Explanation
Ordinance 0786-2013 authorized the Director of the Department of Finance & Management to enter into an Electric Service Agreement with AEP Energy, Inc. for the provision of electric service at certain set rates for various city-owned facilities under the purview of the Departments of Finance & Management, Public Service, and Recreation & Parks.
This agreement was modified pursuant to the authority granted under Ordinance 2539-2013, which allowed for thirty-percent (30%) green power sourcing (i.e. wind-generated, solar-generated, etc.). By adding this feature to the contract, certain city facilities were able to reduce their greenhouse gas emissions by 7%, while largely preserving cost savings negotiated under the original Electric Service Agreement.
This legislation requests authority to modify the existing agreement with AEP Energy, Inc. to allow for fifty-percent (50%) green power sourcing, to include the Department of Public Utilities and the city-owned facilities under their purview, and to extend the contract termination date from May 2, 2016 to May 2, 2018.
It is necessary to modify the terms of the existing contract to respond to rare market conditions and new environmental regulations that are causing uncertainty in the marketplace. The new environmental regulations are collectively known as the EPA’s Clean Power Plan. This plan is set to go into effect in June of 2015. With the arrival of the new regulations, the Regional Transmission Organization (RTO), which serves Columbus and known as PJM, has been preparing to retire many power plants that currently operate throughout the region because they will not meet the new regulations. In total, over 12,000 Megawatts of total capacity are going to be removed from the market, which represents approximately 6% of the PJM electrical grid capacity. Removing this 6% is expected to increase the price of electricity due to decreased supply.
AEP Energy is guaranteeing a supply energy price o...
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