REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Increase the Purchase Order Authorization and Extend the Rental Term with Atlas Copco Rental for the Rental of an Air Compressor at the Donald Von Raesfeld Power Plant, for Additional Compensation Not-to-Exceed $321,168, for a Total Aggregate Maximum Compensation Not-to-Exceed $921,168, Inclusive of $600,000 Previously Authorized by the City Council
Report
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), operates two power plants in Santa Clara: the Donald Von Raesfeld Power Plant (DVR) and the Gianera Generating Station (Gianera), as well as other power generating assets. These facilities rely on compressed air systems to supply clean, dry air that is essential for the control and operation of critical equipment, including turbines, pumps, and pressure vessels.
DVR is designed to operate with two air compressors to provide the reliability and redundancy necessary to support plant operations. In August 2023, one of the two air compressors failed. To address this immediate need, SVP secured a rental air compressor from Atlas Copco Rental (Atlas), the original equipment manufacturer (OEM) of DVR’s existing compressors. Atlas was identified as the sole vendor offering trailer-mounted rental air compressors. The rental unit provides necessary backup capacity for DVR’s instrument air system and reduces the risk associated with relying on a single functioning permanent air compressor.
In January 2025, the City Council authorized the issuance of Purchase Orders to Atlas for the rental of an air compressor at DVR for a total amount not to exceed $600,000, through September 30, 2026 (Attachment 1, RTC 25-1019).
SVP now seeks City Council authorization to increase the total purchase order authorization and extend the rental term through March 31, 2028.
DISCUSSION
In October 2025, the City Council approved an agreement with ACCO Engineered Systems, Inc. (ACCO) for the replacement of two air compressors and two air dryers at DVR (Attachment 2, RTC 25-1016). The replacement project included the air compressor that failed in August 2023, as well as the second air compressor, which remains operational but is aging. The agreement with ACCO was executed on November 13, 2025. During implementation, it was determined that ACCO could not meet the required performance specifications for the replacement equipment. As a result, SVP terminated the agreement in July 2026.
Following termination of the ACCO agreement, SVP began working with the City’s Purchasing Division to evaluate the market and determine the most appropriate procurement method for replacing the two air compressors and two air dryers. Any resulting contract for the replacement equipment will be brought to the City Council for approval.
Based on the anticipated procurement and installation schedule, SVP estimates that the Atlas rental air compressor will be required for approximately 18 additional months beyond the current authorization period, through March 31, 2028. Maintaining the rental unit during this period is necessary to preserve redundancy in DVR’s instrument air system and support reliable plant operations until the permanent replacement equipment is installed and operational.
The current rental rate is $13,780 per month and is valid through June 30, 2027. Because the rental will extend beyond that date, staff’s cost estimate assumes a five percent increase in the monthly rental rate for the period from July 2027 through March 2028. The estimated costs are summarized in Table 1 below.
Table 1 - Cost Summary
|
Description |
Amount |
|
Rental Cost Through September 30, 2026 |
$583,184 |
|
Estimated Additional Rental Costs Through March 31, 2028 |
$254,241 |
|
Total |
$837,425 |
|
Contingency |
$83,743 |
|
Revised Total Not-to-Exceed Maximum Compensation |
$921,168 |
The contingency of $83,743, approximately 10 percent of the estimated total rental cost, is included to address potential rental-rate adjustments, schedule changes, or other unforeseen costs that may arise before the permanent replacement equipment is installed and placed into service.
The City Council previously authorized up to $600,000 for the Atlas rental. The requested increase of $321,168 would increase the total authorized amount from $600,000 to $921,168 and extend the authorized rental period from September 30, 2026, through March 31, 2028.
ENVIRONMENTAL REVIEW
The action being considered is exempt from the California Environmental Quality Act (“CEQA”) pursuant to section 15301 “Existing Facilities” of Title 14 of the California Code of Regulations as the action relates to the continued operation of an existing public facility involving negligible or no expansion of use.
FISCAL IMPACT
Sufficient funds are available in the FY 2026/27 Operating Budget in the Electric Utility Operating Fund. Budget for future years will be requested through the biennial budget process.
COORDINATION
This report has been coordinated with the Finance Department and the 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 or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15301 (Class 1 - Existing Facilities) of Title 14 of the California Code of Regulations;
2. Authorize the City Manager or designee to issue Purchase Orders to Atlas Copco Rental for an additional $321,168, for a revised maximum aggregate amount not-to-exceed $921,168, for the continued rental of an air compressor at the Donald Von Raesfeld Power Plant through approximately March 31, 2028, subject to appropriation of funds and review and approval as to form by the City Attorney; and
3. Authorize the City Manager or designee to take any action as necessary to implement and administer the Purchase Orders, subject to the above maximum compensation and review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. RTC 25-1019
2. RTC 25-1016