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Home My WebLink About2010-01-06 PACKET 04.C.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 01/06/2010 PREPARED BY Public Works Les Burshten ORIGINATING DEPARTMENT STAFF AUTHOR COUNCIL ACTION REQUEST 2010 Fuel Consortium Purchase Program Update. STAFF RECOMMENDATION 2010 Fuel Consortium Purchase Program Update. BUDGET IMPLICATION $ $ BUDGETED AMOUNT ACTUAL AMOUNT FUNDING SOURCE SUPPORTING DOCUMENTS ® MEMO /LETTER: Brian Voelker, December 28, 2009. ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: M OTHER: Fuel Consortium Fixed and Spot Pricing Overview. ADMINISTRATORS COMMENTS City Administrator D r COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED OTHER All x -O o MINNESOTA To: Honorable Mayor and City Council Ryan Schroeder, City Administrator Cc: Robin Roland, Finance Director Les Burshten, Public Works Director From: Brian Voelker, Management Analyst Date: Monday, December 28, 2009 Subject: Fuel Consortium Purchase Program Background /Discussion On December 17, 2009, the State of Minnesota entered into a Fixed Price and Spot Price Fuel Program with Yocum Oil. The Fuel Consortium Purchase Program for State of Minnesota Agencies and Cooperative Purchasing Venture Members is a program that the State of Minnesota Acquisition Management is going to operate. The Fuel Consortium Purchase Program consists of two programs: Fixed Price Program and Spot Price Program. The Fixed Price Program requires a participating agency or entity to: • be located primarily in the seven county metropolitan area unless otherwise approved. • agree and comply with the terms and conditions of the Contract. • be able to take either gasoline or diesel fuel in the required product type and as delivered by the Contract Vendor in quantities of at least 500 gallons per delivery. • commit to a specific amount of the fuel for a monthly delivery. • take 100 percent of the committed monthly amount at a fixed price contracted on its behalf. The Spot Price Program may be used by any participating agency /entity, on an as needed basis, and will require a participating agency /entity to: • be located within the borders of Minnesota. • agree and comply with the terms and conditions of the Contract. • place orders directly with the Contract Vendor for its requested amount and product type. • pay the Contract Vendor the amount based on the Spot Price formula contracted, which is the Daily Rack Average Price plus the Contract Vendor's Total Bid Constant (profit/overhead /delivery cost) per gallon delivered. Fixed Price for January 1, 2010 to January 31, 2011 The City of Cottage Grove committed for an estimated 80% (5,500 gallons per month) of 87 Octane gasoline purchases and an estimated 80% (2,300 gallons per month) of Diesel Winter /Summer Blends. The following chart includes the fuel price under the fixed cost, state taxes, and fees prices: Fixed Prices for Gasoline and Diesel Purchases Gallons Per Month Gallons per Year Price Per Gallon Total Cost Per Year 87 Octane Gasoline 5500 71500 $ 2.3781 $ 170,034.15 Diesel (Summer & Winter Blends) 2300 29900 $ 2.2966 $ 68,668.34 Total 1375 1014001 $ 3.09 $ 238,702.49 Spot Pricing The 20% that the City of Cottage Grove didn't commit to in the fixed price fuel purchase program will be based on the Daily Rack Price for the day and the total bid constant, which we estimate to be the Market Price plus $0.0020 per gallon, plus state taxes and fees. We are also going to compare the price we receive from Yocum to the open market vendors such as, Hartland Fuels and Midwest Industrial Fuel. For budget purposes we are assuming $3.0953 per gallon average for 87 Octane and $2.98551 per gallon average for Diesel Summer and Winter