REPORT TO COUNCIL
SUBJECT
Title
Action Authorizing the City Manager to Negotiate and Execute Agreement(s) with Vendor(s) for the Purchase of Capacitor Banks with Reactor Switching Devices, Protection and Control Panels, Insulators, and Surge Arresters to be Funded by the Electric Utility Capital Fund
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
In November 2019, Silicon Valley Power (SVP) management met to discuss the strategic priorities for SVP and identified that the City of Santa Clara (City) would experience significant electric load growth requiring SVP to develop a capital improvement strategy. Staff determined the need for developing both near-term and long-term strategies to accommodate approved growth and develop the necessary infrastructure plan options.
On October 13, 2020, the City Council authorized the City Manager to execute master service agreements with several engineering consultant firms to support SVP with system expansion, general consulting services, and plan implementation services (RTC # 20-854).
On April 6, 2021, staff presented a comprehensive review of upcoming load growth and capital projects to the City Council as part of the SVP Quarterly Report. The presentation concluded with the next steps, including the preparation of a system growth strategy to be presented at a future City Council meeting.
On September 28, 2021, the City Council accepted SVP’s Three-Year System Growth Plan Strategy (RTC # 21-871). 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.
On April 5, 2022, the City Council adopted Resolution # 22-9069 adding new and updated connection and load development fees for SVP (RTC # 22-449). Additionally, on April 19, 2022, the City Council adopted Resolution # 22-9081 adopting the City of Santa Clara fiscal year 2022/23 Municipal Fee Schedule, which included new and updated connection fees and load development fees, effective July 1, 2022 (RTC # 22-99). These fees were further updated for fiscal year 2023/24 by the adoption of Resolution # 23-9221 on April 18, 2023, and for fiscal year 2024/25 by adoption of Resolution # 24-9316 on April 23, 2024. Such fees and their corresponding increases are intended to maintain fees at cost recovery levels necessary to support electric load growth.
On November 15, 2022 (RTC # 22-1172), the City Council accepted SVP’s System Expansion Plan for the California Independent System Operator’s Transmission Planning Process FY2023/24 (SVP System Expansion Plan CAISO TPP FY2023/24). 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.
On May 9, 2023, the City Council adopted Resolution # 23-9223 regarding the City’s intent to issue tax-exempt electric system bonds for reimbursement of expenditures for certain capital improvement projects for SVP (RTC # 23-104), including load growth projects and associated equipment and material purchases.
On July 18, 2023, staff presented an update on these key near-term projects necessary for system growth to the City Council as part of the SVP Quarterly Report (RTC # 23-757). At the same meeting, the City Council approved amendments to several master service agreements, including increases to cumulative maximum compensations (RTC # 23-737).
On September 10, 2024, City Council approved the issuance of electric revenue bonds which provide funding for the large System Expansion Plan projects (RTC # 24-46).
As part of SVP’s ongoing efforts to support these City Council actions, system expansion, and address load growth, a series of purchases have been made and are in progress to ensure that the necessary equipment and materials are delivered to meet project schedules. Significant purchases have already been authorized by the City Council as follows:
• On October 10, 2023, the City Council authorized the purchase of up to 12 high voltage transformers with a total not-to-exceed amount of $81,392,908 (RTC # 23-122).
• On May 7, 2024, the City Council authorized the purchase of up to 78 high voltage circuit breakers with a total not-to-exceed amount of $43,700,000 (RTC # 24-35).
• On May 28, 2024, the City Council authorized the purchase of high voltage disconnect switches, station service voltage transformers, voltage transformers and capacitive voltage transformers, and combination revenue metering transformers with a total not-to-exceed amount of $20,100,000 (RTC # 24-453).
• On November 12, 2024, the City Council authorized the purchase of control enclosures with protection and control panels and neutral grounding resistors with a total not-to-exceed amount of $14,950,000 (RTC # 24-1056).
DISCUSSION
In alignment with the City Council actions outlined above, staff is now seeking approval to negotiate and execute agreements for the purchase of four types of equipment: (1) Capacitor Banks with Reactive Switch Devices, (2) Protection and Control Panels, (3) Insulators, and (4) Surge Arresters. Although the formal bidding process has not yet been initiated, staff is requesting authorization now to expedite the process in order to meet project schedules. Staff intends to publish Requests for Bids (RFBs) on the City’s e-procurement system for each of the four procurements by mid-November 2024.
City staff intends to award each procurement in accordance with Section 2.105.140(d) of the Santa Clara City Code (City Code). Under this section, the City may only award to the lowest responsive and responsible bidder who meets all the material specifications. In the event that bids are deemed non-responsive or non-responsible, Section 2.105.200 of the City Code authorizes the Purchasing Division Manager to reject all bids and, if appropriate, either prenotice the bid or directly negotiate with vendors on the open market without further notice. Staff will work with the Purchasing Division Manager to ensure any decision to forgo readvertising is in compliance with Section 2.105.200. Additionally, if no bids are received, Section 2.105.220 of the City Code provides similar authority to acquire the equipment on the open market or to renotice the solicitation.
