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Committee advances ordinance authorizing energy procurement through FY2031
Summary
The committee reported favorably on an ordinance authorizing the city to enter agreements to purchase electricity, natural gas and vehicle fuel for city accounts through fiscal years 2029–2031. City energy staff said the approach provides budget certainty and noted recent hedging saved roughly $3.4 million during a January storm.
The Committee on Transportation and Public Utilities reported favorably on bill 260266, which would authorize the city to enter procurement agreements for electricity, natural gas and vehicle fuel for future fiscal years to provide budget certainty and to allow the city to access competitive wholesale markets.
Madeline Hsu, program director for municipal energy in the Office of Sustainability, said the ordinance would permit the city to enter agreements for delivery of energy supplies through fiscal years 2029–2031 via state-regulated, licensed providers selected through competitive processes. Hsu said the city’s approach — using an appointed licensed service provider as an agent to make market purchases and staggering purchases over time — has historically protected the city from price spikes. "The hedge strategy protected the city from over $3,400,000 in electricity costs during January alone," Hsu said.
Hsu provided cost context during testimony: electricity costs across the general, water and aviation funds averaged about $72,000,000 over the previous three fiscal years, with approximately $33,000,000 charged to the general fund in fiscal year 2025; the electricity-supply portion is roughly two-thirds of total electricity costs. She said competitively purchased natural gas costs to all three funds were approximately $3,700,000 in fiscal year 2025 and vehicle fuel costs were about $16,900,000 across funds (roughly $14,000,000 to the general fund in FY2025).
Hsu said authorizing procurement for the stated period does not obligate the city to make purchases but allows staff to act when market conditions provide competitive pricing. She referenced Executive Order 6-10, which established an electricity supply advisory committee that meets quarterly to review purchasing strategy.
Hsu recommended the ordinance as a way to provide budget certainty and to allow the city to take advantage of competitive pricing while preserving flexibility. With no public testimony and no committee questions, Vice Chair Young moved to report the bill with a favorable recommendation and to suspend the rules to permit first reading; the motion was seconded and carried by voice vote.
The ordinance will move to first reading at the next council session.
