REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute an Agreement for Services with Cascade Energy, LLC for a Third-Party Efficiency and Electrification Solutions for Industrials Program, for a Total Amount Not-to-Exceed $750,000
Report
BACKGROUND
In accordance with the Public Utilities Code (PUC) Section 385, covering the Public Benefits Charge (PBC), and the City’s Public Benefits Program Policy Statement adopted by the City Council on May 12, 1998, staff developed energy efficiency programs to benefit Silicon Valley Power’s (SVP) commercial and industrial customers. Over the past several years, there has been increased interest from the legislature, California Energy Commission, and environmental agencies to boost the level of energy efficiency programs in the municipal utilities, with legislation pushing to double the amount of energy efficiency achieved in California.
Every four years, electric utilities in California are required to conduct a Potential Study that determines all economically feasible energy efficiency opportunities within the utility’s service territory. Based on Santa Clara’s load profile, nearly all of the City’s energy efficiency potential comes from business customers.
The PBC is a state-required surcharge imposed on all sales of electricity and electrical services. State law mandates that funds collected must be used for eligible energy efficiency, renewable energy, low-income, or electric technology research and development programs and projects. In alignment with these requirements, SVP continues to enhance its business energy efficiency programs to support statewide energy efficiency and greenhouse gas reduction goals.
To implement these initiatives, SVP contracts with third-party providers to deliver energy efficiency programs and consulting services that supplement existing energy efficiency rebate programs. The Efficiency and Electrification Solutions for Industrials (EESI) will deliver a three-year energy efficiency and building electrification program targeting industrial facilities located in the City of Santa Clara. The program includes on-site energy assessments and provides customers with technical reports on energy saving and building electrification options. It also identifies no cost and low-cost behavioral, operational, retro commissioning measures, including system tune-ups, and identifies what measures qualify for SVP rebates and implements the measures. The program’s primary objectives are to improve energy efficiency, achieve energy cost reductions through no cost and low-cost improvements, and identify building electrification opportunities that reduce greenhouse gas emissions from industrial facilities.
DISCUSSION
Pursuant to City Code Section 2.105.140(c), a formal Request for Proposals (RFP) was conducted with the award recommendation based on “best value.”
The City issued the RFP for Third-Party Energy Efficiency and Building Electrification Programs, using the City’s e-procurement system. The RFP has remained open since its original publication. Periodically, usually quarterly, the City reviews proposals that were received for that period. The RFP will remain open until all allocated funds are expended. Cascade Energy, LLC was the second firm to respond. AESC was the first company that responded and was awarded a three-year Strategic Energy Management (SEM) and electrification program targeting schools K-12 and higher education, community-based organizations, and public sector facilities. Since then, additional proposals have been received and are currently under evaluation. Any subsequent agreements will be presented to the City Council as separate actions. The RFP is open ended to allow vendors with different service and product offerings to submit them in a timely manner. This allows SVP to continue to offer new and innovative programs to customers.
A three-member panel was formed to evaluate the proposal. Each team member independently evaluated the proposal and determined the proposal was responsive and met the initial pass/fail review of the stated minimum qualifications. The proposal was then evaluated for:
• cost effectiveness of program delivery;
• ability to supplement existing programs with a new program offering; and
• addressing underserved customer segments
An interview was held for further clarification regarding the firm’s ability to deliver on the program objectives as stated above. Based on this evaluation, the panel has determined that Cascade Energy’s proposal aligns with the goals and requirements in the RFP and recommends award of contract to Cascade Energy for a Third-Party Commercial Strategic Energy Management Program.
The proposed agreement includes a detailed scope of services for a three-year energy efficiency and electrification program for industrial customers. Program activities will include conducting on-site energy assessments, performing system tune-ups and retro commissioning, and supporting implementation of capital improvement energy efficiency or building electrification upgrades through Silicon Valley Power’s rebate programs.
The term of the proposed agreement is three years with an option to extend for an additional year with no increase to the maximum compensation. The estimated total cost to implement the program is $750,000. Compensation is allocated across program development and program implementation activities as shown in the table below.
|
Budget Category |
Budget Sub-Category |
Not to Exceed Maximum Compensation |
Compensation Methodology |
|
Program Development |
Program Startup |
$ 10,000 |
Fixed Fee |
|
|
Customer Targeting & Outreach |
$ 36,167 |
Time & Materials |
|
|
Scoping Audits |
$ 156,500 |
Fixed Fee |
|
|
Program Administration |
$ 39,000 |
Time & Materials |
|
Program Implementation |
|
$ 508,333 |
Performance |
|
Total |
$ 750,000 |
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to Section 15061(b)(3) of Title 14 of the California Code of Regulation in that it can be seen with certainty that there is no possibility that the proposed actions may have a significant effect on the environment.
FISCAL IMPACT
The maximum compensation under the proposed three-year agreement with Cascade Energy, LLC is $750,000. The City Manager would also be authorized to amend the Agreement for an additional year with no increase to the maximum compensation, subject to the appropriation of funds and to the review and approval as to form by the City Attorney. Sufficient funds are available in the Electric Grant Operating Trust Fund in the Public Benefits Program. Funding for future years will be incorporated through the regular 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. Authorize the City Manager to execute an Agreement for Services with Cascade Energy, LLC, for a Third-Party Efficiency and Electrification Solutions for Industrials Program, for a three-year term ending September 30, 2028, for a total maximum compensation amount not-to-exceed $750,000 (Agreement), subject to the appropriation of funds and approval as to form by the City Attorney, to be funded by the Electric Operating Grant Trust Fund; and
2. Authorize the City Manager or designee to take any actions necessary to implement and administer the Agreement including negotiating and executing future amendment(s) to (1) add or delete services associated with the services, (2) adjust future rates based on market conditions, (3) exercise a one-year option to extend the term through September 30, 2029, and (4) make de minimis changes, subject to the maximum compensation stated above and review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Proposed Agreement for Services with Cascade Energy, LLC