Due to the temperatures that the City has experienced this winter and to account for more potential weather events, we are requesting a Change order to the PO for Moore oil. When natural gas costs spike, it is more cost effective to run the H units on fuel oil than natural gas. This occurred in January when natural gas prices exceeded $30/mcf from the normal range of $2.50/mcf.
Additionally, during this cold weather events our other units at Sub I and J are called upon by SPP to run more. This has caused an increase in fuel oil purchases at all substations. When the units run, that helps to reduce the overall cost of power to our customers. We purchased fuel oil from Frazier to bring the tanks to their required max levels prior to this anticipated cold per policy. Due to the limited tank volumes at the substations, sometimes the fuel must be purchased in real time as it is used. Frazier is a smaller company and not responsive to the short turn around and weekend / holiday requirements we were under.
Deliveries of fuel oil are needed for Substations H, I & J. These expenditures are done to replace fuel that is burned to support generation requests for the Southwest Power Pool, for which Power & Light (IPL) is a member. This is a routine expense for the Transmission and Distribution Division of Power & Light and budgeted accordingly.
The City initially goes to Frazier Oil Company who the City is contracted with for typical fuel deliveries. When Frazier Oil Company is unable to make deliveries due to turn-around time, IPL must purchase quantities from John Moore Oil or shut units off.
Approval of this item authorizes change orders up to ten (10) percent of the authorized amount, providing appropriations are available.