Title
Amendment of the Wholesale Power Contract with the City of Alachua (NB)
The City of Alachua wishes to levelize its wholesale power fuel adjustment to match Gainesville's retail fuel adjustment to improve customer relations. This will require a contract amendment.
Explanation
Our electric retail fuel adjustment charges are levelized to minimize wide swings due to fuel price volatility and the cost of planned outages of Deerhaven 2. The City of Alachua is currently billed for the provision of wholesale power on the basis of actual average fuel costs for electric generation, without any levelization. As a result, Alachua's retail customers experience wide swings in fuel price that don't match those experienced by their neighbors in Gainesville.
It would be difficult for Alachua to effectively levelize its retail fuel adjustment charges without detailed operating knowledge of fuel markets, the replacement costs for power during planned outages, and other details of generation dispatch. Accordingly, staff has been requested to amend the wholesale power contract to provide levelized wholesale power costs for Alachua to pass through to its customers. Staff is willing to accommodate this request provided that the Levelization is consistent with existing levelization practices and a true-up mechanism is put into place to net out any over or under collection that may exist at the time the wholesale power contract is terminated. Accommodating Alachua's request will improve Alachua's customer satisfaction and reduce any apprehension that Alachua is being treated unfairly.
Recommendations
The City Commission authorize the General Manager or her designee to negotiate an amendment to the wholesale power contract with City of Alachua to match retail fuel adjustment levels but also providing for a true-up prior to the termination of the contract, subject to approval by the City Attorney as to form and legality, and report back to the City Commission upon...
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