Blends, which is approximately 25% above the fuel consortium price. Spot Prices for Gasoline and Diesel Purchases Gallons Per Gallons Price Per Estimated Month per Year Gallon Total Cost 87 Octane Gasoline 1375 17875 $ 3.09 $ 55,261.10 Diesel (Summer & Winter Blends) 5751 74751 $ 2.99 $ 22,317.21 Total 1 253501 $ 77,578.31 2010 Budget Savings Based on the above numbers, we are estimating a $35,870.22 budget savings from the original fuel costs budgeted at $2.80 per gallon in July 2009. FIXED PRICE PROGRAM - PRICE SCHEDULE Tot a181d Co,,ns attt ProfiUQver BIO- DIESEL -DYED, - SUMMER BLENDSP,ER SPEGIFIOAT<II:)NS, FIXED DELIVERED PRICE - BASED ON 2,554,900 GALLON COMMITMENT Total id Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Estimated Estimated Constant Constant Constant Constant Constant Constant Constant Constant purchase purchase 500.999 1000 -1999 2000.2999 3000 -3999 4000 -4999 5000.5999 6000.6999 7000 -7500 amount of total amount of total Gallons Gallons Gallons Gallons Gallons Gallons Gallons TANKER PRODUCT commitment. Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered B5 83% 27 4 - TT r6 - 45 $2.2916 -- r274 6 $2.2854 54 $2.2790 2. 2 B10 3% TY 7 72 4 . 8 . =4 2.23 $2.3213 $2.3190 Premium B20 13% $2.3074 $2.2645 1 $2.2485 1 $2.2416 $2.2378 $2.2354 $2.2313 1 $2.2290 Premium 2% $2.3134 $2.2705 $2.2545 $2.2476 $2.2438 $2.2414 $2.2373 $2.2350 BjQ- DIESEL - DYED„ WINTER BLENDS PER SP...EGIFICATI,_NS r . FIXED DELIVERED PRICE - BASED ON 1,566,750 GALLON COMMITMENT Total id Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Estimated Constant Constant Constant Constant Constant Constant Constant Constant Constant purchase 500 -999 1000 -1999 2000 -2999 3000 -3999 4000.4999 5000.5999 6000 -6999 7000.7500 3000- 3999 amount of total Gallons Gallons Gallons Gallons Gallons Gallons Gallons TANKER PRODUCT commitment. Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered B5 81% $2.3574 $2.3145 $2.2850 $2.2916 $2.2878 $2.2854 $2.2813 $2.2790 B10 15% $2.3974 $2.3545 $2.3385 $2.3316 $2.3278 $2.3254 $2.3213 $2.3190 Premium 4% 1 $2.3974 1 $2.3545 1 $2.3385 1 $2.3316 1 $2.3278 $2.3254 $2.3213 $2.3190 FIXED DELIVERED PRICE - BASED ON 4,168,155 GALLONS COMMITM Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Constant Constant Total Bid Constant Constant Constant Constant Constant Constant 8000+ 500.999 Constant 1000- 2000 -2999 3000- 3999 4000 -4999 5000.5999 6000 -6999 7000.7999 Gallons Gallons 1999 Gallons Gallons Gallons Gallons Gallons Gallons Gallons Tanker Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered $2.1709 $2.1280 $2.1120 $2.1051 $2.1013 $2.0989 $2.0948 $2.0925 $2.0908 FIXED DELIVERED PRICE - BASED ON 164,600 GALLONS COMMITMENT Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Total Bid Constant Constant Total Bid Constant Constant Constant Constant Constant Constant 8000+ 500.999 Constant 1000- 2000.2999 3000 -3999 4000.4999 5000.5999 6000.6999 7000 -7999 Gallons Gallons 1999 Gallons Gallons Gallons Gallons Gallons Gallons Gallons Tanker Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered $1.7209 $1.6780 $1.6620 $1.6551 $1.6513 $1.6489 $1.6448 $1.6425 $1.6408 DROP CHARGE TO MULTIPLE LOCATIONS AFTER INITIAL DELIVERY - ,$25.00 PER DROP SPOT PRICE PROGRAM - PRICE SCHEDULE YOCUM OIL ORDER MAY BE FOR ANY FUEL PRODUCT TYPE POSTED ON OPIS EXCEPT PROPANE PRICE FORMULA: Total Bid Constant (TBC) - (Bid Constant + Delivery Cost) + Daily Contract Average Rack Price (OPIS) per Gallon x Number of Gallons Delivered Total Delivered Price DESIGNATED TERMINAL: MINNEAPOLIS 500.999 Gallons TBC = 1 $0.0609 1000 199 TBC = 1 $0.0180 2000 - 2999 Ga /ions TBC = 1 $0.0020 TBC ($0.0087) 3000 - 3999 Gallons TBC = 1 ($0.0049) ' 5000- 5999.Galtons TBC ($0.0111) 5000 + Gallons TBC = 1 ($0.0274)