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GROSSE POINTE CITY — Less than six months after entering into an agreement with the Petoskey-based firm Tenurgy to look for savings on utilities, Grosse Pointe City is already expected to benefit financially.
The city will start purchasing natural gas from Baltimore, Maryland-headquartered Constellation instead of DTE Energy starting Dec. 1. This was one of the areas of potential savings identified by Tenurgy during a recently completed audit of the city’s utility costs and providers. City Manager Joseph Valentine said the City expects to save roughly $9,600 annually on the cost of gas itself and another $1,700 annually on gas distribution, for a total saving of $11,300 each year over what they had been paying DTE. As part of its agreement with Tenurgy, the city will split that savings 50/50 with Tenurgy for the first three years, making the actual annual savings for the municipality about $5,650.
During a meeting Oct. 21, the Grosse Pointe City Council voted unanimously in favor of a three-year contract with Constellation for natural gas.
Valentine said from his experience, the process of switching to a new natural gas provider “is seamless.”
Valentine said companies like Constellation can offer these savings because they don’t have the infrastructure to maintain, so their overhead is lower.
“They’re just buying the gas and selling you the gas,” Valentine told the council.
While the contract locks in the rate the city will be paying for the next three years, Valentine didn’t think DTE would be able to offer lower rates during that time — nor did he feel Constellation might offer lower natural gas prices to new customers during that period.
“They typically won’t go down — they’ll go up,” Valentine said of the rates.
He said there aren’t many alternate suppliers out there for natural gas.
“I think we have an opportunity to save,” Mayor Sheila Tomkowiak said. “A little bit here, a little bit there — it all adds up.”
After the first 36-month period, the contract would automatically renew annually unless either party gave a written notice otherwise at least 60 days in advance. Valentine said that’s similar to the contract the city now has with DTE, which automatically renews each year.
Besides the natural gas savings, Valentine said Tenurgy identified other areas where the city might be able to reduce its costs for electricity and telecommunications, both of which were still being explored by city officials at press time.
In addition, Valentine said Tenurgy discovered that the city had paid sales tax on some items it shouldn’t have had to pay tax on. He said the city recently filed paperwork to recover that sales tax, which is expected to result in a refund of roughly $15,000 to $20,000 — half of which will go to the city and half of which will go to Tenurgy. In the future, Valentine said, the loss of these sales tax payments should result in an annual savings to the city of approximately $5,000, a savings that will be split with Tenurgy for the next three years.
