HomeMy WebLinkAboutCOD-38-02
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CJaIj. U
Leading 1.ggtll
REPORT
CORPORATE SERVICES DEPARTMENT
Date:
GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
C;fR- 53'6-O;L
By-law#r2DD-J- - t37
September 9,2002
File # ;::Db
Meeting:
Report #:
COD-38-02
Subject:
Co-operative Agreement - Direct Purchase of Natural Gas
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report COD-38-02 be received;
2. THAT the Agreement with A.E. Sharp Limited at a price of .001134/m3 (.03/GJ)
extended for an additional three years; and
3. THAT the attached By-law marked Schedule "A" authorizing the Mayor and Clerk to
execute the agreement and be approved.
Submitted by:
r Marano, H.B.Sc., C.M.O.
Director of Corporate Services
Reviewed~J ~ ~
Franklin Wu,
Chief Administrative Officer
MM\LAB\km
1201
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REPORT NO.: cOD-3S-02
PAGE 2
BACKGROUND AND COMMENT
The existing agreement with A.E. Sharp Limited for consulting services for the purchases of
Natural gas has now expired. The Municipality of Clarington in conjunction with the Durham
Purchasing Co-operative entered into this agreement in late 1997, in order to take advantage of
the open market and have the ability to acquire gas at competitive prices. Due to the complexity
of the market and the lack of expertise, it was fell that a consultant would best serve the needs
of all participants while at the same time combining the Natural Gas requirements.
A.E. Sharp Limited have proposed to the group a (3) three year extension agreement which
would keep the existing commission rate of .001134/m3 (.03/GJ). Based on this, the total
annual consulting fee applicable to the Municipality of Clarington would be approximately
$900.00. Due to the fluctuation in gas prices a total cost savings for purchasing gas under this
method are not available, however, are estimated to be + $39,000.00 over the past three
years. A comparison of unit prices is attached marked Schedule "B".
I have attached a preliminary copy of the Agency Agreement that will be entered into with
A.E. Sharp Limited. Note, this agreement has been reviewed by the Solicitor for the City
of Oshawa and has been approved with minor revisions.
The participants of the Durham Purchasing Co-operative support this recommendation.
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T(905)623-3379 F (905)623-4169
1-202
,-
CliIL_n
SCHEDULE "A"
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
BY-LAW 2002-
Being a By-law to authorize a contract between the
Corporation of the Municipality of Clarington and A.E. Sharp
Limited, Willowdale, Ontario, to enter into an agreement for
direct purchase of Natural Gas.
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON HEREBY ENACTS AS
FOLLOWS:
1 . THAT the Mayor and Clerk are hereby authorized to execute, on behalf of the
Corporation of the Municipality of Clarington with the Corporation Seal, a contract
between, A.E. Sharp Limited, Willowdale, Ontario and said Corporation; and
2. THAT the contract attached hereto as Schedule "A" form part of this By-law.
By-law read a first and second time this day of
,2002.
By-law read a third time and finally passed this day of
,2002.
John Mutton, Mayor
Patti L. Barrie, Municipal Clerk
1203
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Schedule "A"
15/07/2002 Large Volume ABC
AGENCY AGREEMENT (Lart!e Volume)
At!eucv BiIlint! and Collection Service
1HIS Agreement made as of the 24th of June 2002
BETWEEN:
CORPORATION OF THE MUNICIPALITY OF CLARINGTON, ("Cnstomer")
and
A.E. SHARP, a Division of DYNEGY MARKETING INC. ("Sharp")
2 Sheppard Ave E., Suite 810
Willowdale, Ontario
MlN5Y7
Notice and Appointment of Agent: The Customer (as identified above) hereby confirms and provides notice to all interested parties (each a
"Notified Party") that by executing this Agency Agreement it has entered into a contract appointing Sharp as its exclusive agent to enter into,
manage and administer, on the Customers behalf, all contracts necessary to arrange for the purchase and distribution (which term includes
transportation, storage and delivery) of gas to the Service Address (as described in Schednle "A" attached hereto), as well as billing and collecting
for these services. The Customer agrees that the terms and conditions of such contracts shall be binding on the Customer.
