Title
Extension of Wholesale Power Contract with the City of Alachua (B)
A mutually beneficial agreement to extend the wholesale electric power contract between Gainesville Regional Utilities and the City of Alachua through 2020 has been negotiated and has been approved by the Alachua City Commission subject to approval by the Gainesville City Commission.
Explanation
Gainesville Regional Utilities (GRU) has been selling wholesale electric power to the City of Alachua for distribution to their retail electric customers since 1992 under agreements extending through December 31, 2010. A third amendment has been negotiated that will extend the contract through 2020, but includes a provision to allow either party to reopen the price provisions of the agreement after five years. The term of the agreement was designed to avoid affecting the timing of GRU's need for additional generation capacity.
The agreement consists of three key pricing elements: 1) a charge per kilowatt of monthly peak kilowatt demand; 2) a non-fuel energy charge per megawatt-hour; and 3) a production cost per megawatt-hour. The first two charges will be adjusted annually based upon a fixed escalation rate of 2.5%. The third charge will vary monthly, 50% based on GRU's retail fuel adjustment, and 50% based on the NYMEX contract cost of gas for the coming month times a factor representing the marginal efficiency of GRU's gas fired units needed to serve Alachua's load. This formula was developed empirically to correlate with both GRU's fuel cost and unit availabilities, and has been in place for the last two years.
The agreement also provides the City of Alachua with two elective options on a fee payment basis. The first is to provide an emergency back-up feed to a portion of Alachua's system through an electrical interconnection near the Turkey Creek subdivision on US 441. The second is to have GRU assist the City of Alachua with processes and filings involved in complying with fe...
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