TRANSMITTAL LETTER FOR BOARD MEETING OF FEBRUARY 2, 2012
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Authorization to exercise an option to extend and amend agreement with Exelon Energy Company for Contract 11-RFP-17, Supply of Electricity, for up to an additional two years, 2014 and 2015, subject to the District obtaining an acceptable price, at the current or lower contracted price, for an amount not to exceed $0.04036 per kWh RTC, Accounts 101-15000/67000/68000/69000-612150
Body
Dear Sir:
At the Board meeting of May 19, 2011, the Board of Commissioners 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 entered into a contract commencing that same day.
This agreement has no prior change orders.
The District's current electricity supply agreement will expire on August 28, 2013, unless it is extended. As reported to the Board on June 28, 2011, the existing agreement gives the District the option to extend the agreement up to an additional three years. If the agreement is extended, the only terms that may vary are the contracted prices and termination date. It was decided that it is in the best interest of the District to extend and amend the existing agreement, subject to the District securing a lower price deemed advantageous to the District.
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 in future years at or below the current contracted price with Exelon.
The extension of the termination date is in Compliance with the Illinois Criminal Code because it is germane to the original agreement as signed and is in the best interest of the District.
In view of the foregoing, it is requested that the Board of Commissioners authorize the Chairman of the Committee on Finance, Executive Director, Clerk and Director of Procurement and Materials Management to exercise the option to extend and amend the existing agreement with Exelon Energy Company for up to an additional two years, in an amount not to exceed $0.04036 per kWh RTC, subject to the District obtaining a price deemed acceptable to the District, and further subject to the approval of the General Counsel as to the form and legality of acceptable amendatory language to the agreement.
Requested, Manju Prakash Sharma, Director of Maintenance and Operations, SES:SO'C:MAG
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
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