HomeMy WebLinkAboutCity of Noorvik Heat Recovery Project Sales Agreement - Apr 2016 - REF Grant 7060941RECOVERED HEAT SALES AGREEMENT BETWEEN
Alaska Rural Utility Collaborative
and
Alaska Village Electric Cooperative, Inc.
WHEREAS the Provider, Alaska Village Electric Cooperative, Inc. (AVEC), a non-
profit electric cooperative membership corporation whose address is 4831 Eagle
Street, Anchorage, Alaska 99503, owns, operates, and maintains an electric power
plant in Noorvik, Alaska; and
WHEREAS the Purchaser, the Alaska Rural Utility Collaborative, whose address
is 3600 Ambassador Drive, Suite 301, Anchorage, Alaska 99508, operates and
maintains the Water Treatment Plant in Noorvik, Alaska; and
WHEREAS, heat generated by the Provider's power plant during production of
electric power can be recovered and used to reduce Purchaser's heating fuel
consumption and boiler exhaust emissions at Purchaser's Heated Facilities; and
WHEREAS, the Provider and the Purchaser wish to enter into an agreement for
the sale and purchase of Recovered Heat; and
WHEREAS, the Purchaser understands and acknowledges that Recovered Heat
is Supplemental Heat which is intended solely to reduce Purchaser's heating fuel
consumption and it is the responsibility of the Purchaser to operate and maintain
a Primary Heat source at the Purchaser's 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 Heat Sales Agreement
b) "BTU" shall mean British thermal unit, a standard unit for measurement
of thermal energy (heat).
c) "Delivery Point" shall mean the point in the System where ownership and
operations and maintenance responsibilities transfers from Provider to
Purchaser as described herein. The Provider shall own, operate, and
maintain all equipment up to the connection to the Purchaser's heat
Heat Sales Agreement — Alaska Rural Utility Collaborative
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exchanger located in the Provider's power plant. The Purchaser shall
own, operate, and maintain all equipment up to and beyond the
Provider's connection point on the Purchaser's heat exchanger located
in the Provider's power plant.
d) "Effective Date" shall mean the date that this Agreement is executed by
both parties.
e) "Interruptible Basis" shall mean that the Recovered Heat will be provided
only when available and may be reduced or stopped at the option of the
Provider with little or no notice.
f) "Operational Date" shall mean the date on which Recovered Heat is first
delivered.
g) "Primary Heat" shall mean the normal heating system (boiler, furnace,
pumps, piping, appurtenances, etc.) and associated fuel supply for the
Purchaser's Heated Facilities which is capable of meeting the full
heating demand of the facilities.
h) "Provider" shall mean Alaska Village Electric Cooperative, Inc.
i) "Provider's System" shall mean that portion of the System in Provider's
Power Plant up to and including the Delivery Point.
j) "Purchaser" shall mean the Alaska Rural Utility Collaborative.
k) "Purchaser's Heated Facilities" shall mean all Purchaser facilities that
receive Recovered Heat.
1) "Purchaser's System" shall mean the System from the Delivery Point to
the Purchaser Heating System.
m) "Recovered Heat" shall mean heat recovered from Provider's power
plant and provided to the Purchaser.
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.
o) "System" shall mean the equipment and piping put into place to recover,
transport, and deliver heat from the Provider's power plant to the
Purchaser's Heated Facilities.
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Section 2. Term
a) General. This Agreement shall remain in effect for five 5 years from
the Effective Date. The Agreement shall be automatically renewed for
an additional five 5 years if the Purchaser continues to accept
Recovered Heat after the initial five years. 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 five 5 year term of its intention to end
the Agreement.
b) Early Termination. Notwithstanding the foregoing, this Agreement may
be terminated early due to the following reasons:
i) The Operational Date has not occurred within twenty-four (24)
months of the Effective Date.
ii) Material failure of either party in performing or fulfilling its
obligations under this Agreement at which time this Agreement
may be terminated at the option of the other party.
iii) The contract between the City of Noorvik and ARUC is
terminated.
c) Relocation of Power Plant. If Provider's power plant is relocated, the
cost of making any necessary modifications to the Provider's System to
continue to provide Recovered Heat to Purchaser shall be the sole
responsibility of Provider. If, in Provider's judgment, the anticipated cost
of such modifications is not expected to be recovered within a
reasonable time period, Provider retains the right to terminate this
Agreement.
d) Abandonment of Purchaser's Heated Facilities. If all of the Purchaser
Heated Facilities are abandoned and no longer heated, then this
Agreement shall terminate. The Purchaser will be required to remove
the Purchaser's System from the Provider's property and facilities within
one year, unless Provider agrees that some or all of the Purchaser's
System can remain.
