FROM: James D. Herberg, General Manager
Originator: Rob Thompson, Assistant General Manager
SUBJECT:
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AGREEMENT FOR NATURAL GAS, SPECIFICATION NO. C-2021-1227BD
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
Approve the Master Retail Natural Gas Supply agreement with Constellation NewEnergy - Gas Division, LLC for the purchase of Natural Gas, Specification No. C-2021-1227BD, for the period August 1, 2021 through July 31, 2022 for $0.035 per Million British Thermal Units (MMBtu) over the Natural Gas Intelligence Weekly Gas Price Index Monthly Bid for the SoCal Citygate for a total estimated annual cost of $715,000 with four one-year renewal options.
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BACKGROUND
Orange County Sanitation District (OC San) Central Generation (CenGen) facilities at Plant Nos. 1 and 2 are vital to OC San's resource recovery and resilient operation. CenGen engines utilize all process digester gas to generate electricity and heat which are utilized in the treatment plants and support buildings. Natural gas is used as a supplemental fuel in the CenGen engines during routine operations and peak power months to reduce electrical demand.
Natural gas is purchased as a bulk commodity from a third-party energy marketing firm and is delivered through regional pipelines owned by Southern California Gas Company. OC San buys natural gas on the open market with pricing set relative to a published index price, the Natural Gas Intelligence Weekly Gas Price Index Monthly Bid for the SoCal Citygate region. OC San has utilized gas marketing firms for over 21 years to effectively manage the cost of natural gas required for CenGen operation. This strategy results in the lowest cost over the long term.
RELEVANT STANDARDS
* Use all practical and effective means for resource recovery
* Ensure the public's money is wisely spent
* Maintain a culture of improving efficiency to reduce the cost to provide the current service level or standard
PROBLEM
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