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A Feasibility Study to Determine the Viability of Public Ownership of the Electric Utility Serving Bethel, Alaska

City of Bethel, Alaska

INTRODUCTION

Purpose

The City of Bethel is accepting proposals from electric utility, financial, economic, and regulatory consulting firms to examine the City's electric load growth, project the cost of service from alternative suppliers, and estimate the capital and operating costs associated with a transfer from current, or future, ownership, to a publicly owned electric utility. The possibility of having supplemental work performed by an electric utility law firm should receive consideration and be factored into the proposal process.

The ultimate goal of the study will be to determine if transferring ownership from a privately owned company to a publicly owned electric utility is feasible, and if so, how that transfer would reduce the cost of energy for the ratepayers of Bethel while concurrently reducing the costs to the State of Alaska in the Power Cost Equalization (PCE) Program.

Overview
Bethel, Alaska is the largest western hub community in Alaska, containing 5,803 residents. It is located 400 miles west of Anchorage along the Kuskokwim River. The City is 40 miles inland from the Bering Sea.
Three companies provide airline service to Bethel from Anchorage: Alaska Airlines, Frontier Air, and ERA Aviation. The flight time is approximately one hour.
Bethel Utilities Corporation is the one privately owned electric utility in Bethel that provides diesel-generated power to residents of Bethel, Napaskiak, and Oscarville. Bethel Utilities Corporation operates one power plant 24 hours a day, seven days a week in the center of town. The plant uses one or more of its six EDS 2,500 kW diesel generators to produce and sell electricity to customers through its grid in Bethel.
Scope of Work
The feasibility study must accomplish items A through H described below.
A. Estimate present and future electric utility revenue requirements and customer rates under alternative ownership structures, including at a minimum, the following:
1. Investor-Owned Utility
2. City-Owned Utility (including operation of the utility by a contractor of the City)
3. Customer-Owned Electric Cooperative

This analysis should include consideration of differences among the structures in the following areas: Operation and maintenance costs, administrative and general costs, property and income tax expense allowances in utility rates, required return on investment (or margin), and cost of compliance with economic regulation by the Regulatory Commission of Alaska (RCA). City-2 owned utilities are exempt from economic regulation and an electric cooperative can become exempt upon election of its members.

B. Evaluate any cost savings that could be realized by the various ownership structures as a result of alternative fuel procurement and storage practices.
C. Evaluate any cost savings that could be realized by the various ownership structures with respect to the integration of wind power into the provision of electric utility services to the public.
D. Evaluate any cost savings (in terms of electric utility cost of service as well as heating costs to the City) that could be realized by the various ownership structures as a result of surplus heat sales from the utility to City-owned buildings.
E. In all of the evaluations listed above, the contractor should evaluate costs and benefits from three (3) perspectives:
1. Electric utility rates paid by utility ratepayers, as a whole.
2. Electric utility rates, heating costs, and local sales tax impacts to be experienced by the City.
3. Subsidies required from the PCE program.
F. Evaluate the comparative costs and benefits associated with the various utility ownership structures with respect to providing local, democratic control of utility decision-making.
G. Evaluate the impacts of the various utility ownership structures on encouraging economic development in Bethel. Factors to be considered should include, but not be limited to, the following with respect to impacts on new, or expanded, economic activity:
1. Impacts of electric utility rates on the new, or expanded, economic activity
2. Impacts of electric utility rates on the demand (e.g., through increased disposable income) of potential customers for the products, or services, of the new, or expanded, economic activity.
3. Impacts of changes in local sales and income taxes that would affect new, or expanded, economic activity.

H. Evaluate the legal, regulatory, economic, and practical constraints and limitations on implementing changes in utility ownership structure from the current structure. This evaluation should include, but not be limited to:
1. Estimation of the purchase price that would likely be required for a new utility owner to acquire the utility assets and operations from either BUC, or prospective purchaser TDX. The likely purchase price will affect the rates and other impacts to be evaluated above.
2. Review any legal, or regulator, options and strategies for bringing about the acquisition of the utility assets and operations from BUC, or prospective purchaser TDX.

