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 an...
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