Repository: UIHistories Project: Board of Trustees Minutes - 1994 [PAGE 642]

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630

BOARD OF TRUSTEES

[June 13

July 1, 1996, and continuing thereafter until further action of the board, the operating budget for Fiscal Year 1996 as it exists on June 30, 1996. Authorization is also requested, in accord with the needs of the University and the equitable interest involved and within total resources: (a) to accept resignations; (b) to make such additional appointments as are necessary, and to approve the issuance of notices of nonreappointment, subject to the provisions of the University of Illinois Statutes, General Rules Concerning University Organization and Procedure, and the Policy and Rules — Nonacademic; and (c) to make such changes and adjustments in items included in the interim budget as are needed. Such changes are to be accounted for in the comptroller's quarterly financial reports, or in reports to the board by its secretary.

On motion of Dr. Gindorf, authority was given as requested by the following vote: Aye, Dr. Bacon, Mrs. Calder, Mr. Engelbrecht, Dr. Gindorf, Mrs. Gravenhorst, Mr. Lamont, Ms. Lopez, Mrs. O'Malley, Ms. Reese; no, none; absent, Governor Edgar. (The student advisory vote was: Aye, Mr. Malone, Mr. Mathew, Mr. Rose; no, none.)

Authorization to Exempt Fuel Oil Purchases from Specific Board of Trustees Approval

(18) Over the years, the purchase of fuel for consumption at the University power plants has evolved into a very sophisticated program that requires the constant balancing of price, availability, and plant reliability. All of the central plants at Chicago and Urbana have multi-fuel capabilities and are designed and operated utilizing the lowest cost boiler fuel ensuring the most economical operation. Over the past several years the University has developed an industry-leading program for the purchase of natural gas. The University's coal purchase program has developed into a multi-year commitment that has produced consistently low cost supplies for the required operations in Urbana-Champaign. And until recently, the program to purchase fuel oil has been very successful in providing an effective alternative to natural gas and coal. To this point, the University's fuel oil purchases were typically bid yearly based on various price index mechanisms with variable volumes to cover any contingency during the year. This process was acceptable with a stable fuel oil market and when any volatility was limited to weather-related issues. However, with new regulations in the natural gas industry and operating limitations imposed by the transporters of natural gas, the price volatility of natural gas and subsequently fuel oil as an alternate fuel has increased dramatically. This has lead to a need to revise the University's purchase strategies for fuel oil to capture opportunities to operate with the lowest cost fuel. The best way to purchase fuel oil now is either by monthly terminal bids or in very large bulk quantities to be stored for planned University use. In the first instance, the cost of required monthly quantities often exceed current administrative approval levels and in the second case because of commodity price volatility for large quantities, a firm purchase commitment must be made within a day to get the best supplier price. The formal approval processes for such purchases and the narrow period of time to respond to such opportunities preclude the University from taking actions which could provide operating efficiencies and cost savings. On previous occasions, the board has exempted certain items from the requirement of specific board approval and has authorized the vice president for business and finance to accept or reject bids and award contracts on behalf of the board. The acquisition process for fuel oil should now be modified to capture new opportunities for the University's benefit.