Explanation
Background: This Ordinance authorizes the Director of the Department of Finance and Management to negotiate with multiple certified energy suppliers in the State of Ohio for deregulated electric supply of all City-owned facilities on the AEP Ohio distribution system. The current electric supply contract expires in April 2025. The authority of the Finance Director to negotiate such contracts shall extend only to the next contract period. Further negotiating authority for any future contracts beyond that granted by this ordinance will require additional authorization from City Council. Due to the fluid nature of electricity costs, it is in the City’s best interest to routinely shop for more cost effective energy prices. The City has established a Universal Term Contract (UTC) with New River Group, LLC dba Scioto Energy Co. for services related to assisting with the procurement of electrical energy supply prices/costs. This Ordinance seeks authority to engage Scioto Energy, via the aforementioned UTC, to assist with the procurement and negotiation of electrical energy prices that are more beneficial and cost effective than existing rates being paid by the City.
The cost benefits of procuring power through competitive supply are twofold: 1) it allows the City to schedule procurement during periods of low energy prices, and 2) there is normally high demand among competitive suppliers who bid on the City's energy utilization, which ensures that the City receives the most competitive prices. In addition to lower energy costs, procuring power through competitive supply also provides an opportunity to increase the percentage of “green” power the City utilizes. This is accomplished through the inclusion of Renewable Energy Credits (REC’s). These REC’s are priced separately from base energy prices and fluctuate with market movements as well. Scioto Energy will assist the City with the potential procurement of green power by soliciting green pricing proposals from energy suppliers. The purchase of REC’s furthers the City’s goal of carbon reduction in accordance with the Climate Action Plan.
It is in the City's best interest to take advantage of favorable energy market conditions when they arise. The current power market environment warrants authorizing the Director to negotiate contract terms with more than one potential supplier. The Department, through its energy advisor Scioto Energy, will request proposals and negotiate terms and conditions with multiple energy suppliers to select the best purchase power contract for the City. The proposals will solicit pricing options up to 18-months. The Department will also seek a “green power” component to the pricing to support the City’s sustainability objectives. Due to the future start date of the potential power contracts, the City is not obligated to enter into contracts or purchase power if proposals do not meet the budgetary goals or serve the best interest of the City and its customers. Once complete, a report will be shared with City Council on the contract terms as well as an analysis of the alternative supplier terms considered for green, brown, and/or blended options.
The Ordinance also seeks a waiver of provisions of the Columbus City Codes, Chapter 329 relating to award of contracts through the Request for Proposal (RFP) process. The bid waiver is required due to the need to enter a retail supply agreement on the same day the pricing is secured. Energy pricing is volatile and can fluctuate rapidly. As such, it is necessary to authorize the Director to enter into contract immediately before energy supply pricing changes. It should be noted that Scioto Energy will conduct a competitive process, whereby multiple competitive bids from reputable suppliers able to meet the unique needs of the City of Columbus will be solicited.
Bid Waiver Request: While a competitive process to solicit energy supply rates will be utilized, this process will be managed through the City’s UTC energy consultant, Scioto Energy, rather than the Purchasing Office. Therefore, a waiver of the competitive bidding provisions of Columbus City Code, Chapter 329 is being requested.
Waiver of Future Legislation Request: A waiver of future legislation is being requested to allow the Director to negotiate with multiple suppliers who submit responsive proposals to obtain the most favorable terms, conditions and pricing for the City of Columbus. This is due to the fluid nature of commodity and energy prices which can fluctuate daily.
Fiscal Impact: There is an expenditure of $1.00 associated with this ordinance to grant the Director the authority to enter into a contractual agreement for the purpose of locking down a firm fixed price for the supply of power.
Emergency action is requested so that energy supply market rates can be assessed as quickly as possible.
Title
To authorize the Director of the Department of Finance and Management to negotiate and enter into contracts for energy supply; to waive the competitive bidding provisions of the Columbus City Codes; to authorize the expenditure of $1.00 from the General Fund; and to declare an emergency. ($1.00)
Body
WHEREAS, it is necessary for the Department of Finance and Management to negotiate with multiple certified energy suppliers in the State of Ohio for deregulated electric supply of all City-owned facilities on the AEP Ohio distribution system; and
WHEREAS, a competitive process to solicit energy supply rates will be utilized via the City’s UTC energy consultant, Scioto Energy, rather than the Purchasing Office, therefore requiring a waiver of the competitive bidding provisions of Columbus City Code, Chapter 329; and
WHEREAS, due to current conditions within the market, it is in the best interest of the City to authorize the Director of Finance and Management to negotiate contract terms with the power suppliers deemed to provide the best overall terms and pricing;
WHEREAS, the proposals will solicit pricing options up to 18-months; and
WHEREAS, the Department will also seek a “green power” component to the pricing to support the City’s sustainability objectives; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Finance and Management in that it is immediately necessary to authorize the Director to negotiate and enter into contracts for energy supply in order to lock in pricing and to capture potential savings for the City and its taxpayers for the immediate preservation of the public health, peace, property, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Finance and Management is hereby authorized to negotiate and to enter into contracts for the supply of power, with a potential green power option, for multiple City Departments in the amount of one dollar ($1.00) for the next energy supply contract term only.
SECTION 2. That this Council finds the best interest of the City and its customers is served by waiving, and does hereby waive, the relevant Sections of Chapter 329 of Columbus City Codes concerning awarding contracts through the request for proposal process.
SECTION 3. That this Ordinance does not require the Director of the Department of Finance and Management to execute a contract if the competitive process does not produce pricing and terms and conditions that serve in the best interest of the City.
SECTION 4. That the expenditure of $1.00, or so much thereof as may be needed, is hereby authorized from the General Fund per the accounting codes in the attachment to this ordinance.
SECTION 5. That the funds necessary to carry out the purpose of this Ordinance are hereby deemed appropriated, and the City Auditor shall establish such accounting codes as necessary.
SECTION 6. That the City Auditor is hereby authorized and directed to transfer any unencumbered balance in the project account to the unallocated balance within the same fund upon receipt of certification by the Director of the Department administering said project that the project has been completed and the monies no longer required for said project; except that no transfer shall be made from a project account by monies from more than one source.
SECTION 7. That the City Auditor is authorized to establish proper project accounting numbers as appropriate.
SECTION 8. That the City Auditor is authorized to make any accounting changes to revise the funding source for all contracts or contract modifications associated with this Ordinance.
SECTION 9. That for reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is hereby declared an emergency measure and shall take effect and be enforced from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.