Explanation
Background: 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.) and was later modified pursuant to Ordinance 1151-2015, which allowed for fifty-percent (50%) green power sourcing as well as extending the original term from May 2, 2016 to May 2, 2018. Ordinance 1151-2015 also allowed for the inclusion of city-owned facilities under the purview of the Department of Public Utilities.
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, Finance & Management, Recreation & Parks, Technology, and Public Service and the city-owned facilities under their purview, and to extend the contract termination date from May 2, 2018 to May 2, 2019.
It is necessary to modify the terms of the existing contract to respond to market conditions and new environmental regulations that are causing uncertainty in the marketplace. The market is currently on the rebound from a historically low pricing period and will continue to rise in relation to the natural gas market. The Energy Information Administration is predicting a 2.5% annual rise in electricity costs into the next year. This contract extension will allow the City to take advantage of the current lower price in the market and manage electricity costs in the near term as is common practice with many entities trying to budget their energy expenses.
AEP Energy is guaranteeing a supply energy pr...
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