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Home My WebLink About1965-11-18 Council Minutes - Special MeetingMINUTES ON THN SPECIAL COUNCIL MEETING OF 18 NOVEM10-IR 1965 IIEARING R.W.BPC:K REPORT Roll call: Memburs present - Chester Cone, Billy 4cCann, Gone Morin and Carl Seaman; Absent - Bud Lofstodt, Roger Meeks and Mayor Vye. Also present: City Mgr. Bill liarrison, Electric Supt, Clay Lyons, Foreman Jim Goff, Accounts Clerk Mrs, Lillian Itahkinon, Mgr. of CUL Odin Strandberg and Harold Galliett, Jr., the City's Engr. on the WuS project. Mr, Leon D. Sponcer, Supervising Engineer for R. W. Beck 4 Associates, consultants to Kenai City Light as per Bond Ordinance #54, presented throe reports: 1. Periodic Survey and Report as required by the Bond Ordinance, 2. Acquisition of Electric Properties of HEA Located within Kenai City Limits, 3. Feasibility of Acquisition of Consolidated Utilities, Ltd., The latter two having boon requested by Council 1. Quoting from the transmittal letter of the report: "In general, the operating practices and procedures now utilized by the City are consistent with sound utility practices. The operating results of the City, with respect to debt service coverage and supplying the electric requirements of the customers, have been good." in an effort to aid management in its goal of serving the customers more effect ivoly, the report recommends: a. Revision of the budget to comply with the form submitted by R.W.Beek at the start of KCL business. b. Monthly status of the budget reports be submitted to R. W. Beck as required by the Bond Ordinance. This is not for the benefit of the consultant, but to aid the City of Kenai in management of the utility. c. Annual audits should be accomplished within 90 days of the close of the fiscal year, and the books should be kept in the City offices at all times. d. Mtce. of R,O,W, should be practiced. e. A review should be made on fire insurance of vehicles and equipment, etc. f. New vehicles should be planned and money allocated for next few years. g. Preprinted forms should be obtained to easily report financial, operating and statistical data. h. Financial and operating reports should be submitted to Utl. Supt., City Mgr, Councilmen and the Consulting Engre as soon as practical at and of each month. L, Metov readers should be instructed to record exactly what is shown on the motor. j, Meter readers compute the kwh consumption and comparo with last month. k. Meter history cards be prepared for each motor. i. Purchase orders should show prices, etc. m, Overhead costs should be allocated to job work orders; charges to con- struction rather than to operating expenses will hale on the ratio of bond coverage, no plant retirements should be practiced --this too helps the financial picture o, Materials inventory cards should be posted more currently. p. Warehousing and storage should be organized for closer checking of inven- tories. q. A log of complaints should be kept and reviewed by the City Mgr, monthly.. r, Electric maps be maintained. s. Each work order should have adequate sketches and data to facilitate accurate mapping. t. Check metering vacilitats should be installed near CUL. u, Accuracy of the power factor meter of CUL's should be checked, and steps taken to see that the power factor remains at 90 percent at least. v. A comprehensive preventive mtce. program should be instituted for the transmission line. w. CUL and the City should explore all possible potential sources of inter -tie x. Connection charges for new customers be eliminated. y. Rates should be administered in strict accordance with the Rate Ordinance. Regarding this last: Spencer says the variances are minor, but if there is to be a deviation, the Ord* should be changed. Its will inform Don Mayor the variances are not of a serious nature. This report was discussed in some detail, page by page, and subject by subject. Special Council oting 18 Nov 65 Moo two The tone of the report showed satisfaction, generally, in KCL operations. 'rho above suggestions were mostly for more benefit of management. Spencer pointed out they do not consider the generation to be adequate --suf- ficient, but not adequate. The now generator to be installed in Jan 166 should help. a� Line loss has been reduced from the 23% when the system was purchased to about �u 10% now. Change -over to Wye helped on this; further reduction in line loss can be made by replacing defective transformers, motors, linos, and by a steady power factor Beck does not recommend repayment of advance construction monies at a rate above 25%. At present, FAA is getting repayment at 75% of monthly billings. The amounts for capital improvements can be improved by bettor bookkeeping. Spencer says this year is the critical year for KC1.. Operating expense has increased extensively, and an expenditure of 5 or 6 thousand dollars above the bud- get can take the bond coverage down too low. 04 He suggests Council should formally establish a policy with regard to payment t° in lion of taxes to the City. This was also a recommendation of the Auditor. TC1, has been paying It of gross revenue which is allowed by bond ordinance. Spencer ei recommends the 1% of gross be retained, but that Wildwood and the Peninsula growers be deleted from this total. a. Telephone cables should be removed from KCL polos. An emergency generator should be installed West of town. Kenai Packers and Peninsula Growers rates should be reviewed. A rate reduction is not feasible in the foreseable future --"perhaps more im- portant is a continuous source of power to all customers --an alternate power supply �+ should be assurod The City might do well to spend "promotional money" reminding industry of KCL's industrial rate --one of the lowest in Alaska. The principal criticism of the report centers on the administrative works Most of this neglect has boon duo to lack of office personnel. Portions of the bond Ordinance regarding reports have not been followed. It is hoped a full time assist- ant can be hired in the very near future to assist in administration of KCL. Water a Sewer, Street assessments, and the snow -balling book -work which comes with these added services. Phse two of the report was btiefiy•rovismad`itkt,Councii's request. It is estimated a revenue bond issue of $150,000 could handle the purchse, but Spencer cautions against the City's limiting itself too stringently. Costs accrued on this project should be paid by bond monies. The report recommends the City negotiaU with H.B.A. for this purchase, as it is undesirable to have the two companies operating within the City Limits. Phase three - Purchase of CUL is not recommended at this time as" it is less costly e to purchase power than to provide self-generation"....''estimates of net revenues of a the distribution and generating facilities will be insufficient to moot requirements M. on parity bonds", etc. Odin Strandberg requested a meeting with Council in the near future; he will have to '$ put in a 4000 KW gas turbine next year, or by 1967 at least. This will be on the Agenda about the second meeting in Dec. The status of the bond market was discussed: The eity hasn't much chance of a good interest rate because we haven't boon in the Power business long enough for a his-tory. Also when KCL first issued Power bonds, the Index was rated at 3.17--it is .04 now 3.40. However, an increase in high revenue customers could change the picture. Permission was given Harrison, at his request, to submit the N.E.A. report to Farnen and the H.B.A. Pres, of the Association. It is desirable to have a signed agreement by i Jan 066, Council thanked Mr. Spencer for the excellent report. Ile will be in town until Sat6 eve. if Council wishes more detail on the study. M !PY/ry 6r tuvt ej Zmiw �� s