Section 3. Construction of System
a) The Purchaser, or the Purchaser's authorized agent, will be authorized
upon reasonable notice to enter upon, over and under the Provider's
premises, including Provider's Facilities, to construct, reconstruct,
maintain, inspect, repair, operate, improve, and update the Recovered
Heat System; provided, however, that Purchaser must coordinate such
entry onto Provider's premises with Provider to ensure the safety and
integrity of Provider's power plant.
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b) The System may consist of piping, heat exchangers, pumps, valves and
appurtenances necessary to recover, transport, and deliver heat from
the Provider's power plant to the Purchaser's Heated Facilities.
c) The construction schedule of the new System will be agreed upon after
review and approval of project drawings by Provider and Purchaser. All
construction within the Provider's facility shall be coordinated with the
Provider.
Section 4. Operations
a) Supply of Recovered Heat. Beginning on the Operational Date Provider
will supply Recovered Heat to Purchaser under the terms and conditions
of this Agreement. It is agreed to and understood by both parties that
Recovered Heat will be supplied to Purchaser's Heated Facilities on an
Interruptible Basis and that Recovered Heat is Supplemental Heat.
b) Purchaser Facilities Primary Heat. Purchaser shall be solely
responsible at all times to operate and maintain in a fully functioning
manner the Purchaser facilities' Primary Heat System and to maintain
an adequate fuel supply to meet the full heating demand of Purchaser's
Heated Facilities.
c) Pumping Energy. The main circulating pump shall be located at the
Purchaser's Facility and the Purchaser shall furnish the electric power
to operate the main pump at no cost to the Provider. Secondary
circulating pump(s), installed in the Purchaser's Heated Facilities, are
part of the Purchaser's System and the Purchaser shall furnish the
electric power to operate the secondary pump(s) at no cost to the
Provider.
Section 5. System Maintenance
a) Responsibility. Purchaser shall be responsible for maintaining that
portion of the System on the Purchaser's side of the Delivery Point and
the Provider shall be responsible for maintaining that portion of the
System on the Provider's side of the Delivery Point_ All maintenance of
the system inside Provider's facility shall be coordinated with the
Provider to ensure the safety and integrity of Provider's power plant.
b) Failure to Maintain. If the Purchaser fails to properly maintain the
System in a fully functioning and environmentally safe manner, the
Provider shall have the right to take corrective actions and recover its
costs from the Purchaser. Except in the case where a failure to maintain
may imminently threaten life or property, the Provider shall give
reasonable notice in writing to the Purchaser of its intention to take
Heat Sales Agreement —Alaska Rural Utility Collaborative
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corrective action under this paragraph, including an estimate of
recoverable costs.
Section 6. Payment Obligations
a) Commencement. Purchaser's payment obligation described in this
section to Provider shall start on the first day of the second month after
the Operational Date and remain in effect through the term of this
Agreement.
b) Billinq. No separate invoice will be issued by Provider. Billing will be
provided on the Purchaser's monthly electric bill. Purchaser shall pay
such bill each month no later than the 251" of each month.
c) Payment Past Due. All amounts not paid by the date due shall accrue
interest at the rate of one percent (1.0%) per month. In addition, in the
event Purchaser fails to pay any amount due to Provider, Provider
reserves the right to discontinue the supply of Recovered Heat. Provider
will notify Purchaser in writing if the supply of Recovered Heat is being
discontinued for nonpayment and, if within thirty (30) days after receipt
of notification, Purchaser fails to pay the balance due, supply of
Recovered Heat may be discontinued without further notice.
Amount. The amount owed for the month shall be computed using the
following formula.
