Title
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO ENTER INTO AN AGREEMENT RELATED TO THE MARKETING OF COMPETITIVE RETAIL NATURAL GAS SUPPLY; AND DECLARING AN EMERGENCY.
Executive Summary: The current natural gas Agreement with Direct Energy Services, Inc. expires on September 30, 2014. Following review and discussion of the forecast gas rates, it was determined the City should enter into a 2-year Agreement with Constellation Energy Gas Choice, Inc.
Body
Legislative History
09-111: Resolution to enter into an Agreement with Direct Energy Services, Inc., for competitive retail natural gas supply.
Purpose & Explanation
Since 2009 the City of Hudson has had an on-going (1-year renewal option) Agreement with Direct Energy Services, Inc. to provide Hudson residents, businesses, and other consumers with an "opt-in" program for natural gas. In summary, this program is a gas aggregation program for the community.
The current natural gas Agreement with Direct Energy Services, Inc. expires on September 30, 2014. The rates in the current Agreement are $4.548/MCF (regular rate), and $4.448/MCF (senior rate 65 and older).
Recently staff met with the City's energy consultant to review forecast gas rates for future years (2014, 2015, and 2016). During the review, the energy consultant provided information on the forecast gas rates from Direct Energy Services, Inc., and other providers.
For perspective, Direct Energy Services, Inc., proposed a one-year gas renewal rate of $5.80/MCF (regular rate), and $5.70/MCF (senior rate 65 and older).
Constellation Energy Gas Choice, Inc. is offering a one-year gas rate of $4.76/MCF (no senior discounts available), and a two-year gas rate of $4.68/MCF (no senior discounts available), based on the market on July 1st.
Following review and discussion of the forecast gas rates, it was determined the City should enter into a 2-year Agreement with Constellation Energy Gas Choice, Inc.
Timing Considerations
Entering into an Agreement with a new gas vendor will require all interested participants in the gas aggregation program to "opt-in". As such, the marketing campaign for this program must start no later than August 15, 2014 to get all accounts in place for October 2014. For such reason, the Administration is asking City Council to adopt the proposed Resolution at the July 16, 2014 Council Meeting.
Currently, the City Solicitor is reviewing the proposed Agreement with Constellation Energy Gas Choice, Inc. The final Agreement, along with the final Resolution will be attached to this document prior to the July 16th Council Meeting.
Fiscal Impact
Currently Budgeted
Supplemental Appropriation Required
X Appropriation Not Required.
Recommendation
Suggested Action
Staff recommends City Council authorize the City Manager to enter into an Agreement related to the marketing of competitive retail natural gas supply; and declaring an emergency.
Submitted by,
Scott N. Schroyer, Interim City Manager