LEGISLATIVE ACTION ITEM
SPONSOR: Grover C. Robinson, IV, Mayor
SUBJECT:
title
RESOLUTION NO. 2021-56 - NATURAL GAS SUPPLY CONTRACT WITH BLACK BELT ENERGY GAS DISTRICT
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RECOMMENDATION:
recommendation
That the City Council adopt Resolution No. 2021-56:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PENSACOLA, FLORIDA AUTHORIZING THE PURCHASE OF NATURAL GAS FROM THE BLACK BELT ENERGY GAS DISTRICT; APPROVING THE EXECUTION AND DELIVERY OF A GAS SUPPLY CONTRACT AND OTHER DOCUMENTS RELATING TO SAID PURCHASE; CONSENTING TO THE ASSIGNMENT OF CERTAIN OBLIGATIONS UNDER THE GAS SUPPLY CONTRACT IN CONNECTION WITH THE ISSUANCE OF BONDS BY THE BLACK BELT ENERGY GAS DISTRICT; PROVIDING FOR SEVERABILITY; PROVIDING AN EFFECTIVE DATE.
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HEARING REQUIRED: No Hearing Required
SUMMARY:
The purpose of the recommendation is to secure a thirty (30) year natural gas supply to provide service to one retail customer in Pensacola Energy’s service area, International Paper, Inc. (IP). IP is agreeing to a two year contract from April 1, 2022 to March 31, 2024, and shall continue from year to year thereafter. Gas supply will be provided at a discount to market price under the prepay agreement enabling Pensacola Energy to share the discount and provide service to IP at a competitive price. At that time, Pensacola Energy would continue to serve IP, or use the supply for its customer base, or return the supply back to BB and terminate the prepay agreement.
The natural gas prepayment project is a structured financial transaction that uses tax-exempt bonds to prepay for the delivery of gas on a long-term basis to achieve a discount to the market index price of gas. BB is a Natural Gas Acquisition Authority and acts as the agency for its members and other participating public agencies to acquire, finance and promote economic sources and supply of natural gas as well as provide transportation, storage and management of gas supply. BB will prepay for gas supply from BP Energy (PE’s current supplier) and sell to the City of Pensacola at a guaranteed minimum discount below the index price of gas.
This resolution is Exhibit H of the Gas Supply Agreement with BB.
PRIOR ACTION:
None
FUNDING:
N/A
FINANCIAL IMPACT:
Natural gas costs are budgeted annually. While the amount of this agreement is unknown, the shared discount will provide a profit to Pensacola Energy to increase fund balance.
LEGAL REVIEW ONLY BY CITY ATTORNEY: Yes
7/23/2021
STAFF CONTACT:
Keith Wilkins, City Administrator
Amy Miller, Deputy City Administrator - Administration & Enterprise
Don J. Suarez, Pensacola Energy Director
ATTACHMENTS:
1) Resolution No. 2021-56
2) Exhibit A - Black Belt Gas Supply Agreement
PRESENTATION: No end