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National IPA Fuel Agreement awarded by: City of Fort Worth, TX.

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Presentation on theme: "National IPA Fuel Agreement awarded by: City of Fort Worth, TX."— Presentation transcript:

1 National IPA Fuel Agreement awarded by: City of Fort Worth, TX

2 Fuel Cost Management Large expense category for most agencies Frustrating to manage due to factors beyond our control –Usage cannot be meaningfully reduced (police, fire, water services) –Prices established via commodity markets with inherent volatility Fuel cost management is therefore dependent on effective contract price management

3 Evolution of Fort Worth Fuel Consortium Contract Grown to utilization by 30 agencies in Fort Worth area, with consistent inquiries from new agencies Resource constraints limit Fort Worth’s ability to recruit new agencies to participate Fort Worth contract has been model for other local consortiums Opportunity to expand to national availability –No other fuel contract available for public agencies nationally –Suppliers have increased capability to serve national group –2008 volatility in fuel prices exposed many weaknesses in price management strategies

4 National IPA Cooperative purchasing organization dedicated to public agencies Focused on helping agencies reduce procurement costs by leveraging group volume Cooperative contracts publicly solicited and awarded by a Principal Procurement Agency, and made available for use by any Participating Agency Public agencies may utilize any agreement in the National IPA portfolio by simply registering with National IPA –NO MINIMUM REQUIREMENTS –NON EXCLUSIVE –NO FEES

5 Types of Public Agencies That May Participate States Cities/Municipalities/Counties Public/Private Education Institutions & Systems Airports/Mass Transit Utilities (Gas, Electric, Water/Sewer) Government/Education Healthcare Entities Non-Profits Any agency that exists for public benefit

6 National IPA Fuel Contract – Terms and Availability Fuel products available –Unleaded All octane levels Conventional or reformulated, as dictated by EPA requirements and seasonality Ethanol blends –Diesel All grades Clear or Red-dyed Biodiesel blends Contract covers bulk fuel purchases only Contract does not include aviation or jet fuels

7 National IPA Fuel Contract – Terms and Availability Available to public agencies in all 48 contiguous United States Each agency is responsible for their own purchases, and must meet credit terms of Supplier Payment terms are net-10 days from date of delivery Effective November 2009 through November 2010, with four, one-year renewal options Deliveries subject to testing to ensure compliance with specifications Awarded to two suppliers –Martin Eagle Oil Company – Available to agencies in Texas –TAC Energy – Available to agencies in all states

8 National IPA Fuel Contract – Pricing Structure Fuel prices based on formula: Benchmark Index + Market Differential + Freight + Taxes (if applicable) = Delivered Price Taxes – determination of tax exempt status determined by each agency, and all taxes, credits, and refunds are a direct pass-through to the agency

9 National IPA Fuel Contract – Pricing Structure Benchmark Index –Establishes a verifiable baseline price per gallon based on the date of delivery –Published daily by the Oil Price Information Service (OPIS) –Participating Agencies must choose from one of two Benchmark Indexes to become their basis for all fuel pricing under the agreement –Decision to be based on most effective pricing strategy for each agency –Must make benchmark index decision prior to implementing the contract –Agencies able to switch benchmark index only during annual contract renewal

10 National IPA Fuel Contract – Pricing Structure Benchmark Index – continued –OPIS Net Contract Unbranded Low The lowest daily contract pricing posted with OPIS among all suppliers in a Rack City for unbranded product only Available through TAC Energy OR –OPIS Net Contract Average The average of all contract prices posted with OPIS, among all suppliers in a given Rack City, including branded and unbranded fuel products Available through Martin Eagle or TAC Energy

11 National IPA Fuel Contract – Pricing Structure Market Differential –The mark-up, added to or subtracted from the benchmark index, for a given fuel product at a given delivery size –This includes all costs and profit for the supplier excluding freight and taxes –Market differentials are fixed for the term of the contract –Market Differentials are specific to a supplier for a given fuel product in a given Rack City –Market differentials are specified on a contract spreadsheet and may be referenced by each agency

12 Freight –Freight charges are direct pass-through costs from the supplier to the agency (no profit recognized) –Freight charges are specific to a given fuel product (unleaded or diesel) and delivery size –Freight charges are based on mileage from fuel terminal to the agency storage facility –Deliveries to be made via common carrier from terminals to storage facilities –Freight rate tables are contract documents available for agency reference National IPA Fuel Contract – Pricing Structure

13 Implementation Plan S = Sign Up A = Analyze V = Value Confirmed E = Establish Account

14 S- Sign Up Sign up to participate with National IPA –www.nationalipa.org

15 A - Analyze Review your current fuel agreement –Current contract commitment –Current benchmark index used for pricing –Current supplier mark-up –Current transportation costs –Obtain copies of current invoices for each fuel product purchased (including freight and taxes) –Obtain list of physical addresses for all storage tanks Review terms of National IPA fuel agreement –Available online at –Discuss agreement with your National IPA representative

16 V – Value Confirmed Request historical analysis to be done –Contact your National IPA Representative or –National IPA Customer Relations at “Spot-checking” pricing for individual days not recommended due to averages, daily volatility, historical trends in each Rack City and other factors

17 E – Establish Account Contact the supplier to establish an account –Provide FEIN –Provide invoicing requirements –Establish delivery schedule and contacts SAVE with National IPA!

18 Contacts National IPA Customer Relations (866)

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