City Council

Council Minutes January 21, 2025 Via Zoom Pursuant to Chapters 113 and 115 of the Codified Ordinances, and Resolution No. 22-29, enacted March 22, 2022. The Council of the City of Shaker Heights met in a special meeting at 12:01 p.m., Mayor David E. Weiss presiding. Council Members Present: Ms. Bixenstine Mr. Claytor (joined at 12:04 p.m.) Mrs. Kaus Mr. Malone Mrs. Moore Ms. Carmella Williams Council Members Absent: Ms. Anne Williams * * * * Video of this meeting may be found here through January 21, 2028. * * * * The Mayor asked the Clerk of Council to read into the record public comments received on the agenda item. Clerk of Council Ms. Chaikin stated that no public comments were received on any agenda items by email or by phone. The Mayor invited members of the audience and those participating via Zoom the opportunity to “raise their hand” to provide public comment. No comments were offered. * * * * Ordinance No. 25-02, by Mr. Claytor, authorizing renewals of the Master Services Agreement with Interstate Gas Supply, Inc. for provision of Retail Natural Gas Services for the City’s Natural Gas Aggregation Program, for a period of up to two years, from April 1, 2025 through March 31, 2027, and declaring an emergency. (ADM). Law Director William Ondrey Gruber stated that the City’s consultant Josh Felix from Palmer Energy is present tonight to answer any questions and provide information. Around 2004 voters approved a ballot measure for the City to create and provide a gas aggregation program. Before that time voters had approved for the City to create an electric aggregation program. The City joined NOPEC, the program closed down and came back, and then the City left the NOPEC program a year ago to create our own program. Energy Harbor now Vistra, which provides service as Dynergy, is the City’s electric supplier. That contract will come to Council soon as the current contract expires this year. The City has had its own gas aggregation program since 2006. The aggregation programs are opt-out programs and do not specify the provider, or how programs should be operated. Since 2006 the gas supplier has been IGS Energy. We do not automatically renew with them; we have a practice to seek proposals from suppliers when the contract is set to expire at the end of March. In August, our consultant Palmer Energy through AmpOhio, a municipal electric conglomerate, branched out to provide gas aggregation services to their members and other cities. Through Palmer Energy or AmpOhio they serve hundreds of cities or villages with gas aggregation programs. After seeking proposals, we received two responses, from IGS and Archer Energy. Archer was competitive but not as low as IGS. Both price and service were considered. IGS has provided excellent service over the years and has been responsive to residents, which is an important component. We received offers and renewed those offers because the market changes on a daily basis. In the last month we sought additional pricing from Archer and IGS. IGS has been flexible in how it is willing to provide contracts. They provide a fixed rate for 12 months or 24 months but customers would have to opt-in to those rates. Because of state law we are able to send a notice to customers saying they will be part of the program unless they opt-out. It is not sent to customers who have contracts with other suppliers. If customers have not selected a program, or are already part of the City’s program, they will automatically be included. The rates are a snapshot in time and the market has been going up so we would like to fix the rate as soon as possible. Council is being asked for flexibility as we have done in the past few years to enter a contract with IGS to set the rate within a two-year time period based on the market. The probable recommendation will be to enter a contract for a twelve-month period and fix the rate through September. We would follow the market and our consultant will let us know when they believe it is time to buy gas for the remaining six months of the contract. Council member Ms. Kaus asked if this program is only for residential service, and Director Gruber stated that it also includes service to small commercial businesses. Large commercial customers are not eligible for the opt-out program under state law and have to seek out their own supplier. City facilities use Enbridge. Josh Felix stated that small commercial businesses make up about 3-5% of the total participation in the program. The program for the City generally averages about 6500 total participants. There is a cap of 500 mcf on the annual usage to be allowed to participate in an aggregation program. Council member Ms. Bixenstine stated that this program has benefitted the City and the residents. She asked if it is possible in this industry to get a cap in the two-year period for the rates to not exceed. Director Gruber stated that last time we set a rate for two years, so it was capped, and did not go up. It turned out to be somewhat high compared to what you could buy with Enbridge because the market dropped. Right now we are suggesting to cap it for six months. Mr. Felix stated that typically when we set a trigger point or price with a supplier, it is a price that we ask the supplier to lock us in at once it reaches that mark, at either the lower or higher end. He would recommend we not do that because the industry is driven by weather and those changes cause a shift in the market. They prefer the flexibility to watch the market and ask the supplier to lock it in at that time. Director Gruber admitted that it is always a guess, and we are honest with residents about this service the City provides. It is totally optional and they can shop for their own supplier. We try to do the best we can to provide a great rate and service, but never guarantee it will be the