REPORT TO COUNCIL
SUBJECT
Title
Action to Delegate Authority to the City Manager to Execute a Professional Services Agreement Between the Northern California Power Agency and the Cities of Palo Alto and Santa Clara for Consulting Services Related to Electric Transmission, Power Generation, and Regulatory and Electric Market Design, for a Total Cost Not-to-Exceed $3,287,500 Over a 5-Year Term, of Which $2,630,000 is the Maximum Contribution from the City of Santa Clara
Report
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), participates in the California energy market, which is subject to frequent regulatory and market changes implemented by the California Independent System Operator (CAISO), the California Energy Commission (CEC), and other agencies that can have significant impact on customer rates. In order to analyze these changes and to make effective and appropriate comments, the Cities of Santa Clara and Palo Alto jointly contract with the Northern California Power Agency (NCPA) to obtain the assistance of industry transmission experts. NCPA contracts with the appropriate industry experts to provide the services. The Cities of Santa Clara and Palo Alto have been contracting out these services for the last 22 years. The current contract is set to expire on December 31, 2025.
Earlier this year, the NCPA sent out a Request for Proposals (RFP) to find the appropriate consultant to provide such services. NCPA received one proposal from Flynn Resources Consultant Inc. (Flynn RCI) who was responsive to the request and demonstrated substantial experience and qualifications to provide the necessary services. These services include monitoring the CAISO and PG&E transmission planning activities, analyzing specific cost impacts, meeting participation, coordinating with other parties, and as necessary, preparing formal position submittals to the CAISO, CEC, and other parties on transmission and grid planning issues.
DISCUSSION
The proposed agreement will allow for ongoing representation in forums related to California and Bay Area specific transmission and grid planning. Without this input and assistance, changes in regulations and markets made by the CAISO, CEC and other agencies could have unexpected impacts on SVP’s electric customers and their rates.
After negotiating with Flynn RCI, the NCPA, tentatively agreed to a 5-year term, with a total not to exceed amount of $3,250,000, subject to final approval of the Cities of Santa Clara and Palo Alto. The NCPA charges an administrative fee for contract administration and oversight, processing invoices from Flynn RCI and billing the Cities of Santa Clara and Palo Alto. The administrative fee will not exceed $37,500 during the 5-year term. SVP’s portion of the agreement is 80% of the total contract amount, with Palo Alto paying the remaining 20%. The 80/20 split is based on electric sales for the Cities of Palo Alto and Santa Clara. SVP’s portion of the total compensation shall not exceed $2,630,000 for the new 5-year term, or approximately $526,000 annually.
Pursuant to Section 2.105.270(b) of the Santa Clara Code, the City may contract, directly or indirectly with a vendor based on an agreement negotiated by a joint powers agency and which the City is a member.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378 (b)(5) of Title 14 of the California Code of Regulations in that it is an administrative activity that will not result in a direct or indirect physical change in the environment.
FISCAL IMPACT
The total annual cost to SVP for services provided under the proposed agreement is approximately $526,000, for a total contract not-to-exceed amount of $2,630,000 over a five-year term. Sufficient funds are available in the FY 2025/26 Electric Utility Operating Fund. Funding in the out years is subject to budget appropriations and will be incorporated into the budget development process for those years.
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.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to execute the Professional Services Agreement between the Northern California Power Agency and the Cities of Palo Alto and Santa Clara for a total not-to-exceed amount of $3,287,500 over the five-year term of the agreement, of which, $2,630,000 is the maximum contribution from the City of Santa Clara, subject to the review and approval as to form by the City Attorney funded by the Electric Utility Fund; and
2. Authorize the City Manager or designee to (1) take any actions as necessary to implement and administer the agreement and (2) amend the agreement so long as there is no increase to the maximum compensation or extension of the term, subject to the appropriation of funds and the 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. Professional Services Agreement with the Northern California Power Agency