Explanation
BACKGROUND: This ordinance authorizes modifications of Contract Numbers CT-07199 and CT-09743 with American Municipal Power-Ohio, Inc. (AMP-Ohio) and EL000875 with Constellation Energy Commodities Group to provide funding for the purchase of wholesale electricity and associated services for the remainder of 2005.
Authorization is also requested to modify the Constellation Energy Commodities Group contract to add the Italian Village Substation as a delivery point. The terms of the contract provide for alternate or additional delivery points.
Amount of additional funds to be expended: $4,270,000
Reasons additional goods/services could not be foreseen: The increased cost of purchase power is a direct result of rising transmission costs associated with FERC's move toward deregulation of the electric utility industry. In addition for Gorsuch, back up power costs are higher than last year; SO2 and NOx emission credits were purchased at higher cost this year; coal prices have increased, and costs have increased from $4 per ton to over $9 per ton for river transport of coal.
The Division of Electricity has several contracts available to purchase power. In the beginning of 2005 the Division estimated the amounts that would be needed for each contract and upon council's approval each contract was increased accordingly. However, because of the uncertainties in the industry, the Division did not encumber all of its budget authority for purchased power at that time in anticipation that some contracts might need to be increased. It is now apparent that the Amp-Ohio Generic agreement and the Amp-Ohio Gorsuch agreement must be increased to meet the division's need for the remainder of 2005.
The costs for the Constellation Energy Commodities Group were estimated to be lower than originally established for 2005 and the contract was reduced, however, it has recently been determined that due to the recent PJM split of energy, transmission and ancillary services it is necessary to increase this contract as well.
The Division of Electricity is building a new substation to enable the division to support new load growth and reliably serve its customers, therefore, it is necessary to modify the Constellation Energy Commodities Group contract to add the Italian Village Substation as an additional point for delivery of wholesale electric power.
Reason other procurement processes are not used: AMP-Ohio is a non-profit organization for state municipalities and, acting as a broker, has contracted on the City's behalf competitive prices through a bidding process. Contract Number CT-07199 is in effect until December 31, 2005 and CT-09743 (Gorsuch) is in effect until 2008.
There is currently a contract in place with Constellation Energy Commodities Group for the purchase and supply of wholesale electricity. This legislation authorizes an increase in the funding amount to cover needs for the remainder of 2005 and the addition of the Italian Village Substation as a delivery point. Provisions of the existing contract allow delivery points to be added. No other terms or condiions of the contract will be modified.
How cost of modification was determined: The modifications are based upon estimated requirements for the remainder of 2005.
Contract Compliance Number for American Municipal Power is 310943223 and the Contract Compliance Number for Constellation Energy Commodities Group is 522019332.
Emergency action is requested in order that purchases may continue without interruption and payments can be made on a timely basis.
FISCAL IMPACT: $40,605,000 was budgeted in the 2005 Electricity Operating Fund and an additional $454,000 was budgeted for Amp-Ohio service fees. There is sufficient budget authority for this purchase. The total purchase power expenditures for 2003 and 2004 were $34,512,302 and $36,206,430 respectively.
Title
To authorize the Director of Public Utilities to modify contracts for the purchase of wholesale electric power with American Municipal Power-Ohio, Inc. and Constellation Energy Commodities Group for the Division of Electricity, under the provisions of Columbus City Codes; to authorize the expenditure of $4,270,000.00 from the Division of Electricity Operating Fund; and to declare an emergency. ($4,270,000.00)
Body
WHEREAS, the City and American Municipal Power-Ohio (AMP-Ohio) have entered into a generic contract agreement dated March 11, 1986, Contract Number CT-07199, under which certain services may be provided by AMP-Ohio to the City via schedules pursuant thereto; and
WHEREAS, the City and AMP-Ohio have entered into a contract agreement dated July 11, 1988, CT09743, for energy supplied from the Gorsuch Station; and
WHEREAS, on December 21, 2000, under the authority of Ordinance Number 2587-00, passed November 27, 2000, and amended by Ordinance Number 2657-00, passed December 4, 2000, the City of Columbus entered into Contract No. EL-000875 with CMS Marketing, Services and Trading Company for Wholesale Energy Management; and
WHEREAS, Ordinance Number 536-03, passed April 7, 2003, authorized the assignment of the CMS Marketing, Services and Trading Company contract to Constellation Power Source, Inc. whose name was subsequently changed to Constellation Energy Commodities Group; and
WHEREAS, the Division of Electricity is building a new substation in the Italian Village area and it is necessary to modify the contract with Constellation Energy Commodities Group to add the new substation as a delivery point for wholesale electric power; and
WHEREAS, it is necessary to increase the existing contracts to provide for wholesale electric power and associated services required in 2005; and
WHEREAS, emergency action is requested in order that purchases may continue without interruption and payments for purchased power may be made on a timely basis; and
WHEREAS, an emergency exists in the usual daily operation of the Division of Electricity, Department of Public Utilities, in that it is immediately necessary to modify contracts with American Municipal Power-Ohio, Inc. and Constellation Energy Commodities Group for the purchase of wholesale electric power 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 Public Utilities be and is hereby authorized to modify contracts with American Municipal Power-Ohio (AMP-Ohio) and Constellation Energy Commodities Group for the purchase of wholesale electric power and associated services, by increasing the contract amounts by 4,270,000, as follows:
VENDOR/CONTRACT NUMBER AMOUNT
Constellation Energy - EL000875-001 $ 500,000
AMP-Ohio (Generic) - CT07199-001 1,000,000
CT-07199-002 - AMP-Ohio (Services) 20,000
CT-09743 - AMP-Ohio (Gorsuch) 2,750,000
$4,270,000
SECTION 2. That the Director of Public Utilities is hereby authorized to modify Exhibit 3.1 of Contract No. EL-0008975 with CMS Marketing, Services and Trading, subsequently assigned to Constellation Energy Commodities Group, by adding an additional delivery point at the Italian Village Substation.
SECTION 3. That these contract modifications are in compliance with Section 329.13, of Columbus City Codes, 1959.
SECTION 4. That to pay the cost of the aforesaid contract modifications, the expenditure of $4,270,000.00, or so much thereof as may be needed, is hereby authorized from Division of Electricity Operating Fund 550, Division No. 60-07, OCA Code 606715, and shall be disbursed among the following Object Level Three Codes:
Object Level Three: 2233 | Amount: $4,250,000
Object Level Three: 3333 | Amount: 20,000
Total: $4,270,000
SECTION 5. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.