Coversheet

Action Item - 49.

Title: Amendment of Contract with Various Energy Commodity Suppliers ($70,987,500)

Board of Education Meeting Date: 5/25/2023

Action under consideration

	The Administration recommends that the Board of Education authorize The School District of Philadelphia, through the Superintendent or his designee, to execute and perform an amendment of a contract, subject to funding, as follows:
	With: Constellation Energy Corporation Direct Energy LP MP2 Energy LLC Petroleum Traders Corporation UGI Energy Services WGL Energy Services Inc.
	Purpose: to add additional funding to existing contracts for energy commodity suppliers for electric, natural gas and fuel oil supply to District schools and administrative offices

	Original Start Date: 7/1/2022
	Current End Date: 6/30/2025

Amended End Date: 6/30/2025

	Currently Authorized Compensation: $120,000,000
	Additional Compensation: All entities will be paid out of the aggregate amount not to exceed $70,987,500
	Total New Compensation: $190,987,500

Location:
All Schools; Administrative Office(s);

Renewal Options: Yes

	Number of Options: 2
	Duration of each option to extend: Years: 1 Months:

Maximum compensation authorized per option period: $22,737,500

Description:

Why is this contract needed?

Providers of electricity, natural gas, and heating oil (heat and light) are essential to support the regular operation of District schools and administrative offices. These commodities provide District staff and students with a suitable environment for teaching and learning.

This amendment for additional funding is due to recent nationwide increases in utility rates, expenditures on heating oil, electricity and natural gas have exceeded earlier projections.

Heating Oil:

Average heating oil rates have increased by 59% between FY 2022 and FY 2023.
In FY 2022, the District paid an average of $2.7 per gallon of heating oil.
In FY 2023, the District has paid an average of $4.3 per gallon of heating oil.

Electricity:

Electricity costs increased by 95% between FY 2022 and FY 2023.
In FY 2022, the District paid $8.0 million for the six-month period from July 2021 through January 2022.
In FY 2023, the District paid $15.6 million for the six-month period from July 2022 through January 2023.

Natural Gas:

Average natural gas rates have increased by 105% between FY 2022 and FY 2023.
In FY 2022, the District paid $4.57 per dth of Natural Gas for the six-month period from July 2021 through January 2022.
In FY 2023, the District paid $9.39 per dth of Natural Gas for the six-month period from July 2022 through January 2023.

Due to these rate increases, the District is projecting a deficit of $17.5 million in the FY 2023 utilities budget assumed in this contract. This overall costs are expected to increase by an additional 15% for FY 2024.

How is this work connected to the District’s plan to achieve Goals & Guardrails?

The use of these commodities supports Board Guardrail 1: Every school will be a safe, welcoming, and healthy place where our students, staff, and community want to be and learn each day.

How will the success of this contract be measured?

Success of this contract will be measured through each contractors' ability to provide around the clock daily access to electricity, natural gas, and heating oil throughout the calendar year and ensure minimal to no disruption of service.

Related resolution(s)/approval(s):
June 23, 2022; No. 44

Funding Source(s):

FY23 Operating

FY24 Operating

FY25 Operating

Office Originating Request: Operations - Procurement