Loading...
HomeMy WebLinkAboutCOD-54-02 ... ~ , qfJl-ilJglon REPORT ";t CORPORATE SERVICES DEPARTMENT Meeting: . GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: November 18th, 2002 (; ffl-Ifc?'Cf-o J.-- File#'E(Oa By-law # )(~-Iqtf Report #: COD-54-02 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. 4. THAT Report COD-54-02 be received; 2. THAT the contract extension to AE Sharp Limited be cancelled; and 3. THAT the revised proposed two (2) year contract extension with AE Sharp Limited for consulting services for the purchase of Natural Gas with unit prices of .03/GJ for year one and.04/GJ for year two be approved subject to contract terms being acceptable to the DurhamPurchasing Co-operative; THAT the attached By-law marked Schedule "A" authorizing the Mayor and the Clerk to execute the necessary agreement b~ approved. , 4. 'e Marano, H.B.Sc., C.M.O. Director of Corporate S~rvices \ ~eviewed bJ ~~ ~ Franklin Wu, Chief Administrative Officer MM\LAB\km 1204 ... REPORT NO.: COD-54..Q2 PAGE 2 BACKGROUND AND COMMENT .' ' l Report COD-38-02 (Schedule "B" attached) was approved by Council authorizing a 3 year contract extension with AE Sharp Limited for consulting services for the purchase of Natural Gas. Since that time, there have been some issues arise with respect to contract language, term, and expiry of existing contracts that prevented the parties from executing the . '. agreement. Although Clarington approved the initial contract, due to the length of time, it has taken to resolve the concerns af the other parties, the original offer from A.E. Sharp has now expired. It is therefore recommended that the award of a three year contract extension to AE Sharp Limited be cancelled. The Durham Purchasing Co-operative have been ill negotiations with AE Sharp Limited and a tentative agreement for a two year contract haS been reached. The prices proposed are .03/GJ for year one and.04/GJ for year two. The proposed two year contract puts all parties on the same contract expiry which will provide better opportunities for future contracts. It is therefore recommended that the proposed revised two (2) year contract extension be approved subject to contract terms being acceptable to the Durham Purchasing Co- operative. CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T(905)623-3379 F (905)623-4169 1205 , 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 AE Sharp Limited, Willowdale, Ontario, to enter into agreement for Consulting Services for direct purchase of Natural Gas for a two year term. 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 and seal with the Corparation Seal, a contract between, AE 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 J206 ,< SCHEDULE "B" ClfJlmgton REPORT CORPORATE SERVICES DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: September 9, 2002 Report #: COD-38-02 File # By-law # 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 a n 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: Marie Marano, H.B.Sc., C.M.O. Director of Corporate Services Reviewed by: Franklin Wu, Chief Administrative Officer MMILABlkm 1207 '. REPORT NO.: COD.38-02 PAGE 2 BACKGROUND AND COMMENT SCHEDULE "B" 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 felt 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 appraximately $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". o.~ 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 L1C 3A6 T(905)623-3379 F (905)623-4169 12Q8 SCHEDULE "B" SCHEDULE "An Cbg-lllgron 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 12D9 Schedu e 15/07/2002 Large Volume ABC SCHEDULE "B" AGENCY AGREEMENT (Lal"l!:e Volume) A!!encv Dillin!! and Collection Service TIllS Agreement made as of the 24th of JlDle 2002 . BETIVEEN: CORPORATION OF TIlE MUNlCIP AUTY OF CLARINGTON, ("Customer") and A.E. SHARP, a Division ofDYNEGY MARKETING INC. ("Sharp") 2 Sheppard Ave E., Suite 810 Willowdale, Ontario M2N 5Y7 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 bas entered into a contract appointing Shmp as its exclusive agent to enter into, manage and administer, on the Customer's behalf, all contracts necessaIY to ammge for the purchase and distribution (which term includes transportation, storage and deli very) of gas to