Proposers may attempt to obtain copies of the prior Alaska Public Utilities Commission decisions regarding the proposed sale of Bethel Utilities Corporation (BUC) assets to Alaska Village Electric Cooperative, Inc. (AVEC) and the subsequent APUC management practices review of BUC regarding fuel procurement from the Regulatory Commission of Alaska. The City of Bethel does not have documentation on the decisions or review.

GENERAL REQUIREMENTS AND CONDITIONS

Submission of Bids

Proposal packages may be withdrawn prior to the scheduled time for the bid opening or before any authorized postponement thereof. Any bid or bid modification received after the time and date specified shall NOT be considered. No respondent may withdraw a proposal within thirty (30) days after the Opening Date. Conditional proposals will NOT be accepted.
The City has a right to determine the qualifications of any respondent to perform the work specified in the proposal package. Upon request, the respondent shall furnish to the City, all information and data for the purpose of determining the respondent's qualifications. The City reserves the right to reject any proposal if the respondent fails to satisfy the City that the respondent is properly qualified to carry out the obligations required in this Request for Proposals document.

The City reserves the right to reject any and all proposals.

No contract shall be awarded to a person, group, organization, or other entity that is delinquent in the payment or collection of sales taxes, fees, charges, penalties, interest or other amounts that are due and owing, or otherwise obligated to the City of Bethel. See Bethel Municipal Code Title 4, Chapter 20.290.
Instructions
1. Read the Request for Proposals document. Questions may be submitted by telephone or in writing and sent, faxed, or e-mailed to:
Lee Foley, City Manager
Tel.: (907) 543-1373
Fax: (907) 543-1394
E-mail: [email protected]

2. Prepare and submit a proposal package containing the following: One Page Cover Letter, Bid Sheet (attached), Proposal, and Company Information. See detail under Proposed Package Contents section.
Proposal packages may be in MS Word format or pdf format and sent to Lee Foley by email at ([email protected]) or by fax: 907-543-1394. The City is not responsible for incomplete transmissions or successful delivery by electronic means. The City will send an email to the responder to confirm receipt of the proposal materials submitted.
Proposal packages submitted in hard copy form must be in an envelope and marked, "Proposal for Utility Acquisition Feasibility Study." Proposal submissions must be received by the

Opening Date and Time: December 6, 2010, 4:00 pm Alaska Time. Send or deliver complete proposal package to:

Lee Foley, City Manager
City of Bethel
300 State Highway
P.O. Box 1388
Bethel, AK 99559

Respondents will be notified by email or telephone that the City Manager has received the proposal package.
Proposal Package Contents

1. Cover Letter
One-page cover letter expressing interest in performing the work required to complete the utility acquisition feasibility study and how company's experience, skill-set, and resources make it the ideal firm to complete the work.
2. Bid Sheet
Complete and sign Bid Sheet attached.
3. Proposal
a. Goals, objectives, and tasks to be accomplished.
b. Methodology – Describe how goals and objectives will be accomplished; how will data and information be gathered; mention sources (e.g., individuals, agencies, reports) of the data/information; mention who will be overseeing or performing the work (if known) or which division of the company will be overseeing or performing the work; mention the use of other firms, partnerships, and collaborative efforts.
c. Expertise – Express the names and qualifications of individuals who will be involved with this study who have relevant expertise. Include resumes, work profiles, and experience summaries as appropriate.
d. Timeline – Include a timeline that describes various milestones, their completion dates, and the deliverables to the City. Mention how and in what form the deliverables will be given to the City (e.g., pdf document by email, CD in the mail, MS Word document).
e. Budget – Include a budget for parts of the project and a total proposed bid amount. The total proposed bid amount should be the same as the total amount listed on the Bid Sheet.
f. Final Report format – Provide an outline or sketch of the contents of the final report and how it will be formatted so that it is easy to read with relevant charts, tables, and photos. The City of Bethel understands that the actual report will likely vary from this initial outline, but wants to be sure the consulting firm can begin with the City's intended "end result" in mind.

4. Company Information
Include information about the consulting firm that will aid City of Bethel decision-makers when deciding which company to select to complete the utility acquisition study. Include any brochures, write-ups, publications, and other promotional material, as appropriate.

Proposal Protocol

The City reserves the right, at its sole discretion, to reject any and all proposals without prejudice to respondents, and to extend the opening date for submitting proposal packages.

