04-0034R

RESOLUTION AUTHORIZING AGREEMENT WITH MINNESOTA POWER FOR PROFESSIONAL SERVICES REGARDING ACQUISITION, TRANSPORTATION AND MANAGEMENT OF NATURAL GAS SUPPLIES IN THE AMOUNT OF NOT TO EXCEED $30,000.

BY COUNCILOR STOVER:

RESOLVED, that the proper City officials are hereby authorized to enter into an agreement, a copy of which is on file in the office of the city clerk as Public Document No. ______________, with Minnesota Power, a division of Allete, Inc. for the provision by MP of professional services related to the purchase, transportation and management of the natural gas supply for the city's natural gas utility in the amount of not to exceed $30,000, payable from gas fund.


STATEMENT OF PURPOSE:  This resolution will approve a professional services agreement with Minnesota Power, a division of Allete, Inc., for assistance in planning and arranging purchases of natural gas supplies and transport and storage transactions for Comfort Systems. Planning assistance will include current natural gas market analysis and long term trend projections, identification of natural gas purchase opportunities, documentation of gas supply and transport transactions related to budget and planned purchases, and evaluation of gas purchase plan performance and benchmark results. In addition, Minnesota Power will collaborate with Comfort Systems to identify and purchase and/or exchange pre-purchased natural gas that is in excess of the other party's short term requirement.

Fees for the professional services, more fully described in the agreement under Article I. sections a) through c), are $2,500 per month ($30,000 annually). The proposed 2004 gas utility budget includes an allocation for these expenses. Should the city request assistance in bidding and administering the purchase of natural gas supplies as provided for in Article I. section d), the city will pay Minnesota Power a fee of $0.02 per MMBTU purchased. This fee would be added to the price of gas purchased. It is anticipated that such purchases would be infrequent and made only when the realized savings would exceed the fee. Should the city and Minnesota find it to their mutual advantage to exchange or sell excess pre-purchased gas as provided in Article I. section e), the economics of the transaction will be made a part of the transaction agreement. (All such agreements are reviewed by the gas purchasing oversight committee.)

This agreement and its role in the gas purchasing process was reviewed by the gas purchasing oversight committee and is recommended for approval by the city council.