Port Officials OK Fixed-Price Electrical Deal

By Reed Fujii, The Record, Stockton, Calif.

Apr. 18–STOCKTON – Port officials Monday approved a new five-year, $5 million contract to provide fixed-price electrical power to businesses occupying the former Rough and Ready Island naval base.

The port also is on track to top the 2005 record for cargo volume, approved an expansion of its foreign trade zone and got around to endorsing a resolution of thanks to U.S. Sen. Dianne Feinstein nearly four weeks after she received it.

The Port of Stockton got into the electricity business in 2003, setting up as a municipal utility and contracting with Sempra Energy Solutions to supply the power. That meant port tenants on the former Rough and Ready Island naval base could receive discounted energy.

“Our contract’s up, so we’re basically locking in a price for the next five years,” said Richard Aschieris, port director.

While current energy prices are pretty high – crude-oil futures closed at a 71/2-month high of $70.40 per barrel Monday, close to the hurricane-related record of $70.85 set Aug. 30, 2005 – Aschieris said the contract will avert any further increases over its five-year term.

Based on prices quoted at 1:30 p.m. Monday and good for three hours – energy traders are reluctant to lock in commitments in such a volatile market – members of the Stockton Port Commission unanimously selected Constellation New Energy, a subsidiary of Baltimore-based Constellation Energy, to provide electricity to the port at an average $75.54 per megawatt hour. That beat bids from current supplier Sempra at $76.51 per megawatt hour and Royal Dutch Shell subsidiary Coral Energy at $88.40, as outlined by the port’s energy consultant, Michael McDonald, principal of McDonald Partners based in Alamo.

“I am familiar with Constellation and know they will do a good job for you,” McDonald told the commissioners during their regular meeting Monday afternoon.

Constellation’s prices are fixed. Should energy costs drop in the future, the port could capture some savings by seeking an extension at a lower rate, McDonald said. He also noted that the contract is below current rates charged by Pacific Gas & Electric Co. to tenants of the port’s older, East Complex, of $130 to $140 per megawatt hour.

In other business Monday:

» Aschieris noted that the port is on track to break last year’s record for shipping volume. So far this year, the port has welcomed 64 ships and 43 barges, the port director said. “We’re on a very strong pace right now.” By April 17, 2005, the port had recorded 44 ship visits and 37 barge stops (barge traffic is largely related to construction of the new span of the San Francisco-Oakland Bay Bridge).

» Commissioners endorsed an application to expand the port’s free trade zone to cover new warehouse and distribution facilities under development by ProLogis in four industrial parks in Tracy and Stockton. ProLogis will pay the port $10,000 and cover the costs of moving the expansion application through the U.S. Customs Service process.

Port officials said they will develop and collect an additional system of tariffs and fees as individual importers come forward and put various free trade activities into place. A free-trade zone treats imported goods as remaining outside the United States for custom purposes, allowing them to be assembled, modified or simply held until they are finished and moved on toward the end user or buyer.

» Officials also, in a move a bit like post-dating a check, gave formal approval to a resolution presented to Feinstein on March 21, recognizing her part in carrying legislation that enabled the Port of Stockton to take over Rough and Ready Island from the U.S. Navy in 2000 and triggering on ongoing expansion of the port’s activities and growth in revenues.

Contact reporter Reed Fujii at (209) 546-8253 or rfujii@recordnet.com

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Copyright (c) 2006, The Record, Stockton, Calif.

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