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. Negotiating contract terms and power pricing with more than one provider should allow the City to secure the best contract available.
The Department of Public Utilities 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 and Water.
The existing purchase power contract is in effect until May 31, 2012. The new proposal would provide power through May 31, 2014. It is in our customer's best interest to obtain stable prices in advance and it would be beneficial to secure power for these years at this time. 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. This wholesale power market environment warrants authorizing the Director of Public Utilities to negotiate contract terms with more than one potential supplier. The department wishes to advertise for purchase power at this time because current market conditions indicate future pricing may in fact be lower than would have been anticipated . This request for proposals will determine whether purchasing power through May of 2014 will provide stable or possibly reduced cost.
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