title
RENEWAL AGREEMENT FOR NATURAL GAS SERVICES THROUGH THE SCHOOL PROJECT FOR UTILITY RATE REDUCTION (SPURR) FOR THE MUNICIPAL UTILITIES DEPARTMENT
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Authorize the City Manager to execute the Renewal Agreement for Natural Gas Services with the School Project for Utility Rate Reduction (SPURR) to provide natural gas to various City facilities and the Municipal Utilities Department (MUD) at a reduced fixed unit price for members (Attachment A), and
2. Approve findings pursuant to Stockton Municipal Code section 3.68.070 in support of an exception to the competitive bidding process.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this motion.
body
Summary
The SPURR program is a Joint Powers Authority (JPA) established to increase the purchasing power of public agencies and reduce costs of natural gas supplied to those agencies. For more than 15 years, the City participated in the SPURR program to reduce the overall cost of natural gas purchased by the City for various department facilities, outlying pump stations, and to produce electric power at the Regional Wastewater Control Facility’s (RWCF) Cogeneration Facility. Over the past ten years, the City realized an average annual cost savings of nearly $45,000. The Renewal Agreements are for a period of five years, and there are no fees to participate. The most current agreement will expire on June 30, 2019. With this action, the City Council will authorize the continued participation in the SPURR program.
DISCUSSION
Background
The SPURR program is a JPA formed in 1989 for the purpose of aggregating the purchasing power and expertise among public agencies to reduce the cost of natural gas. This program serves more than 270 agencies, including University of California and California State University campuses, municipalities, and other California public agencies. There are no fees paid to SPURR to participate.
The City’s natural gas purchases are currently made under a city-wide agreement with the SPURR. Natural gas used by various departments is paid by the City and charged to the appropriate department account in the same manner as charges for other PG&E utility services. The MUD participated for more than 15 years in the SPURR natural gas procurement program. Over the past ten years, the City realized an average annual cost savings of nearly $45,000.
The SPURR program buys natural gas at the wholesale level from multiple suppliers including, but not limited to, Shell Energy, ConocoPhillips, BP, United Energy Trading, and Constellation Energy. The SPURR provides participating agencies with reduced pricing through its relationship with multiple suppliers and the purchasing power of the participating agencies.
Present Situation
On average, the RWCF uses 75,000 therms (thm) of natural gas per month and the various department facilities and outlying pump stations use 13,000 thm of natural gas per month. Over the past five years, the RWCF has decreased its use of natural gas, while use at various department facilities and outlying pump stations have remained steady. By participating in the SPURR program, the City realizes cost savings since the rates remain stable and do not fluctuate during the fiscal year, and there are no surcharges or tariffs. Participation in the SPURR is for a five-year period. The City can opt out of the agreement on June 30 of any year by providing written notice to the SPURR by March 1 of that same year. Staff recommends the City Council approve executing a five-year Renewal Agreement for Natural Gas Services with the SPURR.
Findings
Stockton Municipal Code Section 3.68.070(A)(5) provides for an exception to the competitive bidding requirements in cases where City Council approves findings that support and justify the purchase through a cooperative purchasing agreement.
The proposed findings in support of this purchase include:
(1) The SPURR is a JPA whose members are California public K-12 school districts, community college districts, and county offices of education.
(2) The SPURR operates an aggregated natural gas acquisition program for its members, other public agencies, and non-profit educational institutions in California.
(3) Other public agencies can participate in the SPURR’s aggregate gas program through a cooperative agreement.
(4) The SPURR’s cooperative agreement is compatible with City standards.
(5) Participation in the JPA simplifies the solicitation and procurement process and reduces administrative costs to the City.
(6) SPURR represents member and participant natural gas interests before the California Public Utilities Commission.
(7) Participation in the SPURR has resulted in significant cost savings to the City.
FINANCIAL SUMMARY
The charges for natural gas are paid for by the City and charged to the appropriate department account in the same manner as charges for other PG&E utility services. A breakdown of total gas charges for the MUD and General Fund accounts for FY 2017-18 are:
|
|
MUD |
General Fund |
Total |
|
SPURR |
$67,623 |
$127,823 |
$195,446 |
|
PG&E |
$3,992 |
$76,743 |
$80,735 |
|
Total |
$71,615 |
$204,566 |
$276,181 |
There is no separate membership fee for participation in the SPURR program, and the administration fees are included in the price per term used. The City will continue efforts to transfer gas accounts from PG&E to the SPURR to take full advantage of the reduced pricing.
There is no impact to the General Fund, or any other unrestricted fund, from this action.
Attachment A - SPURR Renewal Agreement