the Service Address (as described in Schedule "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 Shmp to enter into ammgements 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 cwrent agent to Shmp. Direction: The Customer herebv 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 infonnation, site usage bistmy report for the past twelve (12) months, credit and payment "istOIY, consumption history, utility account nwnber and account information to Shmp and acknowledges that such release may be subject to a fee accordance with any tenns and conditions of the Notified Party. -,> ". Distribution Company Terms: The Customer confirms that ShaIp 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 confirms that the Customer will comply "ith such terms, conditions and policies. Reliance: Each Notified Party may deal exclusively with and rely on ShaIp to make all arrangements on the Customer's behalfin connection "ith the supply and deli very of natural gas to each Service Address as if such arnmgements had been made by the Customer. Billing and Fees: The Distribution Company will bill the Customer for the naturnl 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 ,viII be paid to ShaIp 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 Term of this Contract, ShaIp may bill the Customer directly for some or all of the costs associated "ith 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 hannless ShaIp from any costs or damages incwred by Sharp that are caused by the Customer. Shmp and the customer will mutually agree upon a pricing strategy that will be confirmed in "riting by ShaIp "ith a separate pricing confirmation. The price of natural gas under this service is not regulated by the Ontario Energy Board. Effectil.e Date: The appoinUUents and directions are effective as of the date of this Agency Agreement Res ponsibility: The Customer confirms that it bas 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 Shmp up-to-date, to pay such accounts v.hen due and to be bound by and responsible for the arrangements made by Sharp as agent on its behalf The Customer has read the Contract and lDlderntands and agrees to be bound by the terms thereof. Term: 111is Contract is for a 3 year term commencing on the date offlfSt deliveries as detennined by the applicable LDC (the "Initial Term"). Conditions of Service: Sharp is under no obligation to provide any services or to continue to anange for the supply of natura! gas under this g~cy Agreement in any of the following circumstances: " .'1 C \WINNT\Profies\b03\TemJXllWY Internet Fies\OlK7\ClEIington_Gas LergeVoumeABCAgency_AgreementDOC JSJIJ.l'l 1210 Schedule "A" ,15i07/2Q02 Large Volume ABC . '. " SCHEDULE "B" . (a) if the Customer default" ou payment of its aCCOQ'lt; Il,) upon \Vritten notice by Sharp, if Sharp is unable 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 \\ith any of the obligations it owes to Sharp; (c) if, as detenninod by Sharp, any: (i) amendment to applicable law, by-law, statute, regulation, rule, ordinance, policy, order, code, informatiou letter, guideline, bulletin or directive; or (ii) 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 lU1.a.ble to agree upon the revised terms and conditions of this Agency Agreement \\ithin 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 Term; (I) if any other natural gas supplier is appointod by the Distribution Companv to supply natural gas to the Service Address during the Term due to an event of default affecting the Customer:. (g) if this Agency Agreement or any part thereof is assigned "ithout the consent of Sharp; or (h) if the Service Address is, at any time during the Term, no longer owned 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 tenninates this Agency Agreement. Scope of Agenq': The Customer acknowledges that (a) Sharp 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 natural 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 bet\veen the forecasted arnoum and the quantities of gas actually consumed (the "Balancing Gas Account"). The Distribution Company may require Sharp or the rustomer to bring its Balancing Gas Account into balance. The Customer \\ill reimburse Sharp for any and all costs incurred by Sharp (including rrges