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<br /> <br /> REQUEST FOR COUNCIL ACTION <br /> <br />DATE: October 26, 2015 <br /> <br />ITEM NO: 11 <br />Department Approval: Administrator Reviewed: Agenda Section: <br />Name Adam T. Edwards RJO Public Works Director/ <br />Title Public Works Director City Engineer’s Report <br /> <br />Item Description: Bulk Fuel Contract <br />List of Exhibits <br />A- Fuel Program Overview for 2016 <br />B- Fuel Prices <br />C- Fixed Fuel Price Fuel Order Form <br /> <br />1. Purpose. The purpose of this request is to gain Council approval for the city to enter into the State of <br />Minnesota Fuel Consortium, Purchase Program for 2016 (February 2016-January 2017). <br /> <br />2. Background. The City consumes approximately 36,000 gallons of gasoline and 9,000 gallons of <br />diesel a year. Prior to 2014, the City purchased fuel on an as needed basis. This resulted in varying fuel <br />prices throughout the year. In 2014 the City aligned itself with the State fixed price fuel contract. As a <br />result the City saved ~ $9,873 in Gasoline and ~$2,709 in Diesel over the year compared to pre-state tax <br />retail rates. In 2015 the City did not enter in to the fixed price agreement as the fixed price went up after <br />the authorization was granted. With the low fuel and relatively stable prices of 2015 the City saved <br />money by not entering into the fixed price contract. <br /> <br />3. State of Minnesota’s Fuel Consortium. The purpose of the Fuel Consortium Purchase Program is <br />to develop a consistent fuel budget for each budget year (see Exhibit A). In addition historically the fixed <br />fuel prices has been lower than the average spot/rack price (See Exhibit B). Municipalities and other <br />governmental organization with in the seven county metro area are eligible to participate. The Fixed <br />Price Fuel Program requires participating cities to agree to a certain volume of fuel to be purchased. Cities <br />need to submit requests by October 30, 2015. The State of Minnesota will then go out for bids before <br />January. <br /> <br />4. Recommendation. The City of Orono participate in the State of Minnesota’s Fuel Consortium <br />Purchase Program for 2016. The City will commit up to 70% of our annual volume of fuel to be <br />purchased through the program (See Exhibit C). The remainder will be purchased through the spot/rack <br />price for that particular day. Staff does not recommend purchasing 100% of our budgeted fuel, since the <br />consumption of fuel can vary from month to month based on how many miles driven and it is possible <br />that the spot/rack price could go below the Fixed Price making it more advantageous to purchase at a <br />lower cost when possible. <br /> <br />COUNCIL ACTION REQUESTED: <br />The purpose of this request is to gain Council approval for the city to enter into the State of Minnesota <br />Fuel Consortium, Purchase Program for 2016 (February 2016-January 2017).