lowest rate. Council Meeting January 21, 2025 Page 8 Council member Mr. Claytor asked how renters or condo owners are affected by this. Director Gruber stated that an individual condo owner with their own gas meter and own account would automatically be included unless they signed a contract with another supplier. If a unit is in a building with one meter and one account then the rate is passed on by the owner who pays the rate. Mr. Felix stated that if the location is deemed residential then they qualify for aggregation programs. Although the master bill may be assessed to one account, the master account could assess it to the sub meters which are individual residential meters. Apartment buildings are frequently part of aggregation programs. Council member Mrs. Moore stated that because residents are always confused why our City gas aggregation is not the lowest rate, she reiterated that in forming our gas aggregation and negotiating a contract with an individual supplier at periodic intervals, we are attempting to offer residents a means of participating in perhaps not the lowest gas rate available, but a competitive gas rate with all those available. In this cycle we are attempting to set a 24-month period with IGS as a supplier hoping we can hedge our purchase of gas within this period to obtain a competitive rate to offer residents. Director Gruber agreed that the City is attempting to provide residents a competitive rate based on the market and the timing of our purchase of supply. We are looking at our options on whether to fix the rate for a certain period or to hedge it by setting it for a shorter period and then buying gas later. It will be a competitive rate but not necessarily the lowest rate at any point in time. Council member Mrs. Moore stated that the benefit to residents who want to go with the lowest rate is that they always have that option. However, it is a complex market and they need to understand all the terms. There are residents who don’t wish to negotiate or watch the market for themselves and this offers them the option of knowing what their rates and supplier will be and how the City will negotiate that rate. Director Gruber added that the City is trying to look out for their best interest. The City does not profit from this. We do not spend any money for this directly or get any money. Residents may opt-in or opt- out at any time. If they are with Enbridge because their rates are lower they can stay with them, watch the market, and if gets higher than our aggregation rate, they can join our program. Other programs may come with high cancellation fees. Mayor Weiss stated that some suppliers offer an introductory rate and then raise it later. Council member Mr. Malone asked if the adder is included in the rate or on top of the rate. Director Gruber stated that the price includes the adder. Mr. Felix stated that there are two markets. The most prominent part of supply costs is the cost of gas futures which trade on an open exchange out into the future with its own price tied to it. The adder is a different market but combines into one rate for the total supply rate. The adder is the transportation cost of the gas to get it from the producer source where it comes out of the ground to the local utility. That adder price is included in our fixed rates. Director Gruber stated that the adder cost also includes any profit margin for the company and consultant fee. Council Meeting January 21, 2025 Page 9 Mayor Weiss stated that six months from now when we are looking to lock in the rate for the balance of the year the total cost would include the adder. Mr. Felix stated that the adder has already been established based on what Council approves today, so that is correct. The more prominent floating cost is the cost of the physical commodity. Anytime between now and the first week of August would be the deadline to lock in a price for October 2025 – March 2026 supplies. Council member Ms. Bixenstine stated that in providing information useful for the public to understand our rationale, it is important to reiterate the question and answer Council member Mr. Malone asked at the Administration Committee meeting about NOPEC rates. The questions we get from residents relate to why we don’t have the lowest rates and are not in NOPEC. Our rates have fared favorably compared to NOPEC over time and sometimes NOPEC is lower than our program. Director Gruber stated that he has not closely followed in the past few years any comparison of our program rates to NOPEC. Mr. Felix stated that the last comparison our consultant ran was for April 2017 – March 2023, and the City’s rate was lower than NOPEC 70-75% of the time. Mayor Weiss reiterated that residents may opt-out of our program at any point, at no cost. Director Gruber clarified that they may not opt-in to NOPEC because we are not a member. However, they may choose Enbridge or any supplier on the Public Utility Commission of Ohio website. It was moved by Mr. Claytor, and seconded by Ms. Carmella Williams, that the rule requiring ordinances to be read on three different days be suspended and Ordinance No. 25-02 be placed upon its final enactment. Roll Call: Ayes: Ms. Bixenstine, Mr. Claytor, Mrs. Kaus, Mr. Malone, Mrs. Moore, Ms. Carmella Williams Nays: None Motion Carried Moved by Mr. Claytor, and seconded by Ms. Carmella Williams, that Ordinance No. 25-02 be enacted as read. Roll Call: Ayes: Ms. Bixenstine, Mr. Claytor, Mrs. Kaus, Mr. Malone, Mrs. Moore, Ms. Carmella Williams Nays: None Ordinance Enacted * * * * Council Meeting January 21, 2025 Page 10 There being no further business before Council, the Mayor adjourned the meeting at 12:39 p.m. _________________________________________ DAVID E. WEISS, Mayor _________________________________________ JERI E. CHAIKIN, Clerk of Council Council Meeting January 21, 2025 Page 11