HomeMy WebLinkAboutMT League - Energy contractMontana League of Cities and Towns
P, 0. Box 1704 - Helena, Mt 59624
406 442-8768 (Phone)
406 442-9231 (Fax)
Memorandum
To: Participants in the Energy Supply Program
Flom: Alec Hansen -% Ks
Subject: Proposed Contract
Date: March 6, 2002
The attached analysis and spreadsheet explain the terms, conditions and benefits of the
power supply contract the League is negotiating with the energy marketing subsidiary
NorthWestern Corporation. This contract will supply electricity to 29 cities and towns
and 59 school districts across the state at very competitive rates.
If you have questions about theses attachments and the supply contract that you will
receive next week, please call me immediately.
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Montana League of Cities and Towns
Electricity Supply Program
Results of Competitive RFP
Current
Billings
Bozeman
Butte
Great Falls
Havre
Helena
Missoula
Glasgow
Deer Lodge
Belgrade
Cascade
Conrad
Darby
Harlem
Malta
Manhattan
Plains
Sheridan
Superior
Three Forks
Laurel
Livingston
League Total
Comparative Savings of Bid versus MPC Default Price Scenarios
MPC Proposal
Est. Annual Savings
vs $0.04005 MPC
$ 76,832
$ 35,653
$ 95,747
$ 73,360
$ 25,028
$ 39,314
$ 38,430
$ 9,442
$ 5,247
$ 944
$ 883
$ 2,416
$ 1,566
$ 2,294
$ 4,678
$ 1,155
$ 1,5$9
$ 2,983
$ 1,704
$ 1,764
$ 19,658
$ 14,008
$ 454,693
Est. Annual Savings
vs $0.03750 MPC
$ 51,188
$ 23,753
$ 63,790
$ 48,875
$ 16,674
$ 26,192
$ 25,604
$ 6,290
$ 3,496
$ 629
$ 588
$ 1,609
$ 1,043
$ 1,528
$ 3,116
$ 769
$ 1,059
$ 1,987
$ 1,135
$ 1,175
$ 13,097
$ 9,332
$ 302,930
E_st, Annual Savings
vs $0.03500 MPC
$ 28,047
$ 12,087
$ 32,459
$ 24,869
$ 8,485
$ 13,326
$ 13,028
$ 3,201
$ 1,779
$ 320
$ 299
$ 819.
$ 531
$ 778
$ 1,586
$ 391
$ 539
$ 1,011
$ 578
$ 598
$ 6,664
$ 4,749
$ 154,143
New
Belgrade (addbtq $ 9,570 $ 6,376 $ 3,244
Bridger $ 2,486 $ 1,656 $ 043
Chinook $ 4,780 $ 3,184 $ 11620
Hardin $ 3,778 $ 2,517 $ 1,281
Harlowton $ 1,254 $ 835 $ 425
Red Lodge $ 1,579 $ 1,052 $ 535
Roundup $ 3,889 $ 2,578 $ 1,312
New Total $ 27,316 $ 18,199 $ 9,260
Lighting $ 152,800 $ 101,000 $ 51,800
TOTAL LEAGUE
634,809 $ 422,929 $
215,204
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Energy Supply Contract
Montana League of Cities and Towns and NorthWestern Energy Marketing
Following solicitation of bids and review of competitive proposals, representatives of the
League of Cities and Towns and the Montana School Boards Association have tentatively
agreed to an electricity supply contract with the energy-marketing subsidiary of
NorthWestern Corporation. Under the terms of the proposed deal, Northwestern will
supply about 25 megawatts of electricity to cities, towns and school districts for five
years at a price below $33 per megawatt-hour. Service will begin on July 1, 2002.
This is a firm price, full service contract. It guarantees delivery of electricity at the
agreed price with no penalties for imbalances or other load variations.
The contract may include a load shaping and conservation element. Under this likely
provision, NorthWestern will sell power moved off peak or conserved by cities and
schools and pay a dividend to the participants based on the differential between the
contract and market prices.
Tom Schneider, the energy consultant working for the League, prepared the attached
spreadsheet to estimate the savings for cities and towns in the electric supply program. It
compares the contract price with three variations of the default rate that members would
pay if they returned to Montana Power Company service. The levels used for this
comparison are the current default rate (0.04005 kwh), the mid-range (0.0375 kwh) and
the most conservative estimate (0.035 kwh). The Public Service Commission is expected
to review and set a default rate next month that will fall somewhere within the ranges
used in this analysis.
Cities and towns are currently paying about $26.50 per mwh for electricity, with
considerably lower prices for streetlights. Costs will increase under the proposed
contract, but cities will pay rates over the next five years that should be well below those
paid by customers staying with Montana Power service. Cities in the program will also
receive transmission credits and possible conservation dividends that will work to reduce
the final price at their meters.
The Electricity Supply committee comprised of Mayors Mike Kadas of Missoula and
Larry Bonderud of Shelby and Chief Executive Judy Jacobsen of Butte negotiated this
contract on the recommendation of our energy consultant. The committee members and
staff believe this contract will provide reliable supplies of electricity to the 29 cities and
towns and 59 school districts participating in the program at the most competitive price
available in the deregulated market.
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We are currently working out the final details of the agreement with NorthW estern, and
will be mailing energy supply contracts to the participating cities and towns in the next
few days. These documents, which are almost identical to the current contract with
Energy West Resources, should be signed and returned as soon as possible. It' you have
questions about the contract or the terms and conditions of the supply agreement, please
contact me immediately.
Information in this memorandum should be considered confidential until the formal
announcement of the contract. We erect to issue a news release and a notice to
participants when the contract negotiations are completed.
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