imposed by the Distribution Company and any other costs incurred by Sharp) that are reasonably attributable to the Customer to bring the l:ialancing Gas Account into balance, Flow-Through Charges: The Customer hereby acknowledges thaL 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 delivery 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 hehalf of the Customer. Customer Indemnity: Customer agrees that it ,,,ill indemnifY and save hannless Sharp, its affiliates, the respective directors, officers, and employees, and the permitted assigns of ShaIp and its affiliates (collectively. "Sharp and its RepreseDtati\'es") in full for any loss, damage, injurv, liability or cost \vhich 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 natural gas to the Service Address including, \yithout limitation to the foregoing, any claim resulting from any default or breach by the Customer~ or any failme 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 \\i.th the Distribution Company. Assignment: Neither party shall assign or otherwise transfer any of its rights or obligations under the Contract without the prior \vritten consent of the other. Such consent shall not be unreasonably withheld: provided however, Sharp may assign or otherwise transfer any aT 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 under the Contract. CODfideDtiality: The Customer shall Dot disclose the terms of any purchase and sale of natwal gas under the Contract to a third party (other than the Customer's employees, counsel, accountants or consultants who have agreed to keep such terms confidential) except in order to comply with anv applicable law, order, regulation, exchange rule or to effectuate transportation of the natwal gas hereunder; providod, the Customer shall notifv Sharp of any proceeding of which the Customer is aware which may result in disclosure and use reasonable efforts to prevent or limit the disclosur~. Sharp shall be entitled to all remedies available at law or in equity to enforce. or seek relief in connection \\i.th, 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 variet)' of roles and \\ith varying interests, The Contract does not, in any way, preclude Sharp and its affiliates from pursuing any other business opportunities they ma~' \\ish to pursue. GIWINNT\Profiesllb03\iemporary Internet Fies\OLK7\Clanngton_Gas LargeVokJmeABCAgencLAgreement DOC 15113.1'1 1211 '. 157071Z?02 L~rge Volume ABC SCHEDULE "B" No Waiver: No del.y or omission by either party in exercising any right, power or remedy under the ConlIact 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 ~t, power or remedy. Severance of Invalid Provisions: If and for so long as any provision of the ConlIm:t 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 ConlIm:t except only so far as shall be necessary to give e/Iect to the construction of such invalidity, and any such invalid provision shall be deemed to be severed from the ContIact without affecting the validity of the balance of the ConlIm:t Entire Agreement: The Contract and A.E. Sharp's letter of June 11",2002 (Natuml Gas Procurement- Consulting Services) contains the entire agreement between the Customer and Sharp and it replaces any prior written or oral agreement between the parties concerning the supply or deli very of natural gas. There are no verbal representations, rights or obligations that are not contained in the Contract The laws of Ontario and the laws of Canada applicable in Ontario shall govern the ConlIm:t Execution: The Agency Agreement may be executed'in multiple counterparts and by facsimile tmnsmission, each of which shall be deemed an original and all of which shall constitute one instrument Addre.. for Notic..: Any notice or other communication under the ConlIm:t 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 UMlTED A Di,ision ofDYNEGY MARKETING INC. ("Sharp") Suite 810 2 Sheppard A venue East Willowdale, Ontario M2N 3Y7 Tel: 416-733-2114 Fax: 416-733-0650 CORPORATION OF THE MUNlCIPAUTY OF CLARINGTON Per: Title: Per: Title: j. -,,-. 