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Home My WebLink About1966-11-09 Council Minutes - Special Meetingk------T_ ---- - -r _ . _ _ ___ _ _ _ _ _ _ _ - _ __^• KENAI CITY COUNCIL MINUTFS - SPECIAL MEETING 9 NOVEMBER 1966 Meeting with Leon Spencer of R. W. Beck h Associates, Seattle. Roll call: Members present - Bob Bielefeld, Chester Cone, Roger Meeks Gone Morin, Carl Seaman and Mayor James Dye, Members absent -Bud Lofsted' Also present City Mgr. James W. Harrison, Atty. James E. Fisher, KCL Supt. James Goff and Lineman Norm McGahan. City Manager Harrison stated this meeting was to: 1. Confirm ordinance on rate change for agricultural purposes; 2. Status of Electrical System today, lie gave a resume of recent activities relating to CUL: 2 1/2 months ago CUL received the new unit e2; Unit N1 stripped a coil and Chicago Pneumatic sent a men to help get it fixed --the coil was shipped to Seattle to be rewound, but the plant was on strike, and it isn't fixed yet. Meanwhile, M2 lost 3 valves, so CUL went back to the old Worthington's. Wildwood had to go on their own power as CUL could not meet the peak demands. Chicago Pneumatic says they could not stand good for the defects; later meetings with them revealed they were will- ing to get the coil fixed, but their Atty. wanted two papers - signed by CUL: 1. A release signed by CUL to C.P., M2. A promissory note to �? pay for greight, installation, etc. CUL's atty. says they will not sign the realease which covers all damages to the motors. G.P. Says the coil will not be fixed until the documents are signed. Odin says he (CUL) will raise the money on his own to get the coil fixed; this would take abut 4 or S days and would be delivered in about 3 weeks if C.P. does the work. Also: CUL, the City, Matanuska Valley Bank, NBA, SBA, etc. met in Anchorage Monday morning to work out a solution to the financial problem: of CUL. Outstanding debts total $686,000; and at least two more units will be needed within the next wo years to most the expected increase in demand. The Bank proposed forming a company, selling 2S yr. bonds 0 7%. SBA could not give an opinion on this suggestion until they had contacted Washington. The City only maintained they did not want any- thing to jeopardize future growth revenue of CUL. As a result, CUL is not meeting its contract with the City and the City �a is not meeting its contract to Wildwood. Peninsula Growers also claims they cannot use their heating lights. Wildwood is very much concerned at having to use their own stand-by power. Harrison requests: 1. Authority to work with Spencer of R. W. Beck h Associates to discuss other sources of electricity (HEA, CEA)--at the least for a tie-in for emergencies if not for prime power. Spencer says the present contract with CUL specifically says it could be for emergency use only. 2. Opinion from Council as to feelers put out by a private company to either buy out KCL and operate the system or to -- furnish management to see that we hr-.e continual power. The City seems to have a - .ice: If Odin doesn't comply with the contract, the City can go .here else for power or can exercise the option to buy CUL for $1,0'.,000100 Leon says if this were done, it 1 might be better to junk the whole works and start all over. Spencer stated his company is interested in large generation for KCL for the entire area. Beck has done this sort of planning for many Cities and they think Kenai is in very good position to offer 8 mill power to the Csty of Anchorage, for instance, and 4 mill power to the Kenai area. r:, i City Council Minutes - Special Meeting - Power 11/9/66 Page two This power Arid would involve workinp with the City of Anchorage, ChA, HHA, the Chemical Co, (Collior Carmon) avid the methane plant, and any other industry up North. The City should decide how they want to go on power: they can he the prime supplier with the idea of furnish- ing cheap power, which is contrary to the aims of some other companies; i.e. to charge what the market will boar. Beck $ Assoc. would make this study, contact all parties, find bond buyers, prepare agreements, etc. for out of pocket money at the time of the study, and would not expect any remuneration for labor un- til such time, if ever, the plan comes to fruition. Spencer estimates this would amount to about $2S00 right now. He will rough -draft a con- tract to present to Council at a special meeting tomorrow night. lie say: Council could either generate or distribute power, or both. He thinks a tie-in is the solution for the immediate moment, but the Yong -term picture should be kept in mind. The City's contract with CUL calls for inner -ties, but this has never been accomplished. The Atty. says the City's position is that CUL is not furnishing the City's power requirements. Spencer suggests any fehlers put out should be along the same lines as before and that nothing can likely be done this winter. Harrison says the City has not made a firm offer to purchase CUL; that maybe the time is now, and then go to the people for bonding. i Spencer says a larger load is needed before CUL would pay-off. i ! CUL is meeting with creditors tomorrow; says if tong -term money is not provided, and some relief is not granted on debts, he cannot operate past this month. The City's prime concern is to furnish adequate, constant, reliable power at an economical rate. Morin moved, Seaman seconded, to authorize the City Manager to pursue other sources of power purchase. Motion passed unanimously. Harrison also requested authorization to obtain legal documents if its necessary to file an injunction against plant stoppage. Morin moved, Meeks seconded, to authorize the City Mgr. to in- struct the Atty. to prepare logal documents if necessary for an injunc- tion. Motion passed unanimously. Re Agricultural Rate to Peninsula Growers: Spencer says the City can offer this to P.G. at 20 mills, for:the_industrial load, and a commer- cial rate for their other loads. This would be an increase in costs to P.G. of $S,700 a yr. The City would receive only $792 of this, but, - — CUL would get $4,900. This would not apply to any toher customer. Harrison requested the Atty. to draft an ordinance reflecting this rate change. Council concurred. Spencer asked about FAA's stand on this. Harrison says they do not consider themselves as a commercial customer --they are a special contract customer as this gives them the right to negotiate independently In answer to an inquiry, the Atty. says the City would have to honor assignments against CUL, but that the City's assignment can have pri- ority if the City fixes the coil; arrangements would have to be made with Chicago Pneumatic. r* Kenai Council Minutes - Special Meeting Power 11/9/66 PoRo throe Re feasibility of servicing Columbia Ward Fisheries: Spencer says it looks like a marginal operation for KC.L. Ile will make a recommendation tomorrow night --that it should be on a reimbursement basis only. Their load is measured in amperes and had to be translated to kwh's. Ile com- pared this with Kenai Packor's load in 1964, which looked good, but their load for 1965 and 1966 showed only 1/3 the power used in 164. If this holds for Col. Ward, it is not a good investment. Harrison assured the people in the audience the City would not be with- out power, no matter what the outcome of CUhts negotiations. There are measures we can take to prevent it. Incidentally, he said the City will acquire a surplus SA KVA generator for emergency power to the Terminal Bldg. and airstrip light- ing. Spencer informed Council the pas contract we have with Union would pro- vide enough gas 15 times over what it now takes to generate power at CUL. The City's contract also provides for additional purchases from Union's reserves. There will be another special meeting at 8:00 p.m. Thurs. eve. in the Manager's office. Meeting adjourned at 9:30 p.m. ' Rosec-trullysJub fitted, ✓=MSG✓ /✓ Frances Torkilsen City Clark �i R i i i F { ,-...+ate oz 1 1 Adpw 1 Ali" 00 1 1 . 1 1 1 1 1 1 1 : 1 I 0