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HomeMy WebLinkAbout~Master - Second Amendment to Agreement to supply coal for Power Plant RESOLUTION NO. 15-031 RESOLUTION APPROVING SECOND AMENDMENT TO AGREEMENT WITH PEABODY COALSALES, LLC, TO SUPPLY COAL FOR THE AMES STEAM ELECTRIC PLANT FOR THE CITY OF AMES,IOWA WHEREAS,the Ames Municipal Electric System(AMES) operates two power generating facilities for the primary purpose of providing electric power to the City's electric customers; and, WHEREAS,both units burn ultra-low sulfur sub-bituminous coal as the primary fuel; and, WHEREAS, for the past five years, the City has had a contract with the Peabody COALSALES, LLC, for its North Antelope Rochelle Mine (HARM) coal from the Powder River Basin located in Campbell County, Wyoming; and, WHEREAS,the power plant has used this coal as its primary fuel continuously for more than 22 years; and, WHEREAS, it is important to note that the City has a separate agreement in place with Williams Bulk Transfer, an Alliant Energy Transportation Company, for the delivery of coal from the mine to the City's power plant; and, WHEREAS, on February 12, 2013, the City Council authorized waiving the City's Purchasing Policy requirement to solicit bids for coal and approved an amendment to the original agreement with Peabody COALSALES, LLC to supply coal for the City of Ames Steam Electric Plant for the period January 1, 2013, through December 31, 2015; and, WHEREAS, current plans call for the natural gas conversion project to be completed by April 2016,with the use of coal to be discontinued in December 2015,and since those dates cannot be guaranteed,however,the proposed agreement provides for the purchase of coal throughout 2016; and, WHEREAS, during the negotiation process,the City's goal was to limit the exposure to our declining coal requirements and extend the agreement through our final demand for coal prior to turning the power plant over to burn natural gas; and, WHEREAS,Peabody commenced the negotiation byproposing pricing for the next two years (2015 through 2016); and, WHEREAS, additional terms, along with pricing, included reducing the minimum annual tonnages and maintaining a clause allowing the City to reduce or suspend delivery of coal with 120 days notice, without penalty; and, WHEREAS, City staff and Peabody COALSALES, LLC, were able to reach an amended agreement for supply of coal that is very favorable for the City,therefore,staff is recommending that the second amendment to the original agreement be approved. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the second amendment to the original agreement with Peabody COALSALES,LLC,to supply coal for the City of Ames Steam Electric Plant for the period January 1, 2015, through December 31, 2016, is hereby approved., ADOPTED THIS 13`h day of January, 2015. -j . A. 'x/ � . Diane R. Voss, City Clerk Ann H. Campbell, Mayor Introduced by: Corrieri Seconded by: Gartin Voting aye: Betcher, Corrieri, Gartin, Goodman,Nelson, Orazem Voting nay: None Absent: None Resolution declared adopted and signed by the Mayor this 13'day of January, 2015.