BY COUNCILOR ECKENBERG:01-004-O
ORDINANCE NO. __________
AN ORDINANCE PERTAINING TO THE PROCUREMENT OF NATURAL GAS BY THE DEPARTMENT OF PUBLIC WORKS AND UTILITIES, ADDING AN ARTICLE XVI TO CHAPTER 48 OF THE DULUTH CITY CODE, 1959, AS AMENDED.
The city of Duluth does ordain:
Section 1. That a new Article XVI entitled "Natural Gas Procurement" be added to Chapter 48 of Duluth City Code, 1959, as amended, to read as follows:
Section 2. That this ordinance shall take effect and be in force 30 days from and after its passage and publication.
Article XVI. Natural Gas Procurement.
Sec. 48-240. Procurement of natural gas.
(a) Notwithstanding the provisions of Chapter 41 or any other provisions of this Code, the department may procure and purchase natural gas by exercising powers enumerated in Minnesota Statutes sections 453A.01 through 453A.12 as authorized by the provisions of Minnesota Statutes section 453A.08, subdivision 2. The department may enter into cooperative agreements with other gas purchasing entities and exercise any and all of the powers granted in Minnesota Statutes sections 453A.01 through 453A.12 in its utility operations;
(b) This Article shall not be construed in any manner to limit or diminish any existing legal right or power the department now has.
Sec. 48-241. Finance director to oversee natural gas purchases.
The finance director shall oversee the procurement and purchase of natural gas by the department and may conduct audits and make recommendations consistent with good accounting and purchasing practices. The finance director may appoint a committee to assist in performing duties set forth in this Section.
As a result of these historical changes, it became difficult, and often virtually impossible, for the utility to purchase the natural gas it needed using traditional purchasing and contracting methods set forth in the purchasing provisions of the City Code. The utility adapted well to the way the natural gas industry bought, sold, transported and stored natural gas but heretofore no one had examined changing the city code to conform to how the utility had to operate.
After the merger of the water and gas and public works departments, the director of public works and utilities became concerned about this situation. After considerable study, it was decided that the best and easiest solution was to incorporate the provisions of Minnesota Statutes, Chapter 453A, which is entitled "Municipal Gas Distribution" into the Duluth City Code as provided for in Minnesota Statutes section 453A.08, subdivision 2.
Chapter 453A authorizes two or more municipalities to form joint powers consortiums called "municipal gas agencies" to purchase gas for the members and sets forth all necessary powers these agencies need to accomplish the gas purchases. The statute also provides, however, in Section 453A.08, subdivision 2, that any single municipality can exercise the powers in Chapter 453A if its city council passes a resolution authorizing the exercise of these powers. Such a resolution will accompany this ordinance along with a copy of Minnesota Statutes Chapter 453A.
This ordinance also provides that the director of finance will oversee the purchase of natural gas by the utility to ensure good purchasing and accounting practices are maintained. This will provide a check over purchasing procedures which previously did not exist.