TO: Finance Committee
FROM: Kevin Sing, Director of Finance
SUBJECT:
title
Natural Gas Supply Auction and authorization to select low bidder
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BACKGROUND:
In an effort to obtain the lowest prices on natural gas, the City has used the services of Apollo Edison to conduct reverse auctions for its 6 facilities. The reverse auction firm conducts the bid over the internet giving City personnel the opportunity to monitor the proceedings. The City had previously selected Apollo Edison through a formal request for proposal. The cost for Apollo Edison’s services is embedded in the cost of natural gas at $0.15 per Dekatherm. One Dekatherm is equal to 10 therms.
The City’s current contracts for natural gas expire on February 28, 2025 with a fixed price of $4.35 per Dekatherm. The City uses approximately 30,000 Dekatherms. It is our intention to conduct the auction on January 22, 2025 Bids will be solicited for periods of 12 months, 24 months, and 36 months. At the conclusion of the auction, staff and the consultant will review pricing and select the one that is expected to provide the City with the lowest cost of natural gas over the long term. This process will look at indicators that impact natural gas rates over the long term. Since the procurement of natural gas is an open market and bids are only valid for 24 hours, Staff is requesting that the City Manager have the authority execute the agreements to lock in the best pricing.
The City has the right to refuse, at no cost, any and all pricing if it does not feel that the pricing is favorable.
CONCLUSION:
Approval of this item will result in the competitive bid the City’s natural gas supply to obtain the lowest cost available.
RECOMMENDATION:
recommendation
It is recommended that the City Council authorize the City Manager to conduct and natural gas auction and award a natural gas supply agreement with the winning bidder.
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