Title
RESOLUTION AUTHORIZING AN AGREEMENT WITH MIDWEST ENERGY RESOURCES COMPANY FOR THE STORAGE AND DELIVERY OF COAL TO DULUTH ENERGY SYSTEMS FOR AN AMOUNT NOT TO EXCEED $55,000.00.
Body
CITY PROPOSAL:
RESOLVED, that the proper city officials are hereby authorized to enter into an agreement with Midwest Energy Resources Company (MERC) for the storage and delivery of approximately 5,000 tons of western sub-bituminous coal to Duluth Energy Systems for an amount not to exceed $55,000.00 payable from 540-920-1490-5387 (steam, Steam Department, steam production, coal).
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes an agreement with MERC for the ongoing storage and delivery of the remaining coal purchased under Contract C22091 between Venture Fuels and City of Duluth which terminates on December 31, 2024. Contract C22091 was executed in 2013 and has been amended and extended several times. However, Venture Fuels is not interested in an additional extension of the contract and the City will need to purchase its remaining obligation of coal, estimated at 5,000 tons, at the time of termination.
Venture Fuels is an entity made up of two partners, one of which is MERC, who has been storing, tending, and arranging transport of the coal to date.
Duluth Energy Systems lacks the storage space to store the excess coal and the equipment to tend it while stockpiled. MERC will continue to store and tend the coal at its current location and deliver it to Duluth Energy Systems per the agreement.
The delivered cost per ton is subject to trucking fuel price adjustments per the terms contained in the agreement. Duluth Energy Systems is converting their existing boilers to use alternate fuel sources and has developed a coal retirement plan and coal delivery schedule to attempt to use up the remaining coal prior to the conversion in 2026, at which time coal will no longer be a fuel source for the City of Duluth.