Enrollment: The Customer authorizes and directs Sharp to enter into arrangements on behalf of the Customer with the natural gas distribution
company for each Service Address (the "Distribution Company"). The Customer approves the transfer from its current agent to Sharp.
Direction: The Customer hereby requests, authorizes and directs the Distribution Company and any other Notified Party to release any and all
information in such Notified Party's possession and control, relating to the Customer, and the supply and delivery of natural gas to each Service
Address including, but not limited to, customer usage infonnatiou, site usage history report for the past twelve (12) months, credit and payment
history, consumption history, utility acCOlUlt number and accOlUlt information to Sharp and acknowledges that such release may be subject to a fee
in accordance with any tenus and conditions of the Notified Party.
Distribution Company Terms: The Customer confmns that Sharp has notified the Customer that the Customer may be bound by the terms,
conditions and policies established by the Distribution Company for each Service Address and further confmns that the Customer will comply with
such terms, conditions and policies.
Reliance: Each Notified Party may deal exclusively with and rely on Sharp to make aU arrangements on the Customer's behalf in connection with
the supply and delivery of natural gas to each Service Address as if such arrangements had been made by the Customer.
Billing and Fees: The Distribution Company will bill the Customer for the natural gas delivered to each Service Address and for certain
distribution access charges and any other fees, charges or taxes relating to the delivery of natural gas delivered to such Service Address. A fee will
be paid to Shalp in consideration of its services of $.001135/cubic meter which will be added to the cost of gas commodity and delivery. The
Customer acknowledges that, at some point during the Tenn of this Contract, Sharp may bill the Customer directly for some or all of the costs
associated with the supply and delivery of gas to the Service Address, provided that the Customer will not pay any additional costs as a result of
Sharp billing the Customer directly. The Customer agrees to indemnify and save harmless Sharp from any costs or damages incurred by Sharp thst
are caused by the Customer. Sharp and the customer will mutually agree upon a pricing strategy that will be confmned in writing by Sharp \\ith a
separate pricing confmnation. The price of natural gas under this service is not regulated by the Ontario Energy Board.
Effective Date: The appointments and directions are effective as of the date of this Agency Agreement.
Responsibility: The Customer confmns that it has the authority to enter into an agreement for the supply of natural gas to each Service Address
and to appoint an agent for the delivery thereof to each Service Address. The Customer agrees to keep the payment of its natural gas account with
the Distribution Company and Sharp up-to-date, to pay such accounts when due and to be bOlUld by and responsible for the arrangements made by
Sharp as agent on its behalf The Customer has read the Contract and understands and agrees to be bound by the tenns thereof
Term: TItis Contract is for a 3 year tenn commencing on the date of fIrst deliveries as determined by the applicable LDC (the "Initial Term").
Conditions of Senice: Sharp is under no obligation to provide any services or to continue to arrange for the supply of natural gas lll1der this
Agency Agreement in any of the following circumstances:
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Schedule "A"
15/07/2002 Large Volume ABC
(a) if the Customer defaults on payment of its account;
(b) upon written notice by Sharp, if Sharp is 1lllable or is prevented from complying with any of the obligations it owes to the Distribution
Company or if the Distribution Company is unable or is prevented from complying with any of the obligations it owes to Sharp;
(c) if, as determined by Sharp, any: (i) amendment to applicable law, by-law, statute, regulation, rule, ordinance, policy, order, code, information
letter, guideline, bulletin or directive~ or eii) judicial or regulatory order, requires, directs or makes desirable. directly or indirectly, that a
material term be amended, inserted or deleted in this Agency Agreement and Sharp notifies the Customer that it wishes to renegotiate the terms
and conditions of this Agency Agreement in connection with such amendment., insertion or deletion and the parties are unable to agree upon
the revised terms and conditions of this Agency Agreement within 30 days of such notice;
(d) if the Distribution Company no longer services the Service Address for any reason or takes any step to disconnect supply, other than as a result
of an emergency or to facilitate repairs to the natural gas facilities;
(e) if the Customer authorizes another natural gas supplier or Agent for the Service Address during the T enn;
(f) if any other natural gas supplier is appointed by the Distribution Company to supply natural gas to the Service Address during the Tenn due to
an event of default affecting the Customer;
(g) if this Agency Agreement or any part thereof is assigned without the consent of Sharp; or
(h) if the Service Address is. at any time during the Term, no longer ovmed or occupied by the Customer or owned or occupied by any person
other than the Customer without the consent of Sharp.