1212 j C:\WINNT\Profies\tlO3\T emporary Internet Fies\OLK7\Cmngton_Gas LqeVokJmeABCAgencyJgrBement.DOC 151/1...1 Schedule "A" -151~712002 L~rge Volume ABC SCHEDULE "B" SCHEDULE "A" TO AGENCV A.GREEMENT SERVICE ADDRESS INFORMA nON The "Estimated Annual Volume" for each Service Address is specified below: Customer Name on Bill Service Address Location Name Mailing Address Account Number Distribution Company Estimated Annual Volume (cubic meters) I. j C:\WINNTIProfies\Ib03\Temoorary Internet Files\OlKTlClerlngton_Gas LargeVolumeABCAgency_Agreement DOC 15/lJ.vl 1213 "---....: . .~ SCHEDULE "B" .=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 LIC 3A6 Dear Ms. Birkett, Re: Natural Gas Procurement - ConsUlting Services .~~, Reference your letter of May-I4lh relative to extendinglrenewfug the Durham Purchasing Co-operative agreement for procurement and consulting/advisory services with AE S~. AE Sharp is pleased with the Co-operative's intend to renew the existing agreement dated March 30,1998. This letter is a formal response to extend the agreement for a period of three years commencing November-I-2002. . In addition to the special conditions as oUtlined in the-existing March 30,1998 agreementAE Sharp 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 ( ~dercopsumption ) or the procurement ofmake--up gas (overconsumption) to balance supply/demaIid to zero. Items 1 and particularly item 2 enhance the financial accountability of the process between AE Sharp the Utility and Client. From an audit standpoint AE Sharp records of procurement and sale of excess gas are audited on an ongoiDg 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-l 4 letter ). . AE Sharp was purchased by Dynegy Canada in October 2001. AE Sharp procures gas supplies on behalf: of their clients from up to four major.gas suppliers ( ie BP-Amoco,CoraI (Shell), Dynegy Canada and Duke Energy) in the best economic interest of our clients. 2 Sheppard Ayenue East, Suite 810, WUlowdak:, OnlllriD M2N SY7 Tel: 416 733.2114 Fax: 416 733.06S0 Em.~: lIJISWCIS@ac-sharp.eom , 1214 > """" .~~~~~ilt~i:. '~;~lm~~~;:",,~~l~~!!!B:~n[~~~lij~~[~ N AprUO Moy-llll Ju_ JuIy-lIlI Augll9l-llll SopIomber-llll llclDIIof-llll Novomber-llll Docomber-OO JoIlU8l\"OI Febfllllly-Ol Morcb-OI Ap/t~1 May-OI "'"--01 July-Ol Augusl-Ol SopIe_-Ol ~: # Gu Prlce ConIp8r1sons "lEEi!!i!ilI1 .:m 5~ffi!f~.:~!!~~!~f, .. 'on 'im;;;;!m!~i!.:"l!lmOO!l ~:~iiii!l!!;_ ". $1m 0.121 0.121 0.121 0.150 0.150 0.150 0.150 0.195 0.195 0.195 0.195 0.195 0.220 0220 0.220 0220 0.220 0.220 .,,,,::''''::::: 1.110 0.111 0.171 0.171 D.172 l.l&1i 1.159 0.201 uu 0.270 O.2CO 0.200 0.211 1.110 0.200 0211 0.210 uta 0.122 0.122 0.152 0.152 0.152 0.152 0207 0.201 0201 0.244 0244 0.351 0357 0.357 0.357 0.321 0321 025ll 0.139 0.141 0.170 0.176 0.166 0.177 0.2&1i 0.257 0.306 0.464 0.397 0.314 0292 0279 0236 0.230 023D 023D 0.148 0.151 0.202 0214 0.167 0207 0266 0278 0.317 0.522 0.422 0.312 0.306 0283 0221 0.173 0.148 0.140 lJl 'Mt '!~!IiiiF.g~ii~t"::~!i~!iiiiiii~~iiiilimli.l\U!~ ;:w.i'.ii~E@#.' ';;riilli! 1"8f;i!i:iEil:::::llitiii!i~~; :;:mlt'.iij~m;l;~~i;;::::1ji1iiliiii~!iiiilif.-?~~ ,. '~ii~'ln;;i:::-f:ii!i@f:immlili!itiEi\iiiGi!;;i;gr,~h'F.f:' i~*-ii . !!i'hi!!@!!~,g~1!.'i;h~~i:e~g~Eiiji;' :;j;i!i~!!~:::~~f,i!r:!!~rii! .........,/11,1.., Legend: Price on 811 Ga. Supply Coot E_brIdge Gu lupply Chorge E_boldge Bar 5.. RefereMe I'I1ce MlIrblPrlce _ Your _Ill on _Ihrough yowgos b11. Tho II'P""'._" your gas IUIIIliY including ^-E. Shorp"'" and _1uoI. TIla ... EnlIIIdge h.. baon _OIIzod bJlhe oee to ....... Is _100 syotam IID"-. _. Is IiI\IhlIr higher. . Th. appnlOlimallt pII.. which Enbddge ICIudy poId "" Is ...In Ihe month. _pIlcoftllDdeIiwrodto~._rIII.pIus__IuoI. . Tho dlllo_"'_ Ihe PrIce onllll1 and AoUI Go SuppIJ cost" racond1od to !he cusIllmor 01110 and"'" - pol . Tho d_ _... _..."'_th....lh EnbIidgo.. Goo SUi>PIyChorge'" Enbrldgo.......looot"...lscapUod In. - Gos__ ond Is roconcIod "" IS........... """'.......... IS b tho oee. ,.""<;' , . . , , Vl (") I m C7 C r m tx:l ~ ~. Ie " ..," \ \..-'~""'" . 6-Feb-...d2 08:42:40 LISTING OF ALL PROPERTIES FOR A CUSTOMER BY CIS NUMBER t.,G: 'I PROPLSn.FRX C'S /I: 1272 CUSTOMER: CIarlngtOll, 1M CoIporaIIon of.... MI01icipaIly of Property C399.004-001 C399-004-002 C399-0004-003 C39!l-004OO4 C3!J9.OO4-lXl5 C3ll9-OO4-l106 C399-l104-007 C39ll-QQ4.OO8 C399.004-009 C399-004-010 C399-OO+011 C399-00+012 COUNT: 12 COUNT: 12 .- N :, ~ CIl n J: m C7 C r- m ~ ro .