Explanation
BACKGROUND: This legislation authorizes the Director of Public Utilities 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. Based on the advice of consultants retained to assist in the selection process, it has been determined that it is in the City's best interest to negotiate contract terms with more than one power provider. Negotiating contract terms and power pricing with more than one provider will allow the City to secure the best contract available.
The Department of Public Utilities will request proposals from potential suppliers during May 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 and Water.
The existing full requirements purchase power contract has been in effect since January of 2001. This contract was established prior to the restructuring of the electric industry and will expire on December 31, 2006. A new contract is required on January 1, 2007.
Wholesale electric prices are currently driven by the volatile and escalating prices for natural gas and coal that are used to generate electricity. It is also adjusting to restructuring/deregulation by the Federal Energy Regulatory Commission (FERC) and state public utility commissions in an effort to increase competition. These factors have created a seller's market for power producers and a change in the market dynamics from those existing at the time of execution of the existing contract. Wholesale purchase power suppliers are no longer willing to hold firm quoted prices. This wholesale power market environment warrants authorizing the Director of Public Utilities to negotiate contract terms with more than one potential supplier.
This ordinance is requested to be an emergency measure to allow contract negotiations to begin at the earliest possible date.
FISCAL IMPACT:
There is an expenditure of $1.00 associated with this ordinance to allow the Director of Public Utilities the authority to enter into a contractual agreement for the purpose of locking down a firm fixed price for the supply of power. It is anticipated that the contract will have a multiyear term. Ordinances will be submitted yearly to fund these planned phases of the contract.
Title
To authorize the Director of Public Utilities to negotiate and enter into a contract for purchase power, to waive provisions of Columbus City Code relating to award of contracts through the request for proposal process, to authorize the expenditure of $1.00 from the Electricity Operating Fund and to declare an emergency. ($1.00)
Body
WHEREAS, it is necessary to enter into a contract for purchase power prior to expiration of the current contract on December 31, 2006; 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 to authorize the Director of Public Utilities to negotiate contract terms and enter into a contract with the power supplier deemed to provide the best overall terms and pricing; and
WHEREAS, it is necessary to waive provisions of Columbus City Code relating to selection using the request for proposal process to allow negotiation with multiple power suppliers; and
WHEREAS, an emergency exists in the usual daily operation of the Division of Power and Water, of the Department of Public Utilities, in that is immediately necessary to authorize the Director of Public Utilities to negotiate and enter into a contract for purchase power, to waive provisions of Columbus City Code relating to award of contracts through the RFP process, in an emergency manner to allow contract negotiations to begin at the earliest possible date, for the immediate preservation of the public health, peace, property and safety, 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 is served by waiving, and does hereby waive Section 329.14, concerning awarding contracts through the request for proposal process.
SECTION 2. That the Director of Public Utilities is hereby authorized to negotiate for and to enter into a contract for the supply of purchase power for the Division of Power and Water in the amount of one dollar ($1.00).
SECTION 3 That the expenditure of $1.00 is hereby authorized from the Electricity Operating Fund 550, Division 6007, OCA 606715, OL1 02, OL3 2233
SECTION 4. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is hereby 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.