Either party may give the other party additional warnings before it terminates this Agency Agreement.
Scope of Agency: The Customer acknowledges that (a) Sbmp is not a fiduciary of the Customer with respect to the purchase and sale of natural gas;
and (b) the Customer has other alternatives to acquire natural gas.
Further Assurances: The Customer agrees that it shall execute other documentation (including another agency agreement) if required by the
Distribution Company in addition to or in substitution of this Agency Agreement.
Natural Gas Imbalances. At any time during the Term, the Customer's actual or forecasted natuml gas consumption may exceed or fall short of
the forecasted Annual Volume as set out in Schedule A. The Distribution Company maintains an account which records the difference between the
forecasted amount and the quantities of gas actually consumed (the "Balancing Gas Account"). The Distribution Company may require Sharp or the
Customer to bring its Balancing Gas Account into balance. The Customer will reimburse Sharp for any and all costs incurred by Sharp (including
charges imposed by the Distribution Company and any other costs incurred by Sbmp) that are reasonably attributable to the Customer to bring the
Balancing Gas Account into balance.
Flow-Through Charges: The Customer hereby acknowledges that. in addition to all other amounts referenced herein. the Customer shall be
responsible for and agrees to pay all charges, fees, assessments or allocations assessed by or through the Distribution Company against the
Customer or Sharp as the result of the deliveI)' of natural gas to the Service Address. matters incidental thereto and any act or omission of the
Customer or of Sharp taken or omitted at the request of or on behalf of the Customer,
Customer Indemnity: Customer agrees that it will indemnifY and save harmless Sharp. its affiliates, the respective directors, officers, and
employees, and the permitted assigns of Sharp and its affiliates (collectively, "Sharp and its Representatives") in full for any loss, damage, injury,
liability or cost which any of Sharp and its Representatives. as applicable, suffers arising from, or incurs as a consequence of. any act or omission of
Customer relating to the supply or delivery of natw"al gas to the Service Address including, without limitation to the foregoing, any claim resulting
from any default or breach by the Customer. or any failure of the Customer to perform any obligation relating to the Contract or any obligation to
any third party, including, but not limited to, any agreement with the Distribution Company,
Assignment: Neither party shan assign or otherwise transfer any of its rights or obligations wder the Contract without the prior written consent of
the other. Such consent shall not be unreasonably withheld; provided however, Sharp may assign or otherwise transfer any or all of its rights or
obligations under the Contract to its affiliates without the consent of the Customer. Other than with the consent of the other party or in the case of
an assignment by Sharp to an affiliate, no assignment or transfer shall relieve the assignor or transferor of any of its obligations lUlder the Contract.
Confidentiality: The Customer shall not disclose the tenus of any purchase and sale of natural gas under the Contract to a third party (other than
the Customer's employees. counsel, accountants or consultants who have agreed to keep such tenns confidential) except in order to comply with
any applicable law, order. regulation, exchange rule or to effectuate transportation of the natural gas hereunder; provided. the Customer shall notify
Sharp of any proceeding of which the Customer is aware which may result in disclosure and use reasonable efforts to prevent or limit the disclosure.
Sharp shall be entitled to all remedies available at law or in equity to enforce. or seek relief in cOIUlection with. this confidentiality obligation.
No Business Restrictions: The Customer understands and acknowledges that Sharp and its affiliates participate, or may participate, in numerous
aspects of the natural gas market under a variety of roles and with varying interests. The Contract does not. in any way. preclude Shaq> and its
affiliates from pursuing any other business opportunities they may wish to pursue,
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15113.vl
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Schedule "A"
15/0712002 Large Volume ABC
No Waiver: No delay or omission by either party in exercising any right, power or remedy Wlder the Contract shall be construed as a waiver of
such right, power or remedy and any single or partial exercise shall not prevent any other or further exercise of the same or the exercise of any other
right, power or remedy.
