Loading...
HomeMy WebLinkAboutCOD-051-04 CI~mgron REPORT CORPORATE SERVICES DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: October 18, 2004 Report #: COD-051-04 File#_ . " .:1' -/11\' ( '! f'-- By-law #;Jcx/( -..;.L2-:; Subject: AWARD OF REQUEST FOR PROPOSAL OF CO-OP RFP-348-2004 FOR NATURAL GAS CONSULTING AND DIRECT PURCHASE Recommendations: It is respectfully recommended to Council the following: 1. THAT Report COD-51-04 be received; 2. THAT the proposal received from A.E. Sharp, a subsidiary of Seminole Canada Gas Company, to provide natural gas consulting services and to act as an agent of the Municipality of Clarington to execute direct purchase agreements (subject to the approval of the Corporate Services Department) for a term of three years be accepted; 3. THAT the agreement be extended for up to a two year additional term pending satisfactory service, pricing and agreement of the Durham Purchasing Co-operative. 4. THAT the Director of Corporate Services be authorized to sign the required Natural Gas Purchase Agreements and Master Service Agreements required to implement and maintain this program during the term of the agreement with A.E. Sharp; and 5. THAT the attached by-law marked Schedule "A" authorizing the Mayor and the Clerk to execute the necessary Agency Agreement be approved. Submitted by: M Marano, H.B.Sc., C.M.O. irector of Corporate Services ~ <-aJL(L~__ CULt Reviewed by: "- Franklin Wu, Chief Administrative Officer MMILABlld 1201 REPORT NO.: COO-oS1-o4 PAGE 2 BACKGROUND AND COMMENT 1.0 Backaround Since 1997, the Municipality of Clarington has participated with the City of Oshawa, the Region of Durham and the Town of Ajax by jointly calling proposals and awarding contracts for the provision of natural gas consulting and direct purchase services. This arrangement has proven to be beneficial by combining natural gas volume to maximize purchasing leverage and reducing administration costs associated with each municipality inviting proposals separately. The current agreements for these services expire on November 1, 2004. It was therefore decided to invite competitive proposals for the upcoming term (3 10 5 years) through a cooperative request for proposals (RFP) issued by the Region of Durham Supply & Services Section. The Municipality's current annual consumption of natural gas is approximately 956,000 cubic meters, and the total combined volumes for the four participants are approximately 9,000,000 cubic meters annually. The estimated cost for natural gas for the period of November 2003 to October 2004 inclusive for the Municipality of Clarington requirements is estimated at $439,000.00. The savings for the same time period by purchasing natural gas through A.E. Sharp is estimated to be $20,000.00. All affiliated Municipality of Clarington Hall Boards and Arenas have been invited to participate in this contract. 1202 REPORT NO.: COD-051-o4 PAGE 3 2.0 Reauest for CO-aD ProDosal RFP 457-2004 Request for Proposals RFP 348-2004 was prepared by the Region of Durham, advertised on August 18, 2004, and closed on September 14, 2004, with the following 4 responses received: AE. Sharp, a Subsidiary of Seminole Canada Gas Company. ECNG Inc. EnPro International Inc. M3 & W. Inc., Operating as Energyshop.com Representatives from the 4 participating municipalities scored each proposal based on the following criteria: Understanding of the RFP requirements Methodology and Management Plan Experience and Qualifications Fees The scores were then compiled with the proposal from AE. Sharp receiving the highest score overall at 93%. AE. Sharp provided the most comprehensive proposal overall, which includes the following services: Providing weekly market analysis of natural gas supply, commodity pricing and forecasts. Performing all communication with Enbridge on behalf of the agencies concerning billing and inventory balancing, and updating lists of locations etc. 1~U3 Ensuring that a continuous supply of natural gas is supplied to meet the needs of the municipalities through direct purchase agreements. REPORT NO.: COD-051-o4 PAGE 4 Utilizing the purchasing leverage of the combined agencies' volumes, as well as providing market analysis and forecasting to maximize price value. Executing direct purchase agreements as an agent of the Region of Durham, subject to the approval of the Finance Department Monitoring balances of natural gas under contract and minimizing potential risks of imbalances through buy/sell transactions and pooled inventory. Providing financial reports to verify transactions, price reconciliation and inventory balances. A.E. Sharp's proposed fees for the Municipality of Clarington are approximately $1,445.00 per year and will be held firm for the first 3 years of the contract. (These are considered minimal when compared with the annual value of natural gas purchases at approximately $439,000.00). Note that A.E. Sharp has performed these services acceptably for the Municipality in the past. 3.0 Budaet ImDact Due to the volatile nature of natural gas commodity pricing, it is not possible to forecast with accuracy the impact of natural gas pricing on the 2005 Budgets. However, based on current commodity pricing and future supply forecasts it is likely that natural gas prices will increase in the range of 10% to 20% in 2005. The impact of price escalations for future years may be minimized through fixed price/volume purchases of natural gas for terms of up to 3 years. The Municipality may lock in all, or a portion of the total natural gas requirements under this type of agreement. Opportunities for fixed price/volume purchases will be monitored on an ongoing basis by the consultant. Should conditions warrant, the Municipality of Clarington will be able to execute a supply agreement to secure long term pricing stability. 1~{J4 ---- REPORT NO.: COD.()51.()4 PAGE 5 4.0 Conclusion It is therefore recommended that the proposal received from A.E. Sharp, a subsidiary of Seminole Canada Gas Company, to provide natural gas consulting services and to act as an agent of the Municipality of Clarington to execute direct purchase agreements (subject to the approval of the Corporate Services Department) for a maximum term of five years be accepted. Note that the other participating municipalities have also recommended A.E. Sharp for their requirements and are presenting similar reports to their respective Councils. 1~U5 -" SCHEDULE "A" THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON BY-lAW 2004- Being a By-law to authorize a contract between the Corporalion of the Municipality of Clarington and A.E. Sharp Limited, Burlington, Ontario, to enter into agreement for the 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 Corporalion of the Municipality of Clarington and seal with the Corporation Seal, a contract between, A.E. Sharp Limited, Burlington, Ontario, and said Corporation; and 2. THAT the contract attached hereto as Schedule "A" form part of this By-law. By-law read a firsl and second time this day of By-law read a third time and finally passed this day of ,2004. ,2004. John Mutton, Mayor Patti L. Barrie, Municipal Clerk 1;~Oo -...