City Council Agenda Report
Meeting Date: October 20, 2026
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Principal Management Analyst Subject
Services Agreement with StoneX Financial, Inc. – FCM Division Recommendation
A. Find that the best interests of the City are served by a direct award of a Services Agreement with Stone X Financial, Inc. - FCM Division (StoneX) without a competitive selection process pursuant to Vernon Municipal Code Sections 3.32.110(B)(2) and (3); and B. Approve and authorize the City Administrator to execute a Services Agreement with StoneX, in substantially the same form as submitted, to provide Integrated Energy Risk Management & Analytics Services for an amount not-to-exceed $234,000, for a three-year term.
Background
Vernon Public Utilities (VPU) provides essential services to the City’s business and residential communities, including a full range of dependable, high-quality, and competitive electric, water, natural gas, and fiber-optic services. As an electric and natural gas service provider, VPU has significant energy and natural gas procurement and hedging requirements for its retail electric and natural gas customers, and the reliable operation of the natural gas-powered Malburg Generating Station.
On November 15, 2022, the City Council adopted Resolution No. 2022-40, approving VPU’s Energy Risk Management Policy (Policy). The Policy establishes operational and financial procedures for purchasing and selling energy and natural gas, ensuring that Vernon receives optimal value in its energy procurement efforts. It specifically addresses the management of the energy and natural gas portfolio through designated procedures and requirements and provides a framework for maintaining proper internal controls over portfolio activities.
On November 7, 2023, the City Council approved a three-year Services Agreement with StoneX Financial, Inc. – FCM Division (StoneX) to provide energy risk management services. Subsequently, on October 7, 2025, the City Council approved Amendment No. 1 to the Services Agreement with StoneX, which modified the scope of work to include the StoneX Plus Energy Analytics platform.
The current Services Agreement with StoneX is set to expire on November 6, 2026. Over the past three years, StoneX has provided critical natural gas hedging, credit and energy risk management support, risk analytics, and market intelligence that have been instrumental for VPU in stabilizing its natural gas costs, assessing counterparty credit risk, and ensuring compliance with the City Council-approved Energy Risk Management Policy.
During this period, StoneX has thoroughly reviewed VPU’s existing Energy Risk Management Policy and procedures and provided recommendations based on industry best practices, evaluated its hedge strategy, and analyzed VPU’s energy portfolio. They have also conducted risk analysis reporting, credit risk evaluations, and monitoring VPU’s counterparties. Additionally, StoneX has provided ongoing consulting on hedge strategies and market intelligence to ensure VPU meets its long-term natural gas hedging benchmarks, thereby supporting VPU’s strategy to deliver competitive rates and cost savings to its customers.
With more than 35 years of experience in providing risk management services and software products, StoneX has a proven track record in managing energy price and credit risks. The proposed Services Agreement will enable StoneX to continue delivering energy risk management services and portfolio analytics related to the procurement of power and natural gas, including access to StoneX’s analytics platform.
The scope of work includes:
• Periodic energy risk management policy and procedures review • Ongoing hedge strategy consulting and market intelligence • StoneX Plus Energy Analytics: StoneX Commodity Indicator, HedgeMonitor Pro, Forecast Tool
• Know-Risk position tracking and mark-to-market reporting • Know-Risk credit limit status reporting
• Counterparty credit risk evaluation, collateral review, and credit news The proposed agreement is exempt from competitive bidding pursuant to Section
3.32.110(A)(10) of the Vernon Municipal Code (VMC) and can be exempt from competitive selection pursuant to Section 3.32.110(B)(2) if a direct award is found to be in the best interests of the City. Section 3.32.110(B)(3) of the VMC indicates that the City Council has the authority to make such a finding when the proposed contract exceeds $100,000. The city's best interests are served by a direct award based on StoneX’s demonstrated expertise in energy risk management, governance and policy, hedge strategy design, hedge plan analytics, position and exposure reporting, recurring market intelligence, and counterparty credit monitoring to VPU, as outlined in this staff report. StoneX has effectively assisted VPU in maintaining and implementing energy procurement strategies, conducting credit evaluations, and ensuring compliance with Resolution No. 2022-40. Continuing the partnership with StoneX will maintain the operation of VPU’s energy risk management structure, thereby ensuring long-term energy hedging and stable costs for the City’s customers.
Staff recommends that the City Council approve a Services Agreement with StoneX for a total amount not-to-exceed $234,000 to provide integrated energy risk management and analytics services. Pursuant to VMC Section 3.32.030(A), City Council approval is required for the proposed agreement, as the total value of the contract exceeds $100,000.
The proposed Services Agreement has been reviewed and approved as to form by the City Attorney's Office.
Strategic Plan Goals
Goal 6: Optimize Public Utility Operations to Ensure Affordable Services Fiscal Impact
The fiscal impact is estimated not-to-exceed $234,000. Sufficient funds are available in the Electric Fund, Administration, Professional Services-Other, Account Number 055-050-580- 529215 for the current fiscal year and will be budgeted in subsequent years.
Attachments
1. Services Agreement with StoneX Financial, Inc. – FCM Division