R2018-57 Authorizing City Manager to Execute a Contract with Midamerican Energy Services, LLC for Natural Gas Supply Services

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Item Coversheet Page 1 of 2 Financial Management DATE: 5/14/2018 MEMO: Letter to the City Council Financial Management Department 2018-06 TO: Honorable Mayor Julie Moore Wolfe Members of the City Council FROM: Tim Gleason,City Manager Gregg D.Zientara,City Treasurer&Director of Finance SUBJECT: Natural Gas Supply Contract SUMMARY RECOMMENDATION: It is recommended that the City Council approve the attached resolution,which authorizes the City Manager to award a Natural Gas Supply Services contract.This resolution will be presented to Council at the May 21st meeting. BACKGROUND: The City purchases natural gas service to "fire up" city owned buildings, throughout the city. The current contract with MidAmerican Energy Services,LLC expires in July 2018. Requests for Price Proposal were sent to four(4)natural gas supply companies.Two(2)suppliers expressed interest in the City business whereby the City is expecting to receive natural gas supply price bids from the two(2)suppliers,including,Constellation NewEnergy—Gas Division,LLC, and MidAmerican Energy Services,LLC(current electricity and natural gas supplier).These two suppliers are among the largest natural gas supply companies in the United States.They are also trusted names in the natural gas supply business. Natural Gas supply contracts are typically of one to three-year duration. Time length variation is generally buyer driven due to buyer sentiments regarding future price expectations. Longer term contracts generally coincide with the expectation for rising natural gas pricing,where shorter contracts generally result from the expectation of declining prices. Natural Gas is a commodity and therefore follows the price structure of the commodity market.Price quotations have a short life, price quotes must be acted upon before the close of business on the day of the release of the price quote. The two(2)suppliers,noted above,are asked to deliver a price quotation to the City Treasurer on Monday May 21,2018 before 1:00 pm CST covering 1,2 and 3 year terms.The City Treasurer will review the price quotations with the City energy advisor, CQI,Associates,Principal Richard Anderson,where the natural gas supply bid will be chosen and presented to the City Manager for his consent. Upon consent of the City Manager,the City Treasurer will notify the selected supplier to lock the price pending final contract approval by the City Council. A resolution authorizing the City Manager and City Clerk to execute the supply contract will be presented to the Council for adoption at the May 20t council meeting.The Council approved contract will be executed by the City Manager and City Clerk for delivery by the City Treasurer to the selected supplier on the morning of May 22"d, 2018, securing the locked pricing of the previous days quotation. The contract price of the selected supplier will be available at the Council meeting including the price quotations from all price bids. The contract of each of the two(2)suppliers is provided in the council packet. PRIOR COUNCIL ACTION: The current contract with MidAmerican Energy Services,LLC was approved with City Council adoption on July 6,2015 and expires in July of 2018. https://decatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemlD=1473 5/16/2018