HomeMy WebLinkAboutA019 - Resolution awarding contract to Petroleum Traders, Corp. for the FY 2025/26 Electrical Services Fuel Supply contract in an amount not-to-exceed $300,000ITEM #:21
DATE:12-16-25
DEPT:ELEC
SUBJECT:FY 2025/26 ELECTRIC SERVICES FUEL SUPPLY CONTRACT
COUNCIL ACTION FORM
BACKGROUND:
This contract is for the purchase of #2 ultra-low sulfur diesel fuel for Electric Services. The
utility has a 250,000-gallon main fuel tank located at the Dayton Substation to fuel the two CT
(combustion-turbine) units. The 250,000 gallon tank provides enough fuel for the two
combustion-turbines to produce maximum electrical generation for only three continuous days.
The tank will require larger refill volumes and quick refills should an emergency dictate that the
CTs stay on-line.
This contract is to supply #2 ultra-low sulfur diesel fuel to Electric Services for the period from
January 1, 2026 through June 30, 2026. The contract includes a provision that would allow the
City to renew the contract for up to four additional one-year terms at a cost increase of 1% per
year. The goal of the contract is to create efficiency and flexibility in the purchase of a valuable
commodity, ensuring that the City is able to use opportunity purchasing and to lock in
performance criteria for the suppliers.
The scope of work for this contract includes supplying fuel to the CT units as needed.
Suppliers were asked to provide pricing based in the form of a markup to the daily-published
“rack” average fuel price at the Des Moines, Iowa terminal for stated products. There are two
fuel terminals that are utilized to supply fuel for the CTs: the Magellan Terminal and the
Buckeye Terminal. The Magellan Terminal is the primary terminal used to supply the
CTs. Buckeye is used as a backup. Therefore, the evaluation of pricing is more
sensitive to the markup on the Magellan Terminal Cost.
On September 10, 2025, 5 bids were received as shown in the table below:
Vendor Magellan Terminal
Cost
Buckeye Terminal
Cost
Petroleum Traders, Corp., of Fort
Wayne, IN $0.0299 $0.0630
Gresham Petroleum Company, of
Indianola, MS $0.0427 $0.0427
Harms Oil Company, of Brookings,
SD $0.5220 $0.0644
Sunoco, LLC, of Dallas, TX $0.0622 $0.0622
Heritage Petroleum, of Evansville,
IN $0.1006 $0.1006
Staff has reviewed the bids and concluded that the apparent low bid submitted by
Petroleum Traders, Corp., in the amount of $0.0299 increase on the Magellan “rack”
fuel price, and in the amount of $0.0630 on the Buckeye “rack” fuel price is acceptable.
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Petroleum Traders has been selected for award for the contract due to their lowest overall
pricing as well as the ability to meet the City's fuel quality and delivery needs. Their bid
represents the best combination of cost savings and dependable service.
Council should note that actual cost invoices will be based on the amount of fuel purchased
and the price of the fuel at the time of purchase. The approved FY 2025/26 operating budget
includes $300,000 for diesel fuel purchases.
ALTERNATIVES:
1. Award a contract for supplying diesel fuel to the City's combustion turbine units for FY
2025/26 to Petroleum Traders, Corp., in the amount of $0.0299 increase on the
Magellan "rack" fuel price, and in the amount of $0.0630 increase on the Buckeye "rack"
fuel price with a total amount not-to-exceed $300,000. The contract includes a provision
that would allow the City to renew the contract for up to four additional one-year terms at
an annual increase in cost of 1% per year.
2. Award a contract to one of the other bidders.
3. Reject all bids and purchase fuel on an as-needed basis.
CITY MANAGER'S RECOMMENDED ACTION:
This contract will offer the City the ability to have flexibility in fuel purchasing and to
maintain standards of performance for fuel content and fuel delivery. Detailed ordering
and delivery procedures will also be part of this contract. Therefore, it is the
recommendation of the City Manager that the City Council adopt Alternative No. 1 as stated
above.
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