Severance of Invalid Provisions: If and for so long as any provision of the Contract shall be deemed to be judged invalid for any reason
whatsoever, such invalidity shall not affect the validity or operation of any other provision of the Contract except only so far as shall be necessary to
give effect to the construction of such invalidity, and any such invalid provision shall be deemed to be severed from the Contract without affecting
the validity of the balance of the Contract.
Entire Agreement: The Contract and AE. Sharp's letter of June 11th, 2002 (Natural Gas Procurement- Consnlting Services) contains 1I1e entire
agreement between the Customer and Sharp and it replaces any prior written or oral agreement between the parties concerning the supply or
delivery of natural gas. There are no verbal representations, rights or obligations that are not contained in the Contract The laws of Ontario m1d the
laws of Canada applicable in Ontario shall govern the Contract.
Execution: The Agency Agreement may be executed in multiple counterparts and by facsimile transmission, each of which shall be deemed an
original and all of which shall constitute one instnunent.
Address for Notices: Any notice or other communication under the Contract shall be in writing and shall be delivered by courier, mail or facsimile
to the Address for Notices set out below or to such other address as may be specified in writing by either party from time to time.
A.E. SHARP LIMITED
A Division of DYNEGY MARKETING INC. ("Sharp")
Suite 810
2 Sheppard A venne East
Willowdale, Ontario
M2N 5Y7
Tel: 416-733-2114
Fax: 416-733-0650
CORPORATION OF THE MUNlCIPAUTY OF CLARINGTON
Per:
Per:
Title:
Title:
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15/07/2002 Large Volume ABC
Schedule "A"
SCHEDULE "A" TO AGENCY AGREEMENT
SERVICE ADDRESS INFORMATION
The "Estimated Annual Volume" for each Service Address is specified below:
Customer;:..r ame on Service Address
Bill
Location Name
Mailing Address
Account Number
Distribution
Company
Estimated Annual Volume
(cubic meters)
C\WINNT\Profies\b03\Tempcmy Intemel m~s\OLK7\Clerington_Gas largeVolumeABCAgency_Agreemenl.DOC
15113.v1
1207
06/12/02 WED 09:09 FAX 4167330650
A. E '-2..-HARP
141002
'-
.
.If' ........~
'",,",
All Sharp
June 11,2002
Ms. Lou Ann Birkett,C,P.P.,A.M.C.T.
Purchasing Manager
Corporation of The Municipality ofClarington
40 Temperance Street
Bowmanville,ON
LlC 3A6
Dear Ms. Birkett,
Re: Natural Gas Procurement - ConsUlting Services
Reference your letter of May-14th relative to extending/renewing the Durham Purchasing Co-operative
agreement for procurement and consulting/advisory services withAE Shaxp.
AE Shaxp is pleased With the Co-operative's intend to renew the existing agreement dated March
30,1998. Thisletter is a formal response to extend the agreement for a period oftbree years
commencing N ovember-I-2002.
In addition to the special conditions as outlined in the-existing March 30,1998 agreementAE Shaxp
shall provide:
1. Every 6 months as a minimum a natural gas price comparison report (benchmarking) that
compares: Price on Utility Bill, Actual Cost of Procured Gas, Utility Price on Bill for their
system customers and Market Price of Gas.
2. Annually, a complete reconciliation of gas delivered to the utility, gas consumed by the
facilities and the mitigation ( sale or purchase) of surplus gas ( underconsumption ) or
the procurement of make-up gas (overconsumption) to balance supply/demand to zero.
Items 1 and particularly item 2 enhance the financial accountability of the process between
AE Shaxp the Utility and Client. From an audit standpoint AEShaxp records of procurement
and sale of excess gas are audited on an ongomg basis. The reconciliation is triggered
by the utility ( ever 12 months) within 60 to 90 days post DP A renewal date ( item #5
in May-14 letter ).
