HomeMy WebLinkAboutDTS-09-107 - Agreement - Electricity Agency RetainerJ
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REPORT T0: Development & Technical Services Committee
DATE OF MEETING: August 10, 2009
SUBMITTED BY: John McBride, Director of Transportation Planning
PREPARED BY: John McBride, Director of Transportation Planning
WARD(S) INVOLVED: All Wards
DATE OF REPORT: July 3, 2009
REPORT NO.: DTS-09-107
SUBJECT: ELECTRICITY AGENCY RETAINER AGREEMENT
RECOMMENDATIONS:
"That the Mayor and City Clerk be authorized to execute an amending agreement to
extend its existing Electricity Agency Retainer Agreement with ECNG Energy L.P. until
Dec 31, 2010, on terms satisfactory to the City Solicitor; and further,
That in subsequent years, the Director of Transportation Planning be authorized to
execute one year renewals of the Electricity Agency Retainer Agreement with ECNG
Energy L.P., on terms satisfactory to the City Solicitor."
BACKGROUND:
The City of Kitchener has approximately 17,400 street lights which consume in excess of
$1,000,000 of energy on an annual basis. This energy cost is made up of the actual energy
portion of the bill, as well as distribution, transmission, wholesale market services and debt
retirement. Prior to 2008, the City purchased its energy at a rate determined twice a year by
the Ontario Energy Board (OEB) under a Regulated Price Plan (RPP) which was applied to
public sector groups which include municipalities, universities, schools and hospitals
(MUSH).
In 2008, the City entered into a one year agreement with ECNG Energy L.P. to purchase
electricity related to street lighting on the City's behalf on the spot market. The purpose of
this agreement was to take advantage of lower energy costs during the evening hours and
ultimately reduce costs for the City.
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REPORT:
The City entered into an agreement with ECNG Energy L.P. last year for the purchase of
energy for street lighting. This agreement permitted the purchase of energy from the spot
market as opposed to the regulated price plan and has saved considerable expense.
When the City considered opting out of the Regulated Price Plan, various purchase options
were considered, including the Association of Municipalities of Ontario who offer a Local
Authority Service Electricity Procurement Program. This organization, along with many other
private service providers, only periodically tender their electricity supply and do not actively
manage their own supply portfolio to capitalize on emerging opportunities.
ECNG Energy was then considered, which is the consultant and agent in the procurement
and administration of natural gas for the City. Their role with respect to street lighting energy
supply would be to solicit supply offers and contracts on behalf of the City including the
management of the electricity supply contracts. ECNG Energy is the only independent
advisor, that we are aware of, which offers distributor consolidated billing. Their advantage is
that they do not hold a financial interest either in the supply or transmission of the commodity
and are able to provide more objective advice. Their interest is in providing the least
expensive electrical energy source and fees are based on usage, not cost of the electricity
purchased.
When comparing last years energy purchase through the use of ECNG's services against
the previous year when the City purchased energy through the regulated price plan, we
experienced a 23% decrease in the cost of the electricity while at the same time the actual
kilowatt hours used increased by 9.9% due to the natural expansion of residential
subdivisions.
In absolute terms the City saved approximately $145,800 in actual electricity but only saved
$41,800 in our total energy bill due to increases in the cost of distribution, transmission,
wholesale market services and debt retirement.
Based on last years consumption, the annual fee for ECNG Energy's services will be
approximately $15,300 which is more than offset by the savings generated.
The Ontario Energy Board intended to disband the MUSH group on Apr 1 of this year which
has not yet happened. If the OEB develops a new program for the purchase of electricity that
is more beneficial to the City, it will be reviewed in relation to this current agreement and the
most advantageous program will be brought before Council.
CONCLUSION:
It is to the City's advantage to continue to purchase the energy supply for street lighting from
the spot market. An extension of the existing agreement with options to renew on an
annual basis with ECNG Energy L.P. is to the City's financial benefit.
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FINANCIAL IMPLICATIONS:
The annual cost of continuing this agreement with ECNG Energy L.P. will be approximately
$15,300 and will be more than offset by the savings in electricity costs. The energy savings
as well as the cost of this agreement have already been reflected in the operating budget.
REVIEWED BY:
Jennifer Sheryer, Assistant City Solicitor (741-2265)
ACKNOWLEDGED BY: Jeff Willmer, Interim General Manager
Development and Technical Services Department
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