HomeMy WebLinkAboutCity of Saint Mary's Recovered Heat Sales Agreement - Mar 2018 - REF Grant 7071043RECOVERED HEAT SALES AGREEMENT BETWEEN
City of Saint Mary's
and
Alaska Village Electric Cooperative, Inc.
WHEREAS the Provider, Alaska Village Electric Cooperative, Inc. (AVEC), a non-profit cooperative
membership corporation whose address is 4831 Eagle Street, Anchorage, Alaska 99503, owns,
operates, and maintains an electric power plant in Saint Marys, Alaska; and
WHEREAS the Purchaser, City of Saint Mary's whose address is PO Box 209, Saint Mary's, Alaska
99658, operates and maintains the City Shop, Water Circulation Loops, Cold Storage/Hotel, and
City Office Building in Saint Mary's, 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:
"Agreement" shall mean this Heat Sales Agreement.
"BTU" shall mean British Thermal Unit, a standard unit for measurement of thermal energy
(heat).
"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 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.
"Effective Date" shall mean the date that this Agreement is executed by both parties and
recovered heat from the new 2018 expansion project is delivered or November 15`, 2018,
whichever comes first.
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"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. Notice
when available shall be aiven.
"Operational Date" shall mean the date on which Recovered Heat from the new 2018 expansion
project is first delivered.
"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.
"Provider" shall mean Alaska Village Electric Cooperative, Inc.
"Provider's System" shall mean that portion of the System in Provider's Power Plant up to and
including the Delivery Point.
"Purchaser" shall mean City of Saint Mary's.
"Purchaser's Heated Facilities" shall mean all Purchaser facilities that receive Recovered Heat.
"Purchaser's System" shall mean the System from the Delivery Point to the Purchaser's Heated
Facilities.
"Recovered Heat" shall mean heat recovered from Provider's power plant and provided to the
Purchaser.
"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.
"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.
Section 2. Terms
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.
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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.
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. Provider
will also absorb the cost of reconnection to the Purchaser if the relocated power
plant is less than 400 feet from Purchasers connection point. If over 400 feet the
Purchaser is responsible for the cost of reconnection.
d) Abandonment of Purchaser's Heated Facilities. If all of the Purchaser's 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.
e) 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.
f) 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 may be supplied
to Purchaser's Heated Facilities on an Interruptible Basis and that Recovered Heat is
Supplemental Heat.
b) Purchaser's Facilities' Primary Heat. Purchaser shall be solely responsible at all
times to operate and maintain in a fully functioning manner the Purchaser's
Facilities' Primary Heat System and to maintain an adequate fuel supply to meet the
full heating demand of Purchaser's Heated Facilities.
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C) Pumping Energy. The main circulating pump and any secondary circulating pump(s)
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.
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.
d) 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
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. (For example, Operational
Date February 28, 2017, Billing Date: April 2017 for March Recovered Heat).
b) Billing. At Provider's discretion, invoices shall be sent monthly or quarterly. Each
invoice will be subject to its own due dates. It will be sent to the following address:
Contact:
Entity:
City of Saint Mary's
Address:
PO Box 209
Saint Mary's, AK 99658
Phone:
907.438.2515
Fax:
907.438.2719
Email:
ksmaccounting@gci.net
If contact information changes, Purchaser will immediately contact Provider by
email eovei@avec.org, phone 907-561-5376 or fax 907-565-5356.
C) Payment Past Due. All amounts not paid by the date due may 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
n
after receipt of notification, Purchaser fails to pay the balance due, and supply of
Recovered Heat may be discontinued without further notice.
d) Invoice Amount.
i) The St. Mary's, Alaska Heat Recovery Study prepared by the Alaska Native
Tribal Health Consortium dated September 6, 2013, reports that 15,918 gallons
of heating fuel was used by the Purchaser's Heated Facilities. It is anticipated
that the Provider will be able to supply 15,726 gallons of equivalent heat to the
Purchaser per year.
Facility
Est. Annual
Fuel Use
(Gallons)
Est. Annual
Fuel Avoided
(Gallons)
City Shop
5,270
5,078
Water Circulation Loop
4,294
4,294
Cold Storage/Hotel
3,529
3,529
City Office Building
2,823
2,823
Total
15,918
15,726
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. The
cost of fuel will be adjusted annually by the Provider.
The payment due each invoice shall be determined by one of the following
formulas below (a or b) depending upon the functionality of the metering
equipment.
iii.a) If no metering equipment failures of more than 30 days were detected
during the period, the bill may be based on the meter reading, calculated as
follows:
iii.b) In an attempt to simplify the payment process during periods where
failures are detected on metering equipment, Provider and Purchaser agree to
evenly divide the payment based on the heat recovery assessment estimates
utilizing the following formula.
Example for demonstration only:
Recovered Heat Sales Agreement — City of Saint Mary's AVEC 2016 v01.
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Rate= 30% of the Provider's average delivered fuel cost for the prior year.
2016 average delivered fuel cost= $2.2991
Estimated Annual Gallons=15,726 gallons
$2.2991 *30% _ $0.69 per gallon
15,726 gallons *$0.69 = $10,846.69
Payment: $10,846.69112 = $903.89 monthly OR $10,846.6914 = $2,711.67
quarterly
iv) If by mutual agreement, annual recordings from a BTU meter or by data
from a Heat Recovery monitoring system finds that the estimated amount
of Recovered Heat to be more than 20% inaccurate, the estimated amount
can be adjusted once annually by the Provider. The Provider shall issue
written notice to the Purchaser 30 days before the adjustment. The
Purchaser's Heated Facilities boilers have 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.
v) The Provider will monitor flow rate & temperature and calculate BTU's
delivered on a monthly basis. At the end of the first year of operation
measured BTU's shall be compared to calculate BTU's. If the difference is
within 20% the Provider will start billing based on actual BTU's delivered as
measured by flow rate and temperature.
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 and give a minimum of 9 months' notice 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.
b) Insurance. Each party shall be responsible for obtaining its own insurance for its
facilities and indemnity obligations.
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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.
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IN WITNESS WHEREOF, the parties have caused this document to be executed on the dates
indicated below.
City of SainttMMary's
Signed ,
N e, Position:
Dated �� GS � /- /P
STATE OF ALASKA )
)ss
FOURTH JUDICIAL DISTRICT )
The foregoing Recovered Heat Sales Agreement was acknowledged before me thisA j day of
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6-s�--
%' ao
Notary Public in and for the State of Alaska
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My commission expires: �!
Alaska Village Electric Cooperative, Inc.
Signed
Me a K hler, CEO
Dated
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
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The foregoing Recovered Heat Sales Agreement was acknowledged before me this -Z day of
ial�Gy / 20 J6 , by /Ohm
Notary Public in and for the State of Alaska
State of Alaska My commission expires: na i Jd d o,2
NOTARY PUBLIC
Onya Stein
My Commission Expires January 18
Recovered Heat Sales Agreement - City of Saint Mary's AVEC 2016 v01.
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