TRANSMITTAL LETTER FOR BOARD MEETING OF FEBRUARY 2, 2012
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Authorization to enter into an agreement with a successful Proposer(s) for the Request for Proposal (RFP) 12-RFP-14, Supply of Electricity, Accounts 101-15000/67000/68000/69000-612150
Body
Dear Sir:
At the Board meeting of February 17, 2011, the Board of Commissioners was notified via a report on the use of a reverse auction provider for energy procurement and management services.
At the April 7, 2011 Board Meeting, authorization was approved to enter into an agreement for Contract 10-RFP-20, Energy Procurement and Management Services to Perform Real Time Reverse Energy Auctions, with World Energy Solutions, Inc., (WES) for the District.
At the Board Meeting of May 19, 2011, the Board authorized the District to enter into an agreement with the successful online, reverse auction, low price bidder for the purchase of electricity for a two-year period, as set forth in Contract 11-RFP-17, Supply of Electricity. On June 28, 2011, the District accepted the low bid price of Exelon Energy Company for Group 1 and MidAmerican Energy for Group 2, and entered into a contract commencing that same day.
Again the District desires to conduct yet another reverse auction for the supply of electricity for the years 2014 and 2015 due to current market conditions. The market for electricity is volatile, the price fluctuating throughout the day, because it is tied to the market price of natural gas. Recent market conditions have led to steadily declining average natural gas prices for end users. These include an uneventful hurricane season, the mild winter weather, the expanded supply of natural gas because of new technologies to extract gas from shale rock formations, the delay in the issuance of restrictive regulations on coal-fired power plants, and the continued downturn in the U.S economy causing depressed levels of natural gas consumption by end users. The District’s current energy Consultants, The Seaton Group and World Energy Solutions, Inc., advise that the near time period offers an advantageous window of opportunity to secure commitments to provide electricity at or below our current contracted prices with Exelon and MidAmerican.
As before, the District intends to award a contract(s) on the basis of the technically acceptable proposal(s) that will result in the best value for each pricing group included in the reverse auction to take place in the near future. Technically acceptable proposals will be those proposals that meet the qualifications and requirements contained in 12-RFP-14, Supply of Electricity. These Proposers will be invited to participate in the online reverse auction for electricity, and Proposers will be allowed to offer and reoffer pricing until the close of the auction time for each pricing group and accompanying contract tern period.
The Proposer(s) will agree to hold their prices in the auction for a certain period of time (i.e., 2 or 3 hours) after the online auction is closed. During this period of time the District needs to select the best value price offer(s) submitted in the auction which meets the needs of the District.
District staff and WES will review the groups’ pricing received and the District will select the Proposer(s) who provided the best value price submitted to lock in prices and execute an agreement with the successful Proposer(s).
The Appendix D and MPLA will not be included in 12-RFP-14 due to the specialized nature of the services requested.
Therefore, it is requested that the Board of Commissioners authorize the Director of Procurement and Materials Management to enter into an agreement with a successful Proposer(s) to supply electricity to the District, subject to appropriation.
Requested, Manju Prakash Sharma, Director of Maintenance and Operations, SES:SO'C:MAG
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for February 2, 2012