REPORT TO COUNCIL
SUBJECT
Title
Action on Delegation of Authority to the City Manager to Negotiate and Execute Amendments to Agreements for Design Professional Services for Silicon Valley Power’s System Capacity Expansion Planning Including Plan Implementation and General Consulting Services
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara’s Electric Utility, Silicon Valley Power (SVP), has provided dependable electric service for over 125 years. The demand for electric power from SVP’s customers is expected to almost double over the next ten (10) years. During the recent heat wave, SVP reached a new system peak demand of 722 MW in 2024. With the new system expansion projects, and the California Independent System Operator’s transmission line to be constructed by LS Power, SVP is expected to reach a peak of +/-1300 MW by 2030.
The City Council has taken many actions in support of growth as a part of SVP’s System Expansion Plan:
• RTC #20-854: On October 13, 2020, City Council authorized the City Manager to negotiate and execute agreements with (1) five firms (1898 & Co., TRC Solutions, Inc., Electrical Consultants, Inc., AECOM Technical Services, Inc., and Stantec Consulting Services Inc.) in the amount of $3,000,000 per agreement for plan implementation; and (2) five firms (Advisian Worley Group, TRC Solutions, Inc., Leidos Engineering, LLC, Flynn Resource Consultants, Inc. and EN Engineering LLC.) in the amount of $2,000,000 per agreement for general consulting services. The total maximum compensation of these ten agreements is authorized not to exceed $25 million over a five-year period.
• RTC #21-871: On September 28, 2021, City Council accepted SVP’s Three-Year System Growth Plan Strategy. This plan identified $300 million in proposed projects for both near-term and long-term capital improvement projects needed to support anticipated system growth and to replace end-of life equipment for system reliability.
• RTC #22-555: On May 13, 2022, City Council authorized the City Manager to execute Amendment No. 1 to the Agreement with AECOM Technical Services Inc. increasing the maximum compensation from $3 million to $11 million to perform program management services for SVP’s System Expansion Plan. This authorization increased the aggregate authorization for the ten agreements to a new aggregate maximum compensation of $33 million.
• RTC #22-166: On October 4, 2022, City Council authorized the City Manager to negotiate and execute amendments to ten agreements with an additional aggregate maximum compensation of $17 million. This authorization increased the aggregate authorization for the ten agreements to a new aggregate maximum compensation of $50 million.
• RTC #22-1172: On November 15, 2022, City Council accepted SVP’s System Expansion Plan for the California Independent System Operator’s Transmission Planning Process FY 2023/24. The purpose of this process is to project SVP’s load growth over the next ten years and apply it to an electric system model to simulate load growth impacts on SVP’s electric system.
• RTC #23-104: On May 9, 2023, City Council adopted Resolution #23-9223 regarding the City’s intent to issue tax-exempt electric system bonds for reimbursement of expenditures for certain SVP capital improvement projects including load growth projects and associated equipment and material purchases.
• RTC #23-757: On July 18, 2023, City Council authorized the City Manager to negotiate and execute amendments to the ten agreements with an additional aggregate maximum compensation of $30 million for a new aggregate maximum compensation of $80 million.
When a specific project is identified, staff issues a Call for Proposals that invites these prequalified consultants to submit qualifications and the award is based on factors such as project specific qualifications and experience, staff availability, project approach, proposed scope of services, project schedule and design completion dates.
DISCUSSION
The Capital Improvement Program (CIP) project portfolio managed by SVP currently includes fifty-two (52) projects with a value of approximately $420 million in FY 2024/25. In addition, SVP has a separate team that focuses on the $400+ million System Expansion Plan that includes the following projects:
• Northern Receiving Station (NRS) Transformer Replacement
• Scott Receiving Station (SRS) Rebuild and Replacement
• Kiefer Receiving Station (KRS) Rebuild and Replacement
• NRS-KRS 115kV Transmission Line
There are a number of additional expansion projects that staff is working on that require engineering services for successful design and delivery. These include:
• Four 60kV reconductor projects
• Breaker replacement projects
• Phase Shifting Transformer project
• Construction of seven substations
• Two additional distribution substation expansions
• Completion of Twenty Year (20) System Expansion Plan
The proposed projects include replacement of aged infrastructures and installation of new facilities which will allow higher internal system capacity and improve system reliability.
To meet the demand for growth in capacity over the next several years and to continue to proactively address aging infrastructure, SVP has a budget of approximately $915 million in the FY 2024/25 and FY 2025/26 Adopted 5-year CIP. As a guideline, approximately 15-20% of capital project costs are associated with engineering services such as design and construction management. To address these engineering costs, staff recommends that the City Council authorize the City Manager to negotiate and execute additional amendments to the ten agreements with an additional aggregate compensation of $20 million to allow staff the flexibility of funding agreements as projects are awarded. If approved, the new aggregate authorization for the ten agreements will total a maximum compensation of $100 million.
ENVIRONMENTAL REVIEW
The proposed actions involve the approval of amendments to existing agreements for program and project management services. Any associated capital improvements have been or will be evaluated under the California Environmental Quality Act (“CEQA”). Therefore, the proposed actions do not constitute a “project” within the meaning of CEQA pursuant to section 15061(b)(3) of Title 14 of the California Code of Regulations as it can be seen with certainty that there is no possibility that the proposed approvals will have a significant effect on the environment.
FISCAL IMPACT
Sufficient funds for these amendments are included in the capital budget for each project for Fiscal Year 2024/2025 and 2025/2026. When additional budget is required or new projects are identified, requests will be submitted to the City Council for approval of the project and associated budget. Where applicable, costs will be recovered through developer contributions including developer deposits and load development fees. It is estimated that approximately 40% - 50% of the project costs will be funded by Load Development Fees or direct development contributions. Also, the system expansion plan projects are primarily funded with bond proceeds. As the System Expansion Plan and design and construction of developer funded substations progress, the costs and timelines will be revised and updated, and budget adjustments will be requested at that time if required.
Funds required for these agreements in future years are subject to budget appropriations and will be incorporated into the budget development process for those years. In the event the authorized budget for a project is insufficient, budgetary actions will be brought forward to the City Council as needed to provide funding for services in advance of authorizing those services.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Subject to the appropriation of funds and review and approval as to form by the City Attorney, authorize the City Manager to negotiate and execute amendments to the Agreements for Design Professional Services (Master Agreements) for Silicon Valley Power’s System Expansion Plan for an additional aggregate maximum compensation of $20 million for a new aggregate maximum compensation of $100 million funded by the Electric Utility Capital Fund and allocated as SVP may require with (a) 1898 & Co., (b) TRC Solutions, Inc., (c) Electrical Consultants, Inc., (d) AECOM Technical Services, Inc., (e) Stantec Consulting Services Inc., (f) Advisian Worley Group, (g) Leidos Engineering, LLC, (h) Flynn Resource Consultants, Inc. and (i) EN Engineering LLC.); and
2. Authorize the City Manager to take any actions as necessary to implement and administer the Master Agreements and to negotiate and execute amendments to those agreements to (a) add or delete services with their scope of services; (b) adjust future rates; and (c) extend the terms of the Master Agreements to complete projects initiated during the authorized term, subject to budget appropriations and approval as to form by the City Attorney.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager