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Home My WebLink AboutTR-55-92 TOWN OF NEWCASTLE A REPORT File # 677- 't Res. # By-Law # MEETING: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE DATE: June 15, 1992 REPORT TR-55-92 FILE #: SUUCT: ASSOCIATION OF MUNICIPALITIES OF ONTARIO — GASAMO CONSORTIUM RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report TR-55-92 be received; 2 . THAT the attached By-Law be forwarded to Council for approval. BACKGROUND AND COMMENT: As negotiated by the Association of Municipalities of Ontario, the Town of Newcastle entered into an agreement in July 1988, with Gas Purchase Direct Limited, subsequently changed to ECNG Inc . , authorizing them to negotiate pricing and purchase on our behalf, natural gas directly from the western producers . The Association of Municipalities of Ontario and ECNG Inc . have now negotiated a reduction in the price paid for natural gas from approximately $1 . 65 per GJ to $1.50 per GJ, retroactive to March 1, 1992 until October 31, 1992 and then to the lesser of eighty-seven percent (87%) of the weighted average cost of gas or $1 .40 per GJ for the next contract year. In conjunction with this offer, the supplier, Direct Energy Marketing Limited require that the existing contract be extended from October 311 1993 to October 31, 1994, at a competitive price to be negotiated prior to the commencement of the last contract year. For the information of Council, the Town of Newcastle has realized approximately $9,1300 . 00 in savings under this program. After further review and analysis of the proposal by the Treasury Department, it is recommended that the proposal be accepted and the Mayor and Clerk be authorized to execute the agreement. 71 Page - 2 - TR-55-92 ASSOCIATION OF MUNICIPALITIES OF ONTARIO - GASAMO CONSORTIUM Respectfully submitted, Recommended for presentation to the Committee, Ma Marano, H.B.Sc . , AMCT. , Lawrence E. K Neff, Treasurer. Chief Adminitative Officer. LAB/hjl Attachment i i i THE CORPORATION OF THE TOWN OF NEWCASTLE BY-LAW 92- being a by-law to amend By-Law 88-102, as amended by By-Law 91-40, a by-law to authorize the entering into of a agreement between ECNG Inc. WHEREAS the Council of the Corporation of the Town of Newcastle deems it expedient to amend By-Law 88-102, as amended by By-Law 91-40, being a by-law to authorize the entering into of an agreement between ECNG Inc. and the Corporation of the Town of Newcastle; and WHEREAS ECNG Inc. have now negotiated a price reduction with Direct Energy Marketing Limited for the supply of our natural gas requirements; and WHEREAS Direct Energy Marketing Limited have negotiated that the contract expiring October 31, 1993 be extended to October 31, 1994. NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE TOWN OF NEWCASTLE ENACTS AS FOLLOWS: 1. THAT the Mayor and Clerk be authorized to execute on behalf of the Corporation of the Town of Newcastle, and seal with the Corporate seal, an agreement between ECNG Inc. and the Corporation of the Town of Newcastle, dated this day of June 1992, attached hereto as Schedule "A" and forming part of this by-law. By-Law read a first and a second time this day of June 1992 . By-Law read a third time and finally passed this day of June 1992 . MAYOR CLERK y �4Q SCHEDULE "A" AGENCY RETAINER AGREEMENT �v BETWEEN ECNG INC. (herein called "ECNG") and- THE CORPORATION OF THE TOWN OF NEWCASTLE (herein called the"Client") WHEREAS under deregulation a municipality can purchase natural gas directly from producers or marketers and realize savings by selling it to their Utility; AND WHEREAS the Client is a consumer of natural gas and wishes to continue to purchase natural gas on a direct basis; AND WHEREAS ECNG arranges and manages direct natural gas purchases on behalf of the members of the Association of Municipalities of Ontario; THE PARTIES THEREFORE, agree as follows: ARTICLE ONE - DEFINITIONS 1.00 "Utility" means the regulated natural gas distributor delivering natural gas to the Client. 1.01 "Direct Gas Supply Contract" means a natural gas supply arrangement with a producer or marketer of natural gas. 1.02 "Direct Gas Supplier" means the gas producer or marketer under any Direct Gas Supply Contract. 1.03 Buy/Sell Agreement means an agreement between the Utility and the Client whereby the Utility agrees to purchase gas from the Client for eventual resale at the Client's end-use facilities. R1-A-01-1— May 21, 1992 t i 1 ARTICLE TWO - INITIAL AGENCY APPOINTMENT AND AGREEMENT TERM 2.00 The Client confirms ECNG's appointment as its exclusive agent until October 31, 1994. 2.01 ECNG's appointment shall continue for the term of any subsequent Direct Gas Supply Contract obtained by ECNG and accepted by the Client. ARTICLE THREE -AGENT FUNCTIONS 3.00 The Client appoints ECNG as its agent to negotiate, enter into and administer: a) a Direct Gas Supply Contract with a Gas Supplier; and b) a Buy/Sell Agreement with the Utility. 3.01 ECNG will continue to carry out all administrative services for these contracts including: a) nominations for natural gas, and b) invoicing and payments. All funds received from the Utility will continue to be paid into a chartered bank trust account from which payments will be made first to the Direct Natural Gas Supplier then, after Bank transfer fees and ECNG's fee, the savings will be paid MONTHLY to the Client. The Client hereby waives any claim on interest which may be accrued on this trust account. 3.02 The Client agrees that ECNG is acting solely as agent for the Client in entering into the Direct Gas Supply Contract and the Buy/Sell Agreement and that, except in the case of fault by ECNG, it will remain primarily liable for payments due. The Client acknowledges that ECNG is not a vendor of gas. 3.03 The Client agrees that the required contracts may be entered into by ECNG on behalf of a number of gas purchasers in order to mitigate costs and agrees that ECNG may determine the Client's participation in such contracts on the basis of the proportion that the Client's requirements bear to the total contract requirements. R1-A-01-1— May 21, 1992 3.04 ECNG will obtain the Client's consent prior to implementing any Direct Gas Supply Contract on the Client's behalf. At the Client's request, ECNG will provide any relevant contracts and documents. 3.05 ECNG will, without additional payment or charge: make reasonable efforts to adjust contracted quantities to reflect changes in Client's consumption; renew the Buy/Sell Agreement; renegotiate prices under the Direct Gas Supply Contract or solicit offers for Direct Gas Supply Contracts to allow the continuance of the arrangements. ARTICLE FOUR - UNDERTAKINGS AND COVENANTS OF ECNG AS AGENT SOLELY FOR THE END-USER 4.00 ECNG agrees to solicit bona fide competitive gas supply offers and to negotiate and implement the Direct Gas Supply Contract and the Buy/Sell Agreement with diligence and to act prudently in protecting the Client's interest in the context of prevailing market conditions. 4.01 ECNG will receive remuneration only from the Client and will not accept remuneration directly or indirectly from any vendor of natural gas. ARTICLE FIVE - PAYMENT OF FEE 5.00 In consideration of ECNG's performance of its services the Client will pay ECNG's fee, calculated as set out in Schedule One attached hereto, . IN WITNESS WHEREOF the parties have executed this agreement by the hands of their authorized officers this day of 119 ECNG INC. I Per: Ih4 Z, I Title: THE CORPORATION OF THE TOWN OF NEWCASTLE i Per: I i Title: R1-A-01-1 -- May 21, 1992 i SCHEDULE ONE A) CALCULATION OF MONTHLY SAVINGS AND ECNG FEE ECNG's fee will be 5 cents per gigajoule of gas purchased under the Direct Gas Supply Contract. The net Buy/Sell savings shall be remitted to the Client. The net Buy/Sell savings shall equal the amount paid to the Client by the Utility less the amount paid to the Direct Gas Supplier by the Client, less ECNG's fee, less any Utility Buy/Sell administration fees and bank transfer fees. B) ADDRESSES FOR SERVICE Client: THE CORPORATION OF THE TOWN OF NEWCASTLE 40 Temperance Street Bowmanville, Ontario L1 C 3A6 Attention: Ms. Lou Ann Birkett Purchasing & Supply Agent Telephone: (416) 623-3379 Telefax: (416) 623-4169 ECNG: ECNG Inc. Suite 300 2896 South Sheridan Way Oakville, Ontario L6J 7G9 Attention: Mr. Robert J. Hyde Vice President I Telephone: (416) 829-2660 Telefax: (416) 829-2436 I i i I i 131-A-01-1 — May 21, 1992 Mr. John D. Lambert Director of Marketing ECNG Inc. 2896 South Sheridan Way Suite 300 Oakville, Ontario L6J 7G9 LETTER OF ACCEPTANCE Dear Mr. Lambert: We hereby accept the offer of Direct Energy Marketing Limited to supply our natural gas requirements at a price of: one dollar and fifty cents per gigajoule (51.50/GJ) for the period March 1 , 1992 to October 31, 1992; and the lesser of 87% of Consumers Gas WACOG or one dollar and forty cents per gigajoule ($1.40 GJ) for the period November 1, 1992 to October 31, 1993. In addition, we agree to extend our contract with DEML for one year to October 31, 1994 with the price for this final year to be negotiated subject to binding final-offer arbitration. We authorize ECNG Inc. to sign the required gas supply contract amendment on our behalf. THE CORPORATION OF THE TOWN OF NEWCASTLE PER: TITLE: DATE: i R1-A-01-1 — May 21, 1992 ° t I I ,