AE Shaxp was purchased by Dynegy Canada in October 2001. AE sharp procures gas supplies
on behal( of their clients from up to four major.gas suppliers (ie BP-Amoco,Coral (Shell),
Dynegy Canada and Duke Energy) in the best economic interest of our clients.
2 Sheppard Avenue East. Suite 810, Willowdale, Ontario 'M2N SY7
Tel: 416 733-2114 Fax; 416 733-06S0 Email: answers@ae.sharp.com
1208
06/12/02 WED 09:10 FAX 4167330650
A,E. SHARP
141003
~
,
3. Annually, a report confirming all facility locations and the volume consumed by each
facility. This report is updated by new facilities and/or deleted facilities and is the basis
for year foreward gas procurements, The report also assures that the proper Rate status
(ie 6,100 etc) is consistent with the facility annual consumption.
4. Fee structure shall remain unchanged for the contract term @ $ 0.001 1341M3 ($0.03/GJ).
5. Price of gas commencing November 1,2002 shall be based on a mix of fixed price and/or
indexed gas post a strategy meeting with participants as soon as it can be arranged.
Relative to gas procurement the market has been extremely volatile since early February and where
there is volatility there's price uncertainty for the near to medium term. The market environment
suggests we should discuss a market procurement strategy sooner than later.
Market Prices (AECO Wholesale Prices) for i-year gas Nov-'02 thru Oct-31-'03.
$/GJ $/M3
Feb.-6th
May_14th
June-11th
3.80
5.50
4.70
0.1436
0.2079
0.1776
Please review this proposal and contact me directly if there are any areas that are not covered or
any areas that need further clarification.
~ c..
J.{7 - ".-....!.
'r"
This proposal is open for acceptance by the Co-operative for a period ofAi6 days from the proposal
date of June 1] ,2002.
Again, we appreciate the Co-operatives continued interest in AE Sharp.
Yours truly,
1209
.
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0.464
0.397
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Tho _..ch.... prieo wllich Enbrjdge -IIY pold for Its gas In"'_.
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0.157
0.202
0.214
0.187
0.2D7
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0.278
0.317
0.522
0.422
0.312
0.306
0.283
0.221
0.173
0.148
0.140
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. 6-Feb-2002 Pogo: 1 ,
oe:42:40 LISTING OF ALL PROPERTIES FOR A CUSTOMER BY CIS NUMBER ,
PROPLST2.FRX "
CIS#: 1272 CUSTOMER: Cfarington, The Corporation ofthe Municipality of
Property Agency II SL# - City Prov V_{m3l Acco...t# LDC Idontity No.
C399-004-001 BAG-l156 3289 TrulsRoad CoII1ice ON 15026.00 ~ 62433
C399-004-002 BAG-1156 247 King street East New<:asIIe ON 10738.00 074514141005 62433
C399-004-003 BAG-1156 373 _ Street South _tie ON 85411.00 0745142S4004 62433
C399-004-m4 BAG-1156 132 CI1lJrch street Bowmanville ON 35450,00 054530108010 62433
C399-004-005 BAG-1156 181 Liberty SIreeI Ba.Nmanville ON 2807.00 054530528112 62433
C399-004-006 BAG-1156 49 Liberty SIreeI North Bowmanvile ON 128150.00 054S30554814 62433
C399-{)()4.()()7 BAG-1156 37 Silver street BoMnanvlle ON 9923.00 054530842711 62433
C399-004-008 BAG-1156 40 Temperance street BtMrmanvile ON 55114.00 0545308Il4845 82433
C399-Q04.009 BAG-1156 33 lake Road BoMnanvlle ON 32835.00 054531993314 62433
C399-Q0.4.010 BAG-1156 2!150. GQml~ Road Courtice._ ON 198056.00 054S5029S011 62433
C399-Q0.4.011 BAG-1156 2430 Hig~way 2 Bowmanvile ON 29107.00 054580422515 62433
C300-OO4-012 BAG-l156 2440 Highway 2 . Bowmanvlle ON 224658.00 745765509994 62433
COUNT: 12 TOTAL: 750414.00
COUNT: 12 TOTAL VOLUME: 750414.00
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