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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Department of Public Works
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DATE:
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May 20, 2005
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BOARD MEETING DATE:
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June 7, 2005
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Neil R. Cullen, Director of Public Works
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SUBJECT:
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Extension of the County’s Participation in the ABAG POWER’s Natural Gas Program
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Recommendation
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Adopt a resolution authorizing the President of the Board to execute an agreement with ABAG POWER that:
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a.
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replaces the previous agreement; and
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b.
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provides for a three-year cancellation term in order to allow ABAG POWER to enter into longer-term gas purchase agreements on behalf of its member agencies.
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c.
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designates the Deputy Director of Facilities as the County’s representative on the ABAG POWER’s Board of Directors.
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Vision Alignment
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Commitment: Responsive, effective and collaborative government.
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Goal 20: Government decisions are based on careful consideration of future impacts rather than temporary relief or immediate gain.
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The proposed agreement with ABAG POWER is anticipated to provide the County with lower cost natural gas than can be purchased from the Pacific Gas and Electric Company (PG&E).
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Background
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Previous Board Action
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Entered into an agreement in 2001 to purchase natural gas from ABAG POWER, a joint powers authority of the Association of Bay Area Governments.
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History
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ABAG POWER was created by the Association of Bay Area Governments (ABAG) to provide lower cost electricity and natural gas to local agencies by aggregating electric and gas purchases for local governments in PG&E’s service territory. The Electric Aggregation Program was suspended in July 2001 due to the high and unstable price of electricity at that time. However, the Natural Gas Purchase Program, which the County participates in, has continued to provide natural gas at a lower cost to ABAG POWER’s member agencies.
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ABAG POWER’s Executive Committee (“Committee”) completed a review of the Natural Gas Program and has recommended that the program continue, but that member agencies be required to remain in the program for a three-year rolling term. This will allow ABAG POWER to enter into three-year fixed price gas purchase contracts to “lock in” reasonable gas prices.
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Discussion
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The proposed agreement provides the three-year rolling term for participants in the program and makes other minor but non-substantive agreement language changes. ABAG POWER expects that it will provide gas at a rate approximately 5% below PG&E’s cost of natural gas as the agreement will allow ABAG POWER to increase the amount of gas it purchases on long-term contracts to approximately 75% of the anticipated load of its member agencies.
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We are also recommending that the Deputy Director of Facilities be appointed as the County’s representative on the ABAG POWER’s Board of Directors.
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An agreement and resolution has been approved as to form by County Council and 30 of the 39 participating agencies have already executed the agreement.
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Fiscal Impact
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Approval of this agreement will have no immediate impact on the budget as the County is currently taking advantage of the price of gas provided by ABAG POWER. The savings will be realized in future years if the County continues to participate in ABAG POWER’s gas program, as it is anticipated that ABAG POWER’s rate will be lower than the gas rates provided by PG&E. We will continue to pay PG&E the transmission and distribution charges for delivering the gas to the meter at each County facility.
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The incremental cost avoidance based on a 5% differential in gas rates is estimated to save the County $90,000 per year. This cost avoidance saving will be shared by all County Departments, including General Fund financed departments, as energy costs are currently part of the facility fees paid by County Departments housed in County facilities.
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