Description and Quantities
The following tables outline the specific items and quantities required for each of the four procurements to support SVP’s expansion projects:
|
Table 1: Capacitor Banks with Reactive Switching Devices |
NRS Qty |
|
60kV Air Insulated Capacitor Bank |
6 |
|
60kV Reactive Switching Device |
6 |
|
Table 2: Protection and Control Panels |
NRS Qty |
|
60kVP&C, Communication and SCADA Panels |
37 |
|
115kV P&C, Communication and SCADA Panels |
32 |
|
230kV P&C, Communication and SCADA Panels |
18 |
|
IT/OT Panels |
4 |
|
Table 3: Insulators |
NRS Qty |
KRS Qty |
SRS Qty |
Total |
|
15kV, Porcelain, Station Post Insulator, Tr205, 110kV Bil, Standard Strength, 3" B.C. Top, 3" B.C. Bottom |
0 |
6 |
6 |
12 |
|
69kV, Porcelain, Station Post Insulator, 350kV IL, Extra High Strength, 7" B.C. Top, 7" B.C. Bottom |
0 |
183 |
183 |
366 |
|
115kV, Porcelain, Station Post Insulator, 550kV BIL, Extra High Strength, 7" B.C. Top, 7" B.C. Bottom |
0 |
112 |
112 |
224 |
|
230kV, Station Post Insulator, 900kV Bil, 2750 # Cantilever Str., Gray, Under-hung on "H" Frames |
9 |
0 |
0 |
9 |
|
230kV, Station Post Insulator, 900kV Bil, 2750 # Cantilever Str., Gray, Upright |
36 |
0 |
0 |
36 |
|
115kV Station Post Insulator, Polymer. 550kV Bil, 5" B.C., Tr-287, 117" Creepage, 5000 Lb Cantilever Strength |
96 |
0 |
0 |
96 |
|
60kV Suspension Insulators |
36 |
123 |
126 |
285 |
|
115kV Suspension Insulators |
48 |
81 |
96 |
225 |
|
230kV Suspension Insulators |
18 |
0 |
0 |
18 |
|
Table 4: Surge Arresters |
NRS Qty |
KRS Qty |
SRS Qty |
Total |
|
60kV Surge Arrester, Upright Mounting |
6 |
26 |
24 |
56 |
|
115kV Surge Arrester, Upright Mounting |
9 |
33 |
15 |
57 |
|
230kV Surge Arrester, Upright Mounting |
6 |
0 |
0 |
6 |
|
230kV Surge Arrester, Under-hung Mounting |
3 |
0 |
0 |
3 |
Summary
Subject to compliance with Chapter 2.105 of the City Code, staff is seeking authorization for the City Manager to negotiate and execute agreements and/or purchase orders for: (1) capacitor banks with reactive switching devices, (2) protection and control panels, (3) insulators, and (4) surge arresters, up to a total maximum aggregate amount of $11,000,000, inclusive of applicable taxes. The requested authorization is subject to review and approval as to form of all agreements and/or purchase orders by the City Attorney and the appropriation of funds.
The majority of the total maximum aggregate amount is designated for the capacitor banks and the control panels, with the remaining funds allocated to the insulators and surge arresters.
Delivery Timeline
Deliveries are expected to take place between September 2025 and April 2026. Payments will be based on the successful completion of key milestones, including a minimum retention of 10% of the contract amount until the City’s final acceptance of the equipment.
For capacitor banks and control panels, a five-year warranty period is anticipated to cover parts and labor and will commence upon final acceptance of each unit.
For insulators and surge arresters, a two-year warranty period is anticipated to cover parts and labor and will commence upon final acceptance of each unit.
Additional Quantities
As part of the expansion, SVP may need to purchase additional capacitor banks with reactive switching devices, protection and control panels, insulators, and surge arresters, subject to the maximum compensation limit. If such purchases are necessary, they will be made pursuant to Section 2.105.130 of the City Code, which states “at the discretion of the Purchasing Division Manager, additional quantities may be purchased after the initial award of a contract or purchase order for general services or products. If the purchase of additional quantities or services increases the maximum compensation that exceeds the City Manager’s signature authority set forth in this chapter, or an amount previously approved by the City Council, then City Council approval is required.”
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)(2) of Title 14 of the California Code of Regulations as the proposed actions solely involve the purchase of equipment for Northern Receiving Station (NRS), Kifer Receiving Station (KRS), and Scott Receiving Station (SRS).
FISCAL IMPACT
The amount to be paid to the Vendor(s) under the Agreement(s) is not-to-exceed $11,000,000 for the initial quantity of units noted in Tables 1-4 and an additional $1,650,000 for a 15% contingency of the total contract value. Appropriations are available in the Electric Utility Capital Fund for the three receiving station rebuild and replacement projects - SRS, KRS, and NRS. On September 10, 2024, the City Council approved the issuance of electric revenue bonds which provide funding for the rebuild and replacement projects.
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 <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, review and approval as to form by the City Attorney, and appropriation of funds, authorize the City Manager or designee to negotiate and execute agreement(s) or purchase order(s) with vendors for Capacitor Banks with Reactive Switching Devices, Protection and Control Panels, Insulators, and Surge Arrestors, subject to a total maximum aggregate compensation amount of $11,000,000, plus a fifteen percent (15%) contingency ($1,650,000) for a maximum compensation amount of $12,650,000; and
2. Authorize the City Manager or designee to (a) take any actions as necessary to implement and administer the agreement(s) and/or purchase order(s), and (b) negotiate and execute amendments to the Agreement(s) for (i) design changes, (ii) any unanticipated issues, (iii) extensions of the term, or (iv) the purchase of additional Capacitor Banks with Reactive Switching Devices, Protection and Control Panels, Insulators and Surge Arresters, subject to the above maximum compensation limit and review 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