HomeMy WebLinkAbout09.a. Authorize execution of Landfill Gas Sales Agreement with Bulldog Gas and Power, LLCCentral Contra Costa Sanitary District
' BOARD OF DIRECTORS 9a.
POSITION PAPER
Board Meeting Date: April 19, 2012
subject: AUTHORIZE THE GENERAL MANAGER TO EXECUTE A LANDFILL GAS
SALES AGREEMENT WITH BULLDOG GAS & POWER, LLC
Submitted By: Initiating Dept. /Div.:
Ba T. Than Plant Operations Department
Plant Operations Division Manager
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
T L_
B. Than
- t,
M. Orr
4F -
Ann E. Farrell
General Manager
ISSUE: Board of Directors' approval is requested for this Landfill Gas Sales
Agreement.
RECOMMENDATION: Authorize the General Manager to execute a Landfill Gas Sales
Agreement with Bulldog Gas and Power, LLC, to supply landfill gas for the period
commencing May 1, 2012, and ending on April 30, 2013.
FINANCIAL IMPACTS: The new landfill gas agreement will provide significant energy
cost savings when compared to the use of natural gas. The District has prepurchased
approximately 60 percent of the natural gas for 2013 at an average price of $4.63 per
decatherm (Dth). The District purchases 15 percent of its natural gas at daily spot
market rates, which can be volatile. Assuming the price of natural gas remains at the
current spot market pricing for the next year, the calculated cost of landfill gas (based
on the terms of the new agreement with a discount rate of 25 percent) will be about
$3.21 per Dth. At an estimated landfill gas usage of 132,000 Dth per year, the District
will save approximately $150,000 over the next year.
ALTERNATIVES /CONSIDERATIONS: Alternatives to signing the agreement would be
to discontinue use of landfill gas, purchase additional natural gas, or continue
negotiations.
BACKGROUND: Landfill gas has been used in the treatment plant since 1983.
Although landfill gas has a lower British thermal unit value and is not as clean as natural
gas, it does provide substantial cost savings to the District and is a sound
environmental use of a greenhouse gas. Landfill gas essentially does not contribute to
the District's 25,000 metric tons greenhouse gas emission cap, thus allowing the District
to remain in an uncapped sector.
The District uses 30,000 to 35,000 Dth of natural gas per month (approximately
420,000 Dth per year), primarily for producing electrical power in the cogeneration
N: \POSUP \Board of Directors \Board - Position Pape rs\2012 \Bulldog Gas and Power 04- 19- 12.doc
POSITION PAPER
Board Meeting Date: April 19, 2012
subject. AUTHORIZE THE GENERAL MANAGER TO EXECUTE A LANDFILL GAS
SALES AGREEMENT WITH BULLDOG GAS & POWER, LLC
system. In addition, the District uses approximately 11,000 Dth of landfill gas per
month (approximately 132,000 Dth per year) in the sludge incinerators and auxiliary
steam boilers.
The existing Landfill Gas Sales Agreement will end on April 30, 2012. Staff has
negotiated a new Agreement with Mr. Nicholas J. Farros, President of Bulldog Gas and
Power, LLC. The Agreement has the following provisions:
1. The proposed term of the agreement will be from May 1, 2012, through
April 30, 2013. The new price structure will become effective on May 1,
2012.
2. The landfill gas discount will be 25 percent less than the District's cost of
natural gas.
The above provisions are consistent with those recommended by the Budget and
Finance Committee on April 2, 2012.
RECOMMENDED BOARD ACTION: Authorize the General Manager to enter into the
Landfill Gas Sales Agreement with Bulldog Gas and Power, LLC, to supply landfill gas
for the period commencing May 1, 2012, and ending on April 30, 2013.
N: \POSUP \Board of Directors \Board - Position Papers\2012 \Bulldog Gas and Power 04- 19- 12.doc