Amendment to Agreement for

Supply of Ferrous Chloride

The Works and Utilities Committee recommends the adoption of the following report (

March 30, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

To amend the price of ferrous chloride for 1999, 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 1999 consumption at our four treatment plants of 3,508,000 kilograms, the 1999 estimated cost of ferrous chloride used at the treatment facilities is $1,456.0 thousand. Given the downward trend of the Consumers Price Index for Transportation during 1998, this decrease was predicted and reflected in our 1999 Operating Budget submission. Therefore, there is no impact on the 1999 Operating estimates. Funding for the purchase of ferrous chloride is available in the 1999 Operating Budget - Wastewater Program.

Recommendation:

It is recommended that the 1999 price for ferrous chloride be adjusted, as required, under the contract and decreased by 0.8 percent to $0.403 per kilogram, in accordance with the decrease of the Consumer Price Index - Table 1, Canada, Transportation, contained in Catalogue 62-001 for the previous 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 public 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 1997 was 121.3 and the same rate for December 1998 was 120.3. This represents a decrease of 0.8 percent. Accordingly, the 0.8 percent rate decrease is to be applied to the 1998 contract price of $0.406 resulting in a 1999 rate of $0.403 per kilogram.

Comments and/or Discussion and/or Justification:

Not applicable.

Conclusions:

The 1999 price for iron salts should be decreased by 0.8 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 1999 rate for ferrous chloride.

Contact Name:

Mr. R. M. Pickett, Director, Water Pollution Control

Telephone: (416) 392-8230; Fax: (416) 397-0908

e-mail: bob_pickett@metrodesk.metrotor.on.ca.