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HomeMy WebLinkAbout2000-03-15 00-137 ORDERItem No 00-137 Date: 3-15-00 Item/Subject: ORDER, Providing Authority to Commit the City of Bangor In Contract with Maine Power Options for the Supply of Electricity Through Their Group Aggregation Program Responsible Departman : Adminiatration Commentary: This Order pmvldes authority m the Assistant City Manager to commit the City of Bangor to contract with Maine power Options for municipal electricity needs. The need for this action follows a decision by the Cumberland York Aggregation Coalition to join with Maine power Options, a statewide aggregation program consisting of towns, cities, school departments, water and sewer districts, colleges, hospitals and other non-profit entities. Maine Power Options is currently evaluatir expressions of interest from power suppliers and has requested that each participating entity designate a representative who an commit to the program on very short notice once the power supply ate is made public. At this time, the other viable altemathe is to simply accept the "standard offer' rate, which Is currently in place. It is anticipated that the MPO rate will be lower than the standard offer rate, thus providing some savings to those participating In the program. ny. 1, , � (t/ 41IW4R 07 Department Head Managers Comments: This Issue was renewed and discussed at the Municipal Operations Committee meeting on March T". The Committee recommends that the Assistant CM Manager be authorized to commit to the MPO program, should it be determined to be in the best Inter oftheCity of ngor. City Manager Associated Information: Order, Memorandum to Municipal Operations Committee, Memorandum from CMAC to Membership Finance Director City Solkiter x Passage _First Reading Page_M_ Referral Assimed to Comcgor 6aldaccf nnrm 15. 2000 n CITY OF BANGOR (MILE.) Order. Privirldona Wh rite toCommit the City ofBan to Contract with Maim PEWSK Qptigol fgr the Supply f Electo 'ty Thirguoh Their GrompAgareadal ProMirant ORDERED, WHEREAS, w Marts 1,2M, Me supply of Mentally has Immune deregulated, providing WHEREAS the Unwhame for a decision to partc¢aaa Or not will W eamptonally shod and Me MPO has requested be each paNtlooting entity desgnate an trdivkhml wiM the auMorityto make a banding mmmittral NOWT THEREFORE, BE IT ORDERED By THE MNSOR CI COUNCPLTHAT: Me Ambient Ory Manger is hansW desigmtad as the repreaenta[Ne from Me City a Bangor who has authority mmmRte an eleNk eneq/ mnha0 on whaff aft City; and BE 1T PURTHER ORDERED,TNAT: in he shall: mmut with tlR City manger and City Solicitor Helm any analysis which may he provided by MPO and/or CYAC, iMushng a mmpammn of the proposed rate with the milled doodah offer rate, which is currently In ple s and evaluate arty other WMfactors as may he thammid appmpdatt m amve at Me most afteageo:a dmoision for the City Or Bangor. users of electricity with the choke to saiett Meir power supplier; and WHEREAS, Me Ory of Bangor dgiresto purchase electriatyfor its avunidpal purposes at Me bunt possble men; and WHEREAS, Maitre Fawr Op[gm(MM) a enalewale aggregalhor of elem"fm towns, Cfts, ideal depar m ins, water and sewer dlstrlcts, hmpasH, mMges, universMes and other mmpmfit entitles hes Invited has City of Bangor (as a member of the CdhdwdaM.Ya AlBrageicn CioaiNon) M join Ma aggmgaoon program; and WHERFA$ Me Nmisla:dNak Aggregation Coalition has recommended to las manbers that joining Maine Options b Me most advantageous mum of action at this have with nag elite purchasing pourer at Me least possible cart; and WHEREAS Maine Pamr Optons he presently levbwhg e.,p:essians Of interest fmun potential power suppliers and will need a mneniment from Mone dialing M parhdpate, holudi,g Me City Of Bangor; ate WHEREAS the Unwhame for a decision to partc¢aaa Or not will W eamptonally shod and Me MPO has requested be each paNtlooting entity desgnate an trdivkhml wiM the auMorityto make a banding mmmittral NOWT THEREFORE, BE IT ORDERED By THE MNSOR CI COUNCPLTHAT: Me Ambient Ory Manger is hansW desigmtad as the repreaenta[Ne from Me City a Bangor who has authority mmmRte an eleNk eneq/ mnha0 on whaff aft City; and BE 1T PURTHER ORDERED,TNAT: in he shall: mmut with tlR City manger and City Solicitor Helm any analysis which may he provided by MPO and/or CYAC, iMushng a mmpammn of the proposed rate with the milled doodah offer rate, which is currently In ple s and evaluate arty other WMfactors as may he thammid appmpdatt m amve at Me most afteageo:a dmoision for the City Or Bangor. IP CITY COMIL March 15, 2000 Motion for Passage Made 6 seconded 00-132 ORDER fpr providing Authority to Commit the City of Saeger to Contract with Safe Power Options for the Supply of ffiectri- city through Their Croup Aggregation Program (niond4A p� � _,T' Cm1ntlRM GaG. I W-13) To: Municipal Operations Committee From: Robert W. Farrar, Assistant City Manager Subject: Electricity Aggregation -Update Date: March 2, 2000 As you are aware, electrical power deregulation for the State of Maine became effective on March 1, 2000. Electric companies such as Bangor Hydro Electric and Central Maine Power officially began operation as transmission and distribution companies and ceased their imroNement with power generation operations. Under this transformation, transmission and distribution companies remain regulated by the Public Utilities Commission while power supply became deregulated. The intent of the deregulation legislation was to create competitive markets for the supply of power. The PUC established a bidding process for "standard offero power supply, i.e. those not choosing a power supplier, which was intended to create a competitive situation for this group of power users. Additionally, it was anticipated that power suppliers would