REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Negotiate and Execute Agreements and/or Amendments to Existing Agreements as Required to Complete Unanticipated Internal Inspection and Re-rate Engineering Study for Transformer Upgrades at the Kifer Receiving Station (KRS) and Scott Receiving Station (SRS) and Approve Related Budget Amendment
Report
BACKGROUND
The City of Santa Clara's Electric Utility, Silicon Valley Power (SVP), imports electric power generated outside of Santa Clara using PG&E interconnections primarily at three receiving substations within the City limits: Kifer Receiving Station (KRS), Scott Receiving Station (SRS), and Northern Receiving Station (NRS). These stations use multiple transformers to lower voltage from 115kV to 12kV. In addition, SVP’s distribution substations use transformers to step down sub-transmission (60kV) voltage to distribution level (12kV). Most of the power from PG&E transmission lines pass through six (6) large transformers, each with a 115kV/60kV 186MVA capacity, installed at NRS, KRS and SRS (two transformers per station).
As part of the several rebuild projects included in SVP’s system expansion plan, new 115kV/60kV 336MVA transformers will be installed at the three stations - two (2) transformers each at KRS and SRS and three (3) transformers at NRS. Until those projects are complete, the existing 115kV/60kV 186MVA transformers need to handle the increased demand.
SVP continues to explore options for providing additional power to serve existing and future customers and will study the feasibility of re-rating the existing115kV/60kV 186MVA transformers at KRS and SRS. This request is a result of the continuous growth of SVP’s electric load and supply chain issues affecting the re-build of NRS, KRS and SRS. The projected dates for energization/in-service of NRS, KRS, and SRS rebuilds are in fiscal year 2027/2028. Between now and the energization date for these receiving stations, staff recommends evaluating the re-rating of the existing transformers at KRS and SRS to provide additional capacity. A transformer re-rate evaluates modifications such as fuel type, exhaust, and other features to increase capacity of the transformer. Providing additional capacity sooner will meet customer needs as well as result in millions of dollars in sales revenue.
SVP’s existing transformers are manufactured by:
1. KRS TA Transformer: ABB (acquired by Hitachi)
2. KRS TB Transformer: Trafo Union (trademark of Siemens Energy)
3. SRS TA and TB Transformers: North American Transformers (purchased by Waukesha Electric Systems, and then merged into Prolec GE-Waukesha, Inc.)
All the original manufacturers of the transformers at NRS, KRS, and SRS have merged or been acquired by other companies and, as a result, there is no clear customer support provided to these legacy transformers.
DISCUSSION
SVP recommends an expedited process that delegates authority to the City Manager to negotiate and execute new agreements and/or amendments to existing agreements for a total authorization of up to $500,000 for the specific purpose of completing an analysis of improvements needed to increase capacity at KRS and SRS and to apply exceptions to competitive procurement requirements where applicable under City procurement ordinances. If improvements can be identified, it is expected that staff will return to Council with a request for up to $5.5 million to complete the work.
SVP will coordinate closely with the Purchasing Division of the Finance Department as well as with the City Attorney’s Office to assure procurement methods are aligned with City policies and ordinance including use of exception to competitive bidding pursuant to Section 2.105.290 of the Santa Clara City Code where appropriate. Section 2.105.290 states that a purchase is exempt from a competitive procurement process if it would not be useful or produce advantage to the City, and if due to circumstances beyond the control of the City, the time necessary to use the competitive procurement procedure would result in substantial economic loss to the City or substantial interference with a critical City operation and will evaluate the decision to execute new agreements or amendments to existing agreements to best meet the needs of the City. Approval of these recommendations will permit staff to execute documents needed to secure delivery timelines for long lead time equipment and accelerate other actions associated with this critical project.
SVP has reached out to major transformer manufacturer’s including Delta Star Inc. (DSI), Prolec-GE Waukesha, Inc., Siemens Energy USA, and Hyundai Power Transformers USA, Inc. (Hyundai). Hyundai declined to offer their services for this project and recommended that SVP reach out to the original manufacturers. At this time, only DSI has provided quotes reflecting service needs and anticipated costs. DSI is the only local power transformer manufacturing company with a plant in San Carlos, CA, and a local transformer field services crew and DSI is currently supporting SVP with similar projects. The remaining vendors were non-responsive to our requests for information regarding re-rating or other options to increase the capacity of existing SVP transformers.