The heat recovery study provided by Alaska Native Tribal Health
Consortium (ANTHC) dated September 20, 2012, reports that
21,300 gallons of heating fuel was used by the Water Treatment
Plant. It is anticipated that the Provider will be able to supply
18,600 gallons of equivalent heat to the Purchaser per year.
ii. Since Purchaser will be providing all maintenance and will be
paying for all operating costs, Provider will sell the Recovered
Heat to the Purchaser at a rate of 30% of the Provider's average
delivered cost of fuel for the prior year.
iii. In an attempt to simplify the payment process, Provider and
Purchaser agree to divide the payment for the equivalent of
18,600 gallons of Recovered Heat in equal installments over a
twelve (12) month period.
iv. The payment due each month shall be determined by the
following formula:
Payment = 30% of the Provider's average delivered fuel cost for the prior
year.
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Examples: $3.40 (2015 average per gallon delivered fuel cost) X 0.30
(30%) = $1.02 per gallon.
$1.02 per gallon X 18,600 = $18,972 annual amount. $18,972 1 12 =
$1581.00 monthly payment for the Water Treatment Plant.
v. If the Recovered Heat is insufficient and requires the use of the
boilers in the Water Treatment Plant and/or store, the Provider and
Purchaser will work together to resolve the issue and adjust the billing
to reflect the actual Recovered Heat supplied.
vi. If by mutual agreement, recordings from a BTU meter or by data from
a Heat Recovery monitoring system finds that the estimated amount of
Recovered Heat to be to be more than 20% inaccurate, the amount can
be adjusted once annually by the Provider. The Provider shall issue
written notice to the Purchaser 30 days before the adjustment. The water
treatment plant boiler has an overall efficiency of 75% and delivers
100,000 BTU of heat for every gallon of #1 diesel fuel consumed. This
value will be used for calculating any fuel offset.
Section 7. Right to Sell Additional Recovered Heat
a) General. Provider retains the right to sell additional Recovered Heat to
other entities.
b) No Significant Effect. If the sale of additional Recovered Heat will not
significantly reduce the amount of Recovered Heat available under this
Agreement (less than 20% reduction), the Provider shall issue written
notice to the Purchaser of the intent to sell additional Recovered Heat
prior to commencing delivery of additional Recovered Heat.
c) Significant Effect. If the sale of additional Recovered Heat will
significantly reduce the amount of Recovered Heat available under this
Agreement (greater than 20% reduction), the Provider shall issue written
notice to the Purchaser of the intent to sell additional Recovered Heat a
minimum of 6 months prior to commencing delivery of additional
Recovered Heat.
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.
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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) Provider will not be liable for any damage or loss
to persons or property arising out of the operation of the System unless
the damage or loss was caused by Provider's sole and exclusive
negligence, and (ii) Provider will not be liable for any damage or loss
caused by failure to provide Recovered Heat to Purchaser.
Section 9. 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
Anchorage, 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) Revenues: The Provider will apply the revenues from the System as
follows:
i. to fund a reserve for periodic maintenance and renewal of the
Provider's System; then
ii. to refund any matching funds or contributions advanced to
them from the Provider's general fund for the Recovered Heat System
construction; and then
iii. to refund improvements made by the Provider to improve the
availability of Recovered Heat; and then
iv. to offset fuel costs for the service area served by the local
Provider's generation plant, thereby reducing the fuel charge per
kilowatt-hour for all electricity supplied in that service area.
Heat Sales Agreement — Alaska Rural Utility Collaborative
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IN WITNESS WHEREOF, the parties have caused this document to be executed
on the dates indicated below.
Alaska Rural Utility Collaborative
Signed -�
ARUC Manager
Dated / 2��r •��
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
The foregoing Heat Sales Agreement was acknowledged before me this
day of I 1 20 Imo, by i (-, n 41 ►il
Notary Public in and for the State of Alaska
My commission expires: MYCOM ISSIonE Expires
Alaska Village Electric Coo rative, Inc
Signed V4�YA "(�,A
Meera Kohler, CEO
Dated Z-O I L2
STATE OF ALASKA }
)ss
THIRD JUDICIAL DISTRICT )
The foregoing Heat Sales Agreement was acknowledged before me this
day of Avo
io�j �'.•.....•
•�ol� ayOtt Pores,
20/�, by -�
Notary Public In and for the State of Alaska
My commission expires
Heat Sales Agreement — Alaska Rural Utility Collaborative
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