Title
Expiration of the Wholesale Power Contract with the City of Alachua (B)
The wholesale power contract between the City of Gainesville and the City of Alachua expires December 31, 2007, but will automatically renew itself without a one year prior notice of termination. Staff does not want to let the December 31, 2006 deadline for providing a one-year's notice of termination to pass without advising the City Commission of its options under the contract.
Explanation
We have provided the City of Alachua with wholesale power for nearly 19 years. Currently Alachua averages 20MW of load and $8,000,000 of total billings. Net revenues from this contract have helped support the municipal services that many of the citizens of the City of Alachua draw on when they visit or work in Gainesville. The current wholesale power contract between the City of Gainesville and the City of Alachua expires December 31, 2007. Unless either party notifies the other of their intent to terminate by December 31, 2006, the contract is automatically renewed for a period of one year through December 31, 2008. If the contract is terminated, the City of Alachua will be required to purchase the residual value of certain equipment in the substation and find another provider by December 31, 2007. Staff wishes to provide the City of Alachua with the courtesy of a reminder of its options under the contract and a notification of the Commission's intent.
Recommendations
The City Commission receive a presentation on: 1) the terms and conditions of the wholesale power contract with the City of Alachua; 2) the City of Gainesville's options under this contract; 3) the profitability of the contract; and 4) Alachua's potential other power suppliers.
Fiscal Note
In FY 2005 we netted $1,134,000 and in FY 2006 we netted $606,000 from the City of Alachua based on incremental production costs, in which natural gas prices weigh heavily. Please note that most of our retail customers wou...
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