In addition to transformer inspection and re-rate studies, additional services will be required from engineering firms for protection and control settings. Staff will authorize this work using existing agreements with engineering firms or through new agreements where aligned with purchasing policy and in the best interest of the City. In the event that construction is required, such services will be procured pursuant to the City Charter.
Plan of Action
Staff have developed a detailed scope of work and there will be a phased approach for re-rating the existing 186MVA transformers:
1. Phase 1 - Internal inspection of existing 186MVA transformers and re-rate engineering study (current Council action).
2. Phase 2 - Field upgrade, installation and testing of the re-rated 186MVA transformers, as recommended in the re-rate engineering study from Phase 1 (possible future Council action).
Estimated Costs:
After completion of the re-rate study, SVP anticipates additional costs related to the findings of internal transformer inspections (phase 2 of plan of action above). Staff will return to Council with additional actions at that time.
A preliminary estimate of the additional tasks that have been identified and their associated cost is as follows:
|
Equipment/Project |
Estimated Cost |
|
Internal Inspections and re-rate to four (4) transformers (current Council action) |
$ 500,000 |
|
Anticipated upgrades to four (4) transformers (possible future Council action) |
$3,500,000 |
|
Contingency (possible future Council action) |
$2,000,000 |
|
Total Anticipated Cost |
$6,000,000 |
ENVIRONMENTAL REVIEW
The proposed actions do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15061(c)(3) of Title 14 of the California Code of Regulations as it can be seen with certainty that there is no possibility the inspection services will have a significant effect on the environment.
FISCAL IMPACT
The recommended budget amendment below is needed to fully fund the transformer upgrade cost, as well as associated inspection, engineering, and construction services. Funding is provided by a transfer from the Electric Utility Fund Unrestricted Fund Balance to the KRS Rebuild and Replacement (CIP 2453) and SRS Rebuild and Replacement (CIP 2456) in the Electric Utility Capital Fund.
Budget Amendment
FY 2023/2024
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Fund (091) |
|
|
|
|
Transfers Out |
|
|
|
|
Transfer to the Electric Utility Capital Fund |
$23,062,234 |
$500,000 |
$23,562,234 |
|
|
|
|
|
|
Reserves |
|
|
|
|
Unrestricted Fund Balance |
$87,174,994 |
($500,000) |
$86,674,994 |
|
|
|
|
|
|
Electric Utility Capital Fund (591) |
|
|
|
|
Transfers In |
|
|
|
|
Transfer from the Electric Utility Fund |
$23,062,234 |
$500,000 |
$23,562,234 |
|
Expenditures |
|
|
|
|
KRS Rebuild and Replacement |
$86,447,723 |
$250,000 |
$86,697,723 |
|
SRS Rebuild and Replacement |
$90,552,753 |
$250,000 |
$90,802,753 |
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 compliance with Chapter 2.105 of the City Code, as applicable, and review and approval as to form by City Attorney, authorize the City Manager to negotiate and execute new agreements and/or amendments to existing agreements with various vendors to complete unanticipated internal inspections, and re-rate engineering studies, at the Kifer Receiving Station (KRS) and Scott Receiving Station (SRS) with a total aggregate authorization not to exceed $500,000;
2. Authorize the City Manager or designee to take any actions as necessary to implement and administer the agreements and to negotiate and execute further amendments to the agreements as needed to complete inspections and studies at KRS and SRS, subject to the maximum authorization of $500,000 and approval as to form by the City Attorney; and
3. Approve the following FY 2023/24 budget amendments:
A. In the Electric Utility Fund, increase the transfer to the Electric Utility Capital Fund and decrease the Unrestricted Ending Fund Balance in the amount of $500,000 (five affirmative Council votes required for the use of unused balances); and
B. In the Electric Utility Capital Fund, recognize a transfer from the Electric Utility Fund in the amount of $500,000, increase the KRS Rebuild and Replacement project (CIP 2453) by $250,000, and increase the SRS Rebuild and Replacement project (CIP 2456) by $250,000 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager