Signed v
NamelTitle�LC,�A 6.� �bw c`�S IBoR Ak6-!� �i � R6 �
Dated 0.1h $X)-Va-y
Kodiak Island oroug chool District
Signed
Namerritle Z.44f V AD -6y- -x
Dated
Contract FY2018-25
INTERRUPTIBLE ELECTRIC SERVICE SALES AGREEMENT
BETWEEN
Kodiak Electric Association, Inc.,
Kodiak Island Borough,
and
Kodiak Island Borough School District
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 school facilities in Kodiak, Alaska; and
WHEREAS the District, Kodiak Island Borough School District, whose address is 720
Mill Bay Road Kodiak, Alaska 99615, operates and maintains schools and associated
facilities 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 District's heating fuel consumption and boiler exhaust emissions at the District's
Heated Facilities on an Interruptible Basis; and
WHEREAS, KEA, Borough, and District wish to enter into an agreement for the sale
and purchase of Interruptible Electric Service to generate Supplemental Heat for
District's Heated Facilities; and
WHEREAS, the Borough and District understands and acknowledges that heat
generated with Interruptible Electric Service is Supplemental Heat which is intended
solely to reduce District's heating fuel consumption and it is the responsibility of the
District to operate and a joint District/Borough responsibility to maintain a Primary Heat
source at the District's Heated Facilities 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.
Intenuplible Electric Service Sales Agreement
Page 1
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.
d) "Interruptible Basis" shall mean electric energy that will be provided only
when available and may be increased, reduced or slopped at the option of
KEA with little or no notice.
e) "Interruptible Electric Service" shall mean electric energy provided to
District's System 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 each of District's Heated
Facilities, the date on which Interruptible Electric Service is first delivered
to that particular facility.
h) "Primary Heat System" shall mean the normal oil -burning heating system
(boiler, furnace, pumps, piping, appurtenances, etc.) and associated fuel
supply for the District's Heated Facilities that is capable of meeting the full
heating demand of the District's Heated Facilities.
I) "KEA" shall mean Kodiak Electric Association, Inc.
j) "Borough" shall mean the Kodiak Island Borough.
k) "District" shall mean the Kodiak Island Borough School District
1) "District's Heated Facilities" shall mean all District facilities that receive
Interruptible Electric Service under this Agreement, specifically:
i) Kodiak Middle School
ii) Kodiak High School
m) "District'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 each of the District's Heated Facilities.
n) "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.
Interruptible Electric Service Sales Agreement
Page 2
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 District 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.
Section 3. Construction of District's System.
a) KEA shall provide District's with a set of specifications to which the District'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 District's Interruptible Electric System at each
of District's Heated Facilities. Within thirty (3D) days of the Operational Date
for each of District's Heated Facilities, KEA shall reimburse Borough for the
expenses paid by Borough for the design, selection, purchase and
installation of the District's Interruptible Electric System at that particular
facility. The total amount of such expenditures subject to reimbursement by
KEA shall not exceed Eight Hundred Eighty Three Thousand Dollars
($883,000) and any expenses incurred in excess of that amount shall be at
District's expense.
b) The District'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
District's Heated Facilities.
c) The District's Interruptible Electric System to be installed at the Kodiak
Middle School is anticipated to be ready to receive Interruptible Electric
Service by 2018, but Interruptible Electric Service is not anticipated to be
available until 2019 or 2020, after completion of KEA's Upper Hidden Basin
Diversion project.
d) The District's System shall be designed to allow the coordinated operation
of the Primary Heat and the District's System such that the Primary Heat
will operate as needed based on the amount of Supplemental Heat being
generated by District's Interruptible Electric System and the District's
desired temperature in its Heated Facilities.
e) Should this Agreement be terminated or either Borough or District
otherwise be unable or unwilling to accept Interruptible Electric Service at
any time prior to January 1, 2035, because of Borough or District's 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
Interruptible Electric Service Sales Agreement
Page 3
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 District 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 or District'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))
Section 4. Operations.
a) Supply of Interruptible Electric Service. Beginning on the Operational Date,
KEA will supply Interruptible Electric Service to District 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 District's Heated
Facilities on an Interruptible Basis and that all heat generated by the
District'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) District Facilities Primary Heat System. District shall be solely responsible
at all times to operate and jointly responsible with the Borough to maintain
in a fully functioning manner the District's Heated Facilities' Primary Heat
System. District shall be solely responsible at all times to maintain an
adequate fuel supply to meet the full heating demand of District's Heated
Facilities.
c) Operation. KEA shall be solely responsible for determining the amount of
Interruptible Electric Service to provide to the District's System. KEA,
Borough, and District jointly agree to the integration of the electric boilers
with the Primary Heat System. District shall ensure that KEA has access to
data regarding the heat output of District's System, the heat output of
District's Primary Heat System and the actual and desired temperatures for
District's Heated Facilities. District shall be solely responsible for
determining the temperature at which to operate its Heated Facilities. The
District's System shall be designed by Borough to limit receipt of
Interruptible Electric Service when not needed to meet the District's desired
temperature in the District's Heated Facilities.
