HomeMy WebLinkAboutA017 - Resolution approving contract renewal with Petroleum Traders Corp for Electric Services Fuel Supply contractITEM #:20
DATE:05-26-26
DEPT:ELEC
SUBJECT:ELECTRIC SERVICES FUEL SUPPLY CONTRACT RENEWAL
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 GT
(gas turbine) units, which are primarily used at times of peak electricity demand and during
emergencies. The utility’s two gas turbines could burn 250,000 gallons of fuel in a 60-hour
time period, requiring larger refill volumes and quick refills should an emergency dictate that
they stay on-line.
The scope of work for this contract includes supplying fuel to the gas turbine units as
needed. Suppliers were asked to provide pricing in the form of a markup or markdown
to the daily-published “rack” average fuel price at the Des Moines, Iowa, terminal for
stated products.
On September 10, 2025, City Council awarded a contract to Petroleum Traders Corporation,
Fort Wayne, Indiana to provide these services. The contract includes a provision that would
allow the City to renew the contract for up to four additional one-year terms. The proposed
renewal contract would be the first of the four optional terms. The renewal period is
from July 1, 2026, through June 30, 2027.
The approved FY 2026/27 operating budget includes $300,000 for this fuel purchase.
The actual cost invoices will be based on the amount of fuel purchased and the price of
the fuel at the time of purchase.
It should be noted that under the Petroleum Traders contract, the Power Plant can take
delivery from two distinct points: Buckeye and Magellan. The fuel from Buckeye meets
General Electric specifications. Fuel from Magellan is received from many different refineries,
which could potentially result in a fuel blend that differs slightly from the General Electric
specifications. Therefore, the Buckeye fuel is the primary delivery point. However, staff
obtained prices from Magellan in case fuel is urgently needed and it is unavailable from
Buckeye. Costs for FY 2026/27 will be a $0.0302 increase to the Magellan "rack" fuel price
and a $0.0636 increase to the Buckeye "rack" fuel price, which represents a 1% increase over
FY 2025/26 costs.
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ALTERNATIVES:
1. Approve renewal of the contract for supplying diesel fuel to the City's gas turbine units to
Petroleum Traders Corporation in a total amount not to exceed $300,000, with the
options for pricing to be computed as a:
a. $0.0302 increase to the Magellan "rack" fuel price, or,
b. $0.0636 increase to the Buckeye "rack" fuel price
2. Reject the renewal option and instruct staff to seek new competitive bids.
CITY MANAGER'S RECOMMENDED ACTION:
This contract will offer the City flexibility in fuel purchasing and maintain standards of
performance for fuel content and fuel delivery. Detailed ordering and delivery
procedures will also be part of this contract. The actual contract amount will be based
on the actual quantities delivered. Therefore, it is the recommendation of the City Manager
that the City Council adopt Alternative No. 1a-b as stated above.
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