SPECIAL MEETING
JULY 24, 2006

ATTENDANCE: Douglas Sutton, Chair; William Krummel; Gwen Briggs.

STAFF: Alan Lo, Building and Facilities Manager

OTHERS: Stuart Opdahl; Kevin Poruban; Matt Miklave; Thomas Hamilton, Finance Director.

I. ROLL CALL

Mr. Sutton opened the meeting at 7:36 p.m. He then introduced the Committee members.

II. NEW BUSINESS

A. Purchase of Electricity

Review information regarding the electricity procurement and refer the following to the
Common Council for approval:
“Authorize the Mayor or the Finance Director to execute any and all documents relating to the procurement of electricity from the lowest qualified electricity supplier for a term not to exceed three (3) years. This authorization will be in effect until April 15, 2007.”

Mr. Sutton gave a brief background on the issue.

Mr. Hamilton stated that in February 2006 the City issued a purchase order to SourceOne to provide the City with electricity commodity procurement services. This included providing the City with an initial buy opportunity analysis; collecting summary electric consumption and demand information directly from the utility; preparing RFP information that will assist the City in securing information that would allow for comparisons of submission received; assist the City in the pre-qualification of suppliers; and provide a risk/reward profile. This was done in preparation for the electric deregulation scheduled for January 2007. Yesterday the City participated in a teleconference with Paul Prescott of SourceOne to get an update on their progress.

Mr. Prescott informed the City that the deregulation of electricity is still scheduled for January 2007; that his office has completed the City’s electric usage profile and sent it to suppliers for review; the current “all-in” price for electricity is approximately 0.095 cents per Kwh; at least two suppliers will participate in the pricing submission process; re-stated that the price of electricity is tied to the price of natural gas, and noted that August and February were the best times to purchase natural gas futures and that this holds true for electricity as well; remarked that the City’s electricity costs would rise under deregulation to 0.110 cents per Kwh; and suggested that the City begin the process of reviewing electrical supplier contracts now to finalize the specific terms before soliciting prices. Mr. Prescott agreed to send copies of supplier contracts so the review process could begin.

Mr. Hamilton said it has been recommended that the City proceed with the necessary approval so they will be in a position to enter into a purchase agreement with the lowest responsible electricity supplier. This requires the Common Council’s pre-authorization for the Mayor or the Finance Director to execute an agreement, which will be reviewed in advance by the Corporation Counsel so that the Mayor or Finance Director will be in a position to immediately execute the agreement when the best price was available.

Mr. Krummel asked who the City contracts with. Mr. Hamilton explained. Mr. Poruban asked if there were any penalties for going above the contracted usage quantities. Mr. Opdahl said they were buying on a floating market and that they wouldn’t feel the impact of that until the end of the contract.

Mr. Krummel suggested adding words to the proposed action to ask the Mayor to look at alternative sources of energy. Mr. Miklave questioned why the City would not do as it usually does. Mr. Hamilton explained that with the deregulation scheduled for January 2007 prices would be getting higher and that it would be to the City’s benefit to lock in the best price it could before that time.

Mr. Krummel questioned what the Second and Third Taxing Districts were doing. He suggested they go ahead with the authorization including Council representation. Mr. Krummel also suggested that the Finance Director be removed from authorization to execute the contract. He stated that the wording should be changed to read “lowest qualified electrical supplier in an initial term not to exceed three years.” Mr. Lo stated that they could amend that to read one year, and that there was really no reason to do more than one year at this time.

Further discussion followed to require the approval the Mayor, Council President, Majority Leader of the Common Council and the Minority Leader of the Common Council and the Finance director (or their designees) prior to the Mayor executing the agreement. In addition, the authorization will remain in effect until December 31, 2006.

** MR. KRUMMEL MOTIONED TO AUTHORIZE THE MAYOR AND THE PRESIDENT OF THE COMMON COUNCIL; THE MAJORITY LEADER; THE MINORITY LEADER; OR THEIR DESIGNEES TO EXECUTE ANY AND ALL DOCUMENTS RELATING TO THE PROCUREMENT OF ELECTRICITY FROM THE LOWEST QUALIFIED ELECTRICAL SUPPLIER FOR AN INTIAL TERM NOT TO EXCEED THREE YEARS. THIS AUTHORIZATION WILL REMAIN IN EFFECT UNTIL DECEMBER 31, 2006.
** MOTION PASSED UNANIMOUSLY.

Mr. Sutton stated that he would take this item to the Council floor.

I11. ADJOURNMENT

** MR. SUTTON MOTIONED TO ADJOURN THE MEETING.
** MOTION PASSED UNANIMOUSLY.

The meeting was adjourned at 8:56 p.m.

Respectfully submitted,

Linda J. Hayes
Telesco Secretarial Services