CITY COUNCIL STAFF REPORT
DATE: November 12, 2025 CONSENT CALENDAR
SUBJECT: APPROVE AMENDMENT NO. 1 TO CONTRACT SERVICES
AGREEMENT NO. 24B189 WITH MANSFIELD POWER AND GAS, LLC
FOR THE PURCHASE OF NATURAL GAS FOR THE MUNICIPAL
COGENERATION PLANT
FROM: Scott Stiles, City Manager
BY: David McAbee, Director of Public Works
SUMMARY:
This action will approve Amendment No. 1 to Agreement No. 24B189 with Mansfield Power and Gas, LLC, to extend the term one-year through December 31, 2026, for an additional amount of $469,553 and a revised contract amount not to exceed $916,738 for the purchase of natural gas for the Municipal Cogeneration Plant.
RECOMMENDATION:
1) Approve Amendment No. 1 to Contract Services Agreement 24B189, with Mansfield Power and Gas, LLC, for an additional amount of $469,553 and a revised contract amount not to exceed $916,738 and extending the term one-year through December 31, 2026, for the purchase of natural gas for the Municipal Cogeneration Plant; 2) Authorize the City Manager or designee to execute all necessary documents BUSINESS PRINCIPAL DISCLOSURE:
According to the Public Integrity Disclosure form (Attachment C) Mansfield Power and Gas, LLC is registered in the states of Georgia and California.
BACKGROUND:
The City purchases natural gas to fuel the Municipal Cogeneration Plant at City Hall that produces electricity and thermal energy (heating and cooling) for the Airport, Fire Station No. 2, City Hall, City Hall Annex, and Police Department, as well as electricity for the City Yard.
City Council Staff Report
November 12, 2025 -- Page 2
APPROVE AMENDMENT NO. 1 TO CONTRACT SERVICES AGREEMENT NO. 24B189 In order to ensure the City has fuel to operate the Municipal Cogeneration Plant, it is necessary to solicit bids from the wholesale natural gas commodity marketplace. The natural gas prices available on the open market vary depending on numerous hard-to foresee factors that affect both the structure and the duration of the pricing agreement.
Since the federal government de-regulated the wellhead price of natural gas in the mid- 1980’s, market forces (of supply and demand) now set natural gas prices. Prices often change direction for no apparent reason, often due to weather changes, the economy, hurricanes (which can temporarily affect gas production in the Gulf of Mexico), oil prices, and more recently, expected demand for gas-fired electric generation, which is highly dependent on actual or forecasted summer weather. Historical natural gas price trends have shown lower contract prices in the late fall months; however, recent solicitations have reflected price increases from hurricane seasons causing damage or destroyed natural gas and petroleum refineries located in the Gulf Coast, resulting in price spikes.
Historically, staff have solicited these services on an annual basis, and the last three solicitations have resulted in only one bidder – Mansfield Power and Gas, LLC. Because only one bid was received, the pricing was analyzed by the Public Works Department and compared to prices paid in the past and found to be fair and reasonable to the City.
The current natural gas purchase agreement secured a bid of $5.261 fixed/Dekatherm for an estimated 85,000 Dekatherms or $447,185 annually, and expires December 31, 2025 STAFF ANALYSIS:
Due to the volatile nature of the current natural gas market, the anticipated increases through the end of the year due to weather changes, the economy, hurricanes (which can temporarily affect gas production in the Gulf of Mexico), oil prices, and more recently, expected demand for gas-fired electric generation, staff recommends amending this contract to extend the term one-year through December 31, 2026, at a fixed rate of $5.171 fixed/Dekatherm for an estimated annual consumption of 90,805, and an additional amount of $469,553, for a revised contract amount not to exceed $916,738.
The current proposed pricing is $5.171 fixed per Dekatherm for an estimated 90,805 Dekatherms, and is subject to usage adjustments. This is approximately .09 cents less per Dekatherm from the current year’s pricing. The Public Works Department has reviewed the pricing and found it to be fair and reasonable to the City.
Staff recommends approval of Amendment No. 1 to Contract Service Agreement 24B189 with Mansfield Power and Gas, LLC, for a one-year term extension in the amount of $469,553 for a not-to-exceed amount of $916,738 effective January 1, 2026, through December 31, 2026.
ENVIRONMENTAL ASSESSMENT:
City Council Staff Report
November 12, 2025 -- Page 3
APPROVE AMENDMENT NO. 1 TO CONTRACT SERVICES AGREEMENT NO. 24B189 Section 21084 of the California Public Resources Code requires Guidelines for Implementation of the California Environmental Quality Act (“CEQA”). The Guidelines are required to include a list of classes of projects which have been determined not to have a significant effect on the environment and which are exempt from the provisions of CEQA. In response to that mandate, the Secretary for Resources identified classes of projects that do not have a significant effect on the environment and are declared to be categorically exempt from the requirement for the preparation of environmental documents. In accordance with Section 15301 “Existing Facilities,” Class 1 projects consist of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public structures, facilities, mechanical equipment involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination. Therefore, authorizing the purchase of natural gas to operate the Municipal Cogeneration Plant is considered categorically exempt from CEQA.
ALIGNMENT WITH STRATEGIC PLANNING:
Approval of this action supports the City Council strategic plan to provide quality, well maintained infrastructure and facilities.
FISCAL IMPACT:
Sufficient funds are available in Fiscal Year 2025-26 and 2026-27 in COGEN account 5503255-50030.
REVIEWED BY:
Assistant Director of Public Works: Daniel Martinez
Director of Public Works: David McAbee
Procurement and Contracting Manager: Tabitha Richards
Assistant City Manager: Teresa Gallavan
City Manager: Scott Stiles
ATTACHMENTS:
A. Amendment No.1 24B189
B. Agreement No. 24B189
C. Public Integrity Disclosure