March 16, 1998
To: Works and Utilities Committee
From: Mike Thorne
Interim Functional Lead, Water and Wastewater
Subject: Amendment to Agreement for Supply of Iron Salts
Purpose:
To amend the price of iron salts for 1998, in accordance with the decrease in the Consumer Price Index, Transportation, for the previous 12 months, as allowed under Clause No. 5 of the existing agreement.
Funding Sources, Financial Implications and Impact Statement:
Based on the estimated 1998 usage of our four treatment plants at 4,162,762 kilograms of iron salts, the price decrease would result in an anticipated cost savings of $37.5 thousand from the 1998 Estimates. Funding for the purchase of iron salts is available in the 1998 Operating budget, Appropriation Account No. WP210.
Recommendations:
It is recommended that the 1998 price for iron salts be adjusted, as required, under the contract and decreased by 0.3 percent to $0.406 per kilogram, in accordance with the decrease of the Consumer Price Index - Table 1, Canada, Transportation, contained in Catalogue 62-001 for the previous 12 months.
Council Reference/Background/History:
On May 3 and 4, 1995, Metro Council, by adoption of Clause No. 15 of Report No. 9 of The Environment and Public Space Committee, authorized entering into an agreement with Eaglebrook Inc. of Canada for the supply and delivery of soluble iron salts for the five year period ending December 31, 2000. Iron salts are used at our four sewage treatment plants to remove phosphorus, which is a major contributor of the growth of algae in Lake Ontario.
The agreement contains a provision for an annual adjustment of the price based on the transportation rate contained in the Consumer Price Index. The clause dealing with this provision states:
The only allowance for inflation will be for transportation rates, and the publication to be used for any price adjustments will be the Consumer Price Index - Table 1, Canada, Transportation, contained in Catalogue 62-001 produced by Statistics Canada. An annual review of this index will be made in December of each year. The published price index for the last 12 months will be used to negotiate any price adjustment required, and that price will apply for the next year following approval by City of Toronto Council.
With reference to the Consumer Price Index, the Transportation rate for December, 1996 was 148.3 and the same rate for December, 1997 was 147.8. This represents a decrease of 0.3 percent. Accordingly, the 0.3 percent rate decrease is to be applied to the 1997 contract price of $0.407, resulting in a 1998 rate of $0.406 per kilogram.
Comments and/or Discussion and/or Justification:
Not applicable.
Conclusions:
The 1998 price for iron salts should be decreased by 0.3 percent in accordance with the decrease of the Consumer Price Index - Table 1, Canada, Transportation, contained in Catalogue No. 62-001 for the previous 12 months, as allowed under Clause No. 5 of the existing agreement.
Eaglebrook Inc. of Canada requests a certified copy of City Council=s resolution accepting the 1998 rate for iron salts.
Contact Name:
Mr. R. M. Pickett, Director,. Water Pollution Control Division, (416) 392-8230, Fax (416) 397-0908, E-Mail bob_pickett@metrodesk.metrotor.on.ca.
M. G. Thorne, P.Eng. Barry H. Gutteridge
Interim Functional Lead Commissioner
Water and Wastewater Works and Emergency Services