Interruptible Electric Service Sales Agreement
Page 4
d) District Option to Operate Electric Heat System. Upon reasonable written
notice to KEA and subject to KEA's available capacity, District may request
that KEA supply electricity to District's System at a time KEA is not already
providing Interruptible Electric Service, or is not providing sufficient
Interruptible Electric Service to meet District's needs. Electric service
provided at District'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 District's Heated Facilities shall
be the point of delivery for Interruptible Electric Service. No load other than
District's System shall be connected to the meter at the Delivery Point.
g) Resale. Resale of any electric service provided under this Agreement is
prohibited.
Section 5. System Maintenance.
a) Maintenance Responsibility. District and Borough shall be jointly
responsible for maintaining the District's System. KEA shall be responsible
for maintaining KEA's electric distribution system up to the Delivery
Point(s).
b) Failure to Maintain. If the District and Borough fail to properly maintain the
Purchaser's System In a fully functioning and environmentally safe manner,
KEA shall have the right to suspend service until District 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 District and Borough.
Section 6. Payment Obligations.
a) Commencement. District'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 District'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, the District shall pay Seven and 50/100 Dollars ($7.50) as a
monthly charge to cover the average cost of meter reading and billing.
Interruptible Electric Service Sales Agreement
Page 5
d) Variable Charge. In addition to the Fixed Charge, District shall pay a
monthly variable energy charge based on electricity consumed ("Variable
Charge"). The Variable Charge is designed to charge Ninety Percent (90%)
of District's estimated avoided fuel cost from utilizing Interruptible Electric
Service to generate heat. An electric meter ("meter") shall be installed at
each of District's Heated Facilities and will measure and record in kWh the
Interruptible Electric Service provided to District. 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.
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/kWh/0.80 (134,000 BTU/Gal) = 0.0318
Gal/kWh
iv) "Fuel Price" is the average price paid by District for fuel
delivered to District's in town Heated Facilities. The Fuel
Price will be revised each month. District shall provide a
monthly report to KEA stating the delivered fuel price paid by
District for fuel delivered to District's in town Heated
Facilities. 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 District no later than the 15th 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.
i) If the District's Fuel Price for May 2021 is $3.00 per gallon
and District 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
Interruptible Electric Service Sales Agreement
Page 6
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 District's Purchaser'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 District Purchaser.
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
Interruptible Electric Service Sales Agreement
Page 7
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 District's Heated Facilities. 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.
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, Borough or District
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
Interruptible Electric Service Sales Agreement
Page B
To Borough:
Office of the Borough Manager
Kodiak Island Borough
710 Mill Bay Road
Kodiak, AK 99615
Phone: (907) 486-9310
To District:
Office of the Superintendent
Kodiak Island Borough School District
722 Mill Bay Road
Kodiak, AK 99615
Phone: (907) 486-7550
IN WITNESS WHEREOF, the parties have caused this document to be executed on
the dates Indicated below.
Kodiak Electric Association, Inc.
(. ,
Signed _
Dar Cott, PresidenUCEO
Dated Z/ZS //,P
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
The foregoing Interruptible Electric Service Sales Agreement was acknowledged
b ore m this 2?u day of 20_a, by
Notary Public in and for the Stale of Alaska
---.- a Mycommission expires: ki of zo
%2�(PR Y ,
•, PUBS r.
•• sT4 F P,P S�-
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Interruptible Elecltic Servlce 521es Agreemenl
Page 9
Signed
NamelTitle
Dated
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
Kodiak Island Borough
The foregoing Interruptible Electric Service Sales Agreement was acknowledged
before me this� day of Fe. fru-ur-i, 20JE_, by
pwwutnp `
1140TAOy S, Notary Public in and for the State of Alaska
My commission expires: to 14M o4C-tu-
`P`\�`� Kodiak Island Borough School District
Signed
NamefTitle iLe 0- "elf {rrr ,kk iie�
Dated 7-17- 7/ /.r
STATE OF ALASKA )
)Ss
THIRD JUDICIAL DISTRICT )
The foregoing Interruptible Electric Service Sales Agreement was acknowledged
before me this 21 day of �� 20A by
STATE OF ALASKANotary Public in and for the State of Alaska
NOTARY PUBLIC61 My commission expires:
Bailey Maier
MY CartrNel m Bq*w Oaf. 17, 2029
Inlemptible Electric Service Sales Agreement
Page 10