The City may accept one of the proposals, subject to funds legally available and lawfully appropriated for the purposes set out in this Request for Bids document. The City will indicate its acceptance of the bid by a written Notice of Award, mailed to the person, company and address identified on the Bid Sheet.

The Notice of Award will be accompanied by a contract. If acceptable to both parties, the contract must be signed and returned to the City (postmarked) within seven (7) days from the time it is received by the awardee. If negotiations over the contract terms ensue between the two parties, then a final contract mutually agreeable to both parties, must be signed by the awardee and returned to the City within thirty (30) days.

The successful respondent shall comply with all applicable federal and state laws, City ordinances, and the rules and regulations of all authorities having jurisdiction over the fulfillment of the intended purchase as the purchase is described in this Request for Proposals document.

Project Timeline
Date Event
Friday, November 5, 2010 RFP Issued

Monday, December 6, 2003 Proposals due to City Hall by 4:00 pm. Proposals opened at 4:00 pm, list made of companies that submitted proposals, and respective bid amounts.

Monday, December 20, 2010 Proposals evaluated and decision recommended to the City Manager. City Manager makes final selection.

Wednesday, December 22, 2010 Notice to Proceed issued to selected proposer.

Wednesday, March 31, 2010 Final Draft of Project Completed and submitted to the City for review and comment.
The city reserves the right to adjust the timeline above, with notice to the proposers.

Bid Package Evaluation

The City will develop a scoring matrix to evaluate the proposal packages submitted. At least three individuals will evaluate the proposal packages received within two weeks of the opening date. The scoring matrix will be based on the categories in the following table.

Category Description Points
Goals, Objectives, Tasks Goals, objectives, and tasks relative to accomplishing the scope of work elements detailed in this RFP. Are they appropriate, comprehensive, and logical? 15
Methodology Methodology as described in the proposal. Is it appropriate, relevant, complete, realistic, and logical? Can the proposed tasks be completed according to the timeline submitted? 40
Expertise and Company Information Are the experts and company/agency sources appropriate, accessible, and committed to working on this project? Does the company have sufficient experience, knowledge, and ability to complete a high-quality feasibility study? 15
Price to Value Bid price relative to the value and level of service to be provided to the City of Bethel. The higher the price, the higher the level of service is expected. The lowest bidder will not necessarily achieve maximum points in this category. 30
Total 100

Insurance Requirement

The contract between the City of Bethel and the chosen proposer will require the proposer to have comprehensive general liability insurance with $500,000 (five hundred thousand dollar) limits naming the City of Bethel as additional insured. The contractor shall not commence work under the contract until he/she has obtained all the insurance required and such insurance has been approved by the City.

Default and/or Termination
Any default by the successful respondent in any manner in the performance of its obligations shall be handled in accordance with the terms and conditions of the signed contract.

In case of default by the vendor, for any reason(s) whatsoever, the City of Bethel may procure the goods and/or services from another source and hold the vendor responsible for any resulting excess cost. The City may seek other remedies under the law.

Contract Management
City Manager Lee Foley will be the managing authority for this project and the contract with the consulting firm.

Billing and Payment

The consulting firm should send or present an invoice to the City of Bethel for payment that clearly shows the work completed. Invoices should be mailed to the City of Bethel on a monthly basis to: Mr. Bobby Sutton, City of Bethel, P.O. Box 1388, Bethel, Alaska 99559. Payment is usually made within thirty (30) days of the date of the invoice in accordance with standard payment procedures, unless there are one or more charges in dispute on the invoice.

BID SHEET

CITY OF BETHEL
FEASIBLITY STUDY FOR PUBLIC OWNERSHIP OF ELECTRIC UTILITY
Bid Date: ____________________ Bid Submitted by: _____________________________
TOTAL BID PRICE
____________________________________________________ $ _____________________
(Use words: Ex. One hundred thousand dollars) (use numerals: Ex. $100,000)
SIGNATURE AND VERIFICATION
Pursuant to and in compliance with the City of Bethel's Request for Proposals, the undersigned hereby proposes to complete the scope of work described herein and in the proposal submitted for review and approval for the total amount of money given above.
Respondent
Name (printed):
Title:
Company Name and Mailing Address:
Telephone Number:
Fax Number:
E-mail Address:
Signature:

Published on:
November 18, 2010 - 4:50pm
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