begin to solicit business from residential customers, businesses, industrial and commercial users on an Individual or aggregated basis, as well. The premise was that competition would drive power costs down. As has been reported extensively In the media, the anticipated Interest to supply Maine electrical power has not yet materialized. The PUC was not successful In obtaining competitive bids for standard offer power. Accordingly, they had to establish "artificial' mes In the interim and direct the transmission and distribution companies to find and secure power for customers. (Even though they were supposedly not to be Involved with pourer generation/supply). This situation, in turn, has created problems for those groups attempting to aggregate power needs, as there is no competitively established standard offer rate to bid against. The underlying assumption was that once the standard offer rate was set, power supply companies could bid on aggregated power needs, potentially at lower rates depending upon the composition and load profile of the aggregation group. It was believed that aggregated groups might even obtain lower rates than the standard offer rate, which presumably would be lower than pre -deregulation rates. To date, none of what was "Pected to happen has materialized. Moving to the City's situation, we have been participating with the Cumberland York Aggregation Coalition (CMAC) for more than a year. The group Is comprised of some 50 Maine towns, cities, schor districts, water/sewer districts who joined together to purchase electricity. The group had anticipated requesting bids on our 20 megawatts of power, but has not done so for two reasons: (1) the recent turn of events made it unlikely that we would recelve any bids; and (2) our power needs (20 megawatts annually) were considered on the low end of what suppliers might be interested In bidding for. Given this situation, the CMAC has decided to join with another Maine aggregation effort, Maine Power Options (MPO). This group has more than 200 participants (towns, cities, universities, colleges, hospitals, and other non -profits) with annual power needs of approximately en megawatts. The combined power needs of the two groups Is approximately 100 megawatts, placing the group in a much better position to attract Interest from power suppliers. In fact, Maim power Options has already received and is evaluating proposals from suppliers of power. Over the next several weeks, CYAC members will have an opportunity to join MPO. Once the electric rates which they are evaluating are disclosed, participants will have a choice to either accept that rate or continue Mh the standard offer rate. Given the current market situation, the general expectation Is that an initial power supply contract would probably only be for a short duration —ane to two years. In the meantime, we will continue with standard offer power. At this time, I see no reason not to join with the MPO group. I anticipate the vast majority of other CYAC participants will join as well. With this information as general background, we will plan to update the Committee on Tuesday and answer any questions which you may have. RWF/j cc: City Manager School Business Manager purchasing Agent f G�114IL/ro�mhM Al G/r(/'/A,�irg,/K^Cf oc -, �rteAw-srr AJsIrljr9�il,. l#r o py -'f�/ I (CYAC) CUMBERLAND -YORK AGGREGATION COALITION bx1 iref,,�l*�1�,{µ�y IN APPO /" RECs TO: CYAC Members LU 14 MAA o _. FROM: Esther Clenotl, Cc -Chair, Cumberland County Larry Littlefield, Co -Chair, York County GIT/AOUWdiliuff cli RE: Joining Maine Power Options DATE: March 2, 2000 Dear CYAC Member: It was not possible for us to contact all of you who did not attend our February 170 meeting in Scarborough before the March 1" deadline. We assume you know that all of us as well as our residents automatically were switched to Standard Offer on March 1° until we would contract with a vendor. Present at our meeting on the 17� were Rich Silkman, our consultant, and Steve Gauthier, who represents Maine Power Options program, an aggregation program sponsored by Maine Health & Higher Education Facilities Authority (a division of fine Maine Bond Bank). Only 17 of our 55 members attended. They unanimously agreed on the following: 1) Remain in Standard Offer in the immediate. Remember our bills will be broken dawn into generation, transmission, and distribution. 2) We are advising our members to loin Maine Power Options. Once MPO receives a rate that they have negotiated with a vendor, CYAC will forward the offer and an analysis of the offer. It is necessary to 7 have one representative with the authority to make the commitment on behalf of your group without further consultation. 3) Each member unit must consent individually to the MPO offer and inform Steve Gauthier of that decision. CYAC is not signing a contract. Our individual members will. A unit member that accepts the MPO price will be obligated forthecontracttenn(1-2years). 4) Al a follow-up meeting, Steve agreed that CYAC will pay MPO $5,000 from its remaining funds, and every member unit that has paid its meter fee to CYAC and has sent in the necessary meter information to CYAC prior to this memo, will be able to join MPO without individually 00-137 paying an MPO fee. If a member unk has not done so and wishes to join MPO, the member unit will be requested to pay the MPO fee directly. MPO needs the number of meters and total load. 5) We will have 2-3 CVAC representatives on the MPO Board. 8) We do not need to obtain a license if we loin MPO individually and not as a group. 7) CVAC will remain together as an entity even as individual members may choose to join MPO. 8) If members have questions, they should contact: Esther Clenotl tel: 871-8380 fax: 871-8292 Larry Littlefield tel: 4396819 fax: 439-5409