DISCLAIMER

07-0394R


RESOLUTION FORGIVING INTEREST CHARGES INCURRED BY DECC FOR 2005-2006 NATURAL GAS HEATING SEASON.

BY COUNCILOR STEWART:

     The city council finds:

     (a)  That it is desirable and in the public interest to assist the Duluth Entertainment Convention Center (the DECC), a government agency, in its finances; and

     (b)  Because of delays in city processes, the DECC has incurred certain interest charges related to the purchase of natural gas after the date of a budgeted change is energy resources; and

     (c)  The city wishes to assist the DECC by forgiving the interest charges resulting from the city-related delay.

     NOW, THEREFORE, BE IT RESOLVED, that all interest owing to the city for natural gas utility service provided to the DECC during the 2005-2006 heating season is hereby forgiven.


STATEMENT OF PURPOSE:  The purpose of this resolution is to forgive all outstanding interest on natural gas bills owing to the city for service to the DECC and to not charge any additional interest related to this amount.


Previous to 2005, the DECC had used natural gas as a major energy source for its operations. After analysis, the DECC determined to change to using by-products from Steam District No. 1 for its operations and budgeted accordingly. However, the contract for the work was delayed in City Hall, causing them to incur unanticipated gas charges in early 2006, ranging from a low balance of $53,600 in December 2005, to a high balance of $203,300 in May 2006, when the account was closed. When their account was terminated there was an unpaid balance of $431.48, which the DECC staff was not aware of until recently. By then, interest charges totaled $21,796.31.


This resolution allows the DECC to pay for the product they actually used, which they will do after this resolution is passed. They will not be required to pay the accumulated interest. This is a one-time action, the account is closed, and the only future charge, if any, will be due to a timing issue between city council action and the next billing cycle.