Explanation
BACKGROUND: This legislation authorizes the Director of Columbus Water & Power to negotiate with multiple potential providers of purchase power to enter into a contract for purchase power and waives provisions of Columbus City Code relating to award of contracts through the RFP process. Negotiating contract terms and power pricing with more than one provider should allow the City to secure the best contract available.
Columbus Water & Power will request proposals from potential suppliers and will negotiate contract terms and conditions with suppliers deemed to have submitted responsive proposals. This process will allow department staff to compare proposals and terms in order to select the best purchase power contract for the Division of Power.
The Department has secured purchase power contracts in effect through December 31, 2028. This new request would solicit pricing for, at a minimum, 12-month, 17-month, 24-month, and 36-month terms in order to secure power up to and including December 31, 2031, in order to meet the Department’s requirements, or a portion thereof as the Department works to accommodate the City’s sustainability objectives. The term and quantity of any contract that may be executed would depend on the pricing proposals received. The Department may also add a “green power” component to the request for proposals to support the City’s sustainability objectives. The “green power” component may include energy from specific renewable energy projects, in which case the term for such green power may extend beyond December 31, 2031.
It is in our customers’ best interests to obtain stable and predictable electric supply prices in advance, and current market conditions may provide an opportunity to secure a portion of the Department’s power supply requirements for December 31, 2028 through December 31, 2031. The PJM wholesale market is experiencing significant change as forecasted demand growth, particularly from large-load customers and data centers, outpaces the addition of new generation resources. Recent capacity auctions have reflected these tightening conditions through elevated prices and projected supply shortfalls.
Natural gas also remains an important driver of wholesale electric prices, while increasing domestic demand and LNG exports may create additional future price uncertainty. Beginning the procurement process now would allow the Department to evaluate multiple suppliers and contracting structures and, where advantageous, secure future requirements over time rather than relying on a single procurement point. These conditions warrant authorizing the Director of Columbus Water & Power to negotiate with multiple potential suppliers to promote price stability, preserve flexibility, and reduce exposure to future market volatility. This ordinance does not require the Director of Columbus Water & Power to execute a contract if the RFP process does not produce pricing/terms and conditions that serve the best interest of the City and its customers.
FISCAL IMPACT:
There is an expenditure of $1.00 associated with this ordinance to allow the Director of Columbus Water & Power the authority to enter into a contractual agreement for the purpose of locking down a firm fixed price for the supply of power. Ordinances will be submitted yearly to fund any planned phases of the contract.
Title
To authorize the Director of Columbus Water & Power to negotiate and enter into a contract for purchase power; to waive the competitive bidding provisions of the Columbus City Codes; and to authorize the expenditure of $1.00 from the Electricity Operating Fund. ($1.00)
Body
WHEREAS, it is necessary to enter into a contract for purchase power for estimated power needs prior to the expiration of current contracts which are secured through December 31, 2028; and
WHEREAS, in order to secure the best combination of contract terms and pricing it is advisable to negotiate with more than one potential power supplier; and
WHEREAS, it is in the best interest of the City due to current conditions within the market to authorize the Director of Columbus Water & Power to negotiate contract terms and enter into a contract with the power supplier deemed to provide the best overall terms and pricing for a term of up to December 31, 2031; and
WHEREAS, it is necessary to waive provisions of the Columbus City Code relating to selection using the request for proposal process to allow negotiation with multiple power suppliers; and
WHEREAS, it has become necessary in the usual daily operation of the Division of Power, Columbus Water & Power, to authorize the Director of Columbus Water & Power to negotiate and enter into a contract for purchase power to allow contract negotiations on behalf of the Division of Power; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. 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 the Columbus City Codes concerning awarding contracts through the request for proposal process.
SECTION 2. That the Director of Columbus Water & Power is hereby authorized to negotiate for and to enter into a contract for the supply of purchase power for the Division of Power in the amount of one dollar ($1.00).
SECTION 3. That this ordinance does not require the Director of Columbus Water & Power to execute a contract if the RFP process does not produce pricing/terms and conditions that serve 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 in Fund 6300 Electricity Operating Fund, in object class 02 Supplies & Materials per the accounting codes in the attachment to this ordinance.
SECTION 5. That this Ordinance shall take effect and be in force